With RGB smart contracts it is possible to build DeFi on Bitcoin and Lightning ("Bitcoin Finance, BiFi"). You can check https://rgb.tech for the details

It seems to me that all defi boils down to these five apps:

1. issuing NFTs and other altcoins, especially stablecoins
2. trading the base currency against NFTs and altcoins, especially stablecoins
3. lending out the base currency to obtain stablecoins (sometimes this is presented via a leveraged trading interface, but ultimately it's still just lending + trading)
4. privacy pools like tornado cash
5. rollups like arbitrum

Part of the reason why defi is almost entirely a bad idea is this:

• notice that the first three options all involve altcoins
• but altcoins are dumb, so defi is dumb too (except for the last two things)
• notice that the first three all involve stablecoins
• stablecoins are centralized so "de"fi isn't "de"-centralized (except for the last two things -- but keep reading because rollups aren't usually decentralized either)
  • stablecoins are usually issued via a custodian who holds an equivalent amount of fiat currency as collateral
  • this method has an obvious single point of failure who can steal user funds -- so it is centralized
  • the next most common issuance method is through user-generated collateralized debt positions e.g. Dai
  • this only works if auctions occasionally occur to sell the collateral to Dai holders if the price of Dai falls, which thus increases the price of Dai relative to the underlying collateral until it (hopefully) achieves stability again
  • but auctions cannot "know" the price of Dai without an oracle (e.g. Chainlink) to "tell" the blockchain the price
  • the oracle is less obvious as a single point of failure, but that's still what they are -- so it is centralized
  • moreover, oracles can abuse their trusted position to steal user funds by participating in the auctions and falsely reporting that the price of dai fell in order to obtain the underlying collateral at an unfair discount
• privacy pools are, in my opinion, actually a good idea and I have no real criticisms of them except I think it was a mistake for tornado cash to have the main website use a governance token -- but that's not a requirement of privacy pools, it was just a dumb fiat-minded error made by that particular team
  • however, privacy pools are pretty similar to coinjoins, which do exist on bitcoin, so we "do" have this form of defi on bitcoin - except coinjoins require the participants to interact with one another, which imo is a major drawback compared to privacy pools
• rollups are, in my opinion, also a good idea, though the "easy" way to do them involves a centralized sequencer who can withhold the data needed by users to withdraw their funds -- and thus hold user funds ransom -- and thus steal from their users
  • however, there are designs that mitigate this, including the "zk" variants of rollups, and there are also some models for where to put the data -- namely, spacechains -- that I think can solve the data availability problem and make rollups actually work in a decentralized manner
  • there are no rollups on bitcoin yet but I think bitvm and "brollups" demonstrate that we can get something roughly equivalent on bitcoin

Does the more expressive Solidity language actually enable DeFi to work as it should where Bitcoin Script can't?

The first three apps that "count" as defi (even though they aren't really decentralized) aren't even good ideas because they require the use of stablecoins and altcoins, which are bad ideas. But in fact they do not require anything that Bitcoin Script can't do:

• issuance: the ordinals and runes people have created NFTs and altcoins (including stablecoins) on bitcoin and so have some lightning devs, e.g. see boardwalkcash.com which has a stablecoin that works on lightning -- and this all demonstrates that bitcoin script has everything we need to issue these things in a manner similar to how "defi" does it (but it's still a bad idea because altcoins are dumb)
• trading: the ordinals and runes people have created auction websites which demonstrate that it's possible to trade NFTs and altcoins (including stablecoins) for bitcoin in a manner similar to how "defi" does it (but it's still a bad idea because altcoins are dumb)
• lending: again, it's not a good idea because it involves potentially giving away your bitcoins to get altcoins (which are dumb), but you can do this on bitcoin -- which is why hodlhodl has a lending product. You might say "but that involves a trusted third party!" but so do ALL stablecoin-based loans -- because the collateral for the stablecoin is either custodied by a trusted third party (e.g. USDC and USDT) or relies on a trusted oracle to end up in the right person's hands (e.g. Dai). If you want to do loans without acquiring any altcoins you can use my Loan Shark protocol

The last two apps are privacy pools and rollups, and for those I say this:

• the existence of coinjoin software demonstrates that privacy pools are possible on bitcoin in an interactive form (yes I do want to make them non-interactive and I think covenants can help here)
• the existence of bitvm + brollups demonstrate that rollups (or something almost just as good) are possible on bitcoin too

So no, there is basically nothing in defi that bitcoin script can't do -- though most of it is a bad idea and some of it might have to remain interactive at least until we get a covenant soft fork.

No, probably not. Defi is mostly bullshit, hot air, rugs and shitcoinery, or worse fiatcoinery.

Defi exists because of stablecoins, and other shitcoins. You are highly unlikely to out trade shitcoins for Bitcoin — and believe me, I have tried!

Defi runs counter to the goals of Bitcoin, to displace fiat currencies in the marketplace.

Take a look who is recently as of tonight getting into the defi schemes…

yes and no.

anything can be built out of anything. you could probably build an Audi out of cabbage if you had a big enough fusion reactor. so yes you could.

but what problem does defi solve? (crickets...)

so no, it doesn't matter.

The thing that finally got me out of alt coins awhile back was when I realized that no actual valuable economic activity was happening on any ecosystem. It was all swaps from one coin to another, lending/liquidity providing to earn from swaps, minting NFTs that would eventually become worthless, and staking. I just thought it was a matter of time with some of these ecosystems (Cosmos in particular I used to be interested in) that the music would stop. I just think Ethereum is a larger system, so the music will likely continue to play for longer. DeFi and yield, you gotta ask where or how is that yield/interest generated and is it sustainable.

What would you personally use DeFi for?

Are you looking for yield? Or to trade your bitcoin for other financial products?

When people say "DeFi" it confuses me, because bitcoin is decentralized finance.

Are crypto bros rooting for the financialization of bitcoin? Do they want to click buttons on their computer like Jerome Powell and not need to work or contribute value to society. Most people around me are exactly like that, pretty much to a tee.

Runes seem to be a promising way to do exactly what Ethereum tries to keep up with, and Bitcoin can handle this (in 10 minutes increments, with high transaction costs during high demand times, sustainably), but currently only on layer 1. I believe Bitcoin DeFi will probably be a thing in the future though. Runes like Mario Coin comes to mind. I've already seen some hyping startup founders talking about Bitcoin becoming this, but ultimately, it does not provide the functionality of smart contracts, where you have liquidity and other DeFi related tasks. It will be more commonly known as something more than just HODL bitcoin and pay with lightning, and because of it's lack of promises in response times and smart contract functionality, it will sustain such value-providing use cases.

It depends on what you mean by DeFi. If you mean any DeFi mechanism you can imagine, no. If you mean some small set of things that a bank or central party would ordinarily do, yes. It'd be easier if you asked about a specific application. As is it's a bit like asking "can my computer run AI?"

This is a good question. You'll definitely get an answer on SN..

Sovryn is already doing it.

DeFi is a total scam

Exploring DeFi on Bitcoin incentivizes innovation in second-layer technologies and sidechains, such as Lightning Network, RSK, and Liquid Network, driving the development of new applications and services that may not have been possible on the original Bitcoin blockchain.

Bitcoin has always maintained a KISS principle in its development, hence the protocol has never been hacked. If DeFi capabilities were introduced into the protocol, what would happen? Most likely the same thing that happened with Ethereum and its hacked DAO. Bitcoin does not need DeFi to function well, it has already been doing so for 15 years without interruptions.

They will probably destroy the defi of eth ecosystem with the fractional reserve iou of cbbtc on coinbase under the manipulation of blackrock, bitcoin will find the way.