Published on 
27 November, 2023

I am a bitcoiner, why Money On Chain?

Money On Chain is a protocol created for bitcoiners by bitcoiners. You can say, I’m a bitcoiner so, why should I consider using Money On Chain?

Let's discuss some arguments to answer this question.

  • Bitcoin as collateral 
  • Liquidity providers 
  • Network security 

Bitcoin as collateral 

At Money On Chain's launch, we wrote:

“When we say Bitcoin-collateralized, we refer to bitcoin as a currency but also to Bitcoin as a network, philosophy, and broader community.” Excerpt from the article bitcoin, the ultimate collateral

Using bitcoin as collateral, Money On Chain creates another use case for bitcoin increasing utility and perceived value. 

Money On Chain contracts run over the Rootstock network. To be able to use rBTC to mint Money On Chain tokens means locking bitcoin in layer 1. Hence, these bitcoins are held out of circulation, which decreases velocity, pushing its price up.

Other stablecoin solutions use fiat money like US dollars or cryptocurrencies such as ETH or USDC as collateral. Using bitcoin means that the collateral is locked in a smart contract, and not in the centralized hands of an enterprise that can be out of operation for many reasons, such as government regulations or prohibitions.

Liquidity providers 

One of the unique characteristics of the protocol is that BPRO holders provide collateral. This means that if you want to mint your stablecoin DOC, you don't need to provide collateral as you do with other stablecoins, but another actor does it for you.

This is a game changer for stablecoins, as its users don’t have to worry about collateral and can operate directly with the protocol to mint DOC using the dapp or a wallet that has it integrated like Defiant, making sure a 1:1 peg to USD.

This other actor is the BPRO holder, this is, a bitcoin hodler that gets really good incentives to offer collateral: 

  • Free leverage: to stabilize the price of DOC in one USD, the protocol gives a little leverage to BPRO. This way the price of BPRO follows bitcoin price with slightly higher moves. When bitcoin increases its price BPRO goes a little higher, and when bitcoin decreases BPRO goes a little lower.
  • MOC tokens: the BPRO holders receive MOC tokens as an incentive to keep holding and providing collateral through the Liquidity Mining Program.
  • Percentage of transaction fees: every transaction pays a fee to the protocol (0.3% if it is paid with rBTC and 0.25% if it’s paid with MOC tokens). 20% of every transaction fee goes to BPRO increasing its technical price (price in the protocol).

Network security 

This is one of the main reasons we chose Rootstock to build the Money On Chain protocol, although it is not strictly a Money On Chain feature but a Rootstock feature. 

Bitcoin layer 1 does not allow the kind of programmable smart contracts needed by Money On Chain to be a reality, so founders decided to use Rootstock, a Bitcoin sidechain that offers the best of both worlds: Bitcoin, the most secure blockchain network with the only hard money, and Ethereum a blockchain that allows writing smart contracts.

Bitcoin miners using a process called Merged-Mining create blocks with the added security of bitcoin, making Rootstock the most secure Smart Contract Platform and one of the most secure blockchains in the world.

EVM-compatible capabilities make it possible to run any smart contract developed for Ethereum and create models like Money On Chain using bitcoin.

There are more reasons to consider using Money On Chain tokens or you may have another point of view regarding this. Either way, we encourage you to join MOC’s community social networks and express your thoughts.

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