Bitcoin-powered DeFi takes a major leap forward as Elastos, the developer of BeL2 protocol, unveils BTCD, a BTC-backed stablecoin aimed at creating a decentralized, Bitcoin-centered monetary system.
A Digital Bretton Woods, Built on Bitcoin
Elastos says its new project is inspired by the Bretton Woods system, the post-World War II agreement that pegged the U.S. dollar to gold. Now, the team is reimagining this model using Bitcoin, the world’s oldest and most secure digital asset.
The Bitcoin Dollar (BTCD) is fully collateralized with Bitcoin and is intended to bring monetary stability to crypto markets by anchoring value to a trusted digital reserve.
How BTCD Maintains Stability
Unlike traditional stablecoins that rely on U.S. Treasury assets, BTCD uses overcollateralized Bitcoin reserves in the range of 160% to 200%, according to Elastos’ team.
Oracles track the BTC/USD price in real time, ensuring dynamic price stability and risk mitigation.
BTCD Stabilization Mechanics:
- Above $1: Holders burn BTCD to reclaim BTC → reduces supply → price falls.
- Below $1: Users mint new BTCD using BTC → increases supply → price rises.
- If coverage falls to 110%: Arbitrage incentives kick in, encouraging BTC redemption to maintain peg.
This system creates a self-balancing loop designed to keep BTCD close to $1, even during volatile market conditions.
Strengthening Bitcoin-Based DeFi Infrastructure
The launch of BTCD is more than just a new stablecoin—it signals an evolving trend where Bitcoin’s security and liquidity are leveraged to support decentralized finance.
As Bitcoin crosses $104,000, its increasing utility in decentralized ecosystems enhances its role not just as a store of value, but as DeFi collateral.
This is a crucial step toward reducing reliance on centralized stablecoins and building a trustless, transparent financial infrastructure powered by Bitcoin.
Conclusion
BTCD by Elastos brings innovation to the stablecoin sector by tying it directly to Bitcoin reserves, enabling a secure, decentralized monetary system that echoes the principles of Bretton Woods in the digital age.
With mechanisms for price stability and on-chain transparency, BTCD could become a cornerstone asset in Bitcoin-native DeFi.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss