Why Hardnosed Bitcoiners Should Learn to Love DeFi

I want to talk about stacking sats. 

It’s a simple idea: accumulate wealth over time by growing your stack of bitcoin (BTC) and HODLing. People can stack by purchasing bitcoin regularly or earning it through work or rewards. The key is that it’s steady and deliberate, with an eye to the long term. If the vision of a decentralized economy is going to win out, it’s essential that bitcoin continues to be established as a primary means of saving and building wealth. 

The concept of stacking eschews the wanton speculation of the initial coin offering boom, epitomized by “wen moon” and similar memes. It’s much more in line with the bedrock principles that underpin the “real economy.” The ability to save money is an essential component of any financial system. Establishing more avenues for people to get predictable but decent returns on their bitcoin is how we truly start to shift the way the world deals with money.

And that’s why bitcoiners who stack sats should take a hard look at the decentralized finance (DeFi) platforms seeing explosive growth on Ethereum. While the optics may call to mind the wild speculation of 2017, the truth is that much of the growth in DeFi is driven by the same sound money principles as stacking.

Supporting good projects wherever they are

Bitcoin’s usefulness and grounding as hard money set it apart from most of the crypto froth from the past several years. The ocean of Ethereum white papers produced has yielded comparatively few working projects, and even fewer that anyone outside the crypto world would call usable.

Regardless of Bitcoin’s advantages, I am on record saying that I am a monetary maximalist, not a Bitcoin maximalist. I believe finance is a human right, just like speech and assembly, and that we need a fair and transparent financial system that empowers individuals, not powerful middlemen. So while I believe in the soundness of Bitcoin and its ability to help reshape finance, I will support any project that furthers this ultimate vision for a new economic system.

Stacking sats is about steadily, gradually, doggedly accumulating wealth over time. And DeFi is in the same spirit when properly implemented.

The fact that Ethereum is not Bitcoin, that it has consistently driven hype and bubbles, and that it still has not found a workable long-term solution for scalability, does not mean it offers nothing of value. In fact, Ethereum’s top DeFi platforms are doing some truly exciting and innovative work, and they have the promise to further the cause of a decentralized future of money.

MakerDAO operates like a credit facility, driving liquidity and encouraging more lending when interest rates are low. Compound, with its developer-focused interest rate protocols, enables the savings and loan functions of traditional banks. In more arcane spheres, projects like Synthetix offer a version of derivatives trading. Together, these platforms represent the germ of a new financial system.

Seeds of a decentralized economy

At this point many of you that know me only as a Bitcoiner are rolling your eyes and drawing comparisons to ICOs and tulips. Projects with names like $YAM and $TENDIES do not inspire confidence, I know. But dig a little into what DeFi is and does, and the foundations that have been laid, and you’ll be pleasantly surprised. DeFi is very real, and it’s worth exploring and explaining.

Stacking sats is about steadily, gradually, doggedly accumulating wealth over time. And DeFi is in the same spirit when properly implemented (never a sure thing in the Ethereum community). It’s basic finance: DeFi lets people do things they already do through banks, mutual funds and other financial institutions. But done right, it offers these services in a way that’s fairer, more transparent and more rewarding. So it’s not an exaggeration to say that DeFi is an ally in achieving a vision it shares with bitcoin: a trustless world of democratized, self-sovereign finance.

It would be myopic and self-defeating to ignore the potential of DeFi to advance a goal that is, after all, shared by all of us. It would be even more self-defeating to ignore real opportunities to put money to work, like when there’s a way for BTC holders to earn through cross-chain bridges like tBTC.

As Bitcoiners, we will always believe in the importance of sound money and in the Bitcoin blockchain as the best technology to facilitate it. There is plenty of risk in Ethereum and in DeFi. Potential investors must always do their due diligence. But I’m here to tell you that DeFi is for real. It’s a bubble, but it’s not just another bubble. And although there absolutely are “DeFi” platforms that will crash and burn, many of the concepts are sound. There are real opportunities for people to earn by putting their money to work – and where that’s true, investment and growth will follow.