Exciting News: Bitcoin DeFi is Evolving on Stacks! Granite Protocol Launches Successfully!

📌 Quick Summary in 3 Lines

• Granite Protocol has launched on "Borrow on Bitcoin," marking another step forward for Bitcoin DeFi!

• Users can now borrow USDCx (a cryptocurrency pegged to the US dollar) using sBTC (synthetic Bitcoin) as collateral on Stacks (a blockchain built on Bitcoin)!

• This indicates that Bitcoin DeFi is moving towards a more concrete and practical direction, but it’s still not mainstream, so let’s keep a cool head.

What’s the Latest on Granite Protocol?

Granite Protocol has recently launched on "Borrow on Bitcoin." This means that for those wanting to utilize Bitcoin-related collateral (the assets deposited when borrowing) without straying from Bitcoin DeFi (decentralized finance), there’s now a new borrowing option available.

The key point of this launch is that Granite provides a lending market based on Stacks (a blockchain operating on Bitcoin). Here, users can deposit sBTC (synthetic Bitcoin on Stacks) as collateral to borrow USDCx (a stablecoin pegged to the US dollar). According to verified information, the variable borrowing interest rate is 1.66% APR, and it features aspects like "isolated pools," "soft liquidation," and "no re-collateralization of user collateral."

However, one important note is that this service is unfortunately not available in the United States. This restriction is quite significant.

Still, this move is evidence that Bitcoin DeFi is becoming increasingly concrete. Previously, there were vague discussions like, "Bitcoin will eventually support DeFi," but now comparison pages, lending markets, collateral methods, and user-accessible products centered around Bitcoin-related assets are being developed one after another.

Of course, this doesn’t mean that Bitcoin DeFi has become mainstream. However, it does indicate that the infrastructure is becoming easier to evaluate.

For more details, check out the official Granite platform.

What Exactly is Bitcoin DeFi? Why Now?

Bitcoin DeFi has had a somewhat difficult position to explain.

Bitcoin is the largest cryptocurrency and has the strongest brand power as a "store of value" in the market, right? However, most DeFi activities have occurred on platforms like Ethereum, Solana, BNB Chain, and other newer Layer 2 ecosystems. Lending markets, DEXs (decentralized exchanges), stablecoin systems, yield protocols, and composable financial applications have been developed there.

While Bitcoin had the funds, the application layer was held by other chains.

Stacks is one of the ecosystems trying to bridge that gap. It aims to provide ways for Bitcoin holders to engage more with DeFi-like products while keeping the narrative firmly tied to Bitcoin.

Granite’s launch on "Borrow on Bitcoin" aligns perfectly with that direction.

This allows users to gain new ways to compare borrowing options, collateral conditions, and risk models within a Bitcoin-related environment.

Additionally, the variable interest rate of 1.66% is a figure that will quickly attract attention. Especially for traders who feel borrowing costs are high in other markets, it’s likely to elicit a reaction of, "Oh!"

However, this interest rate should be approached with caution. Borrowing rates can change. They fluctuate based on utilization rates, available liquidity, risk parameters, market demand, and protocol design. While the advertised low rate is attractive, there’s no guarantee that those conditions will persist.

More importantly, Bitcoin DeFi products are beginning to compete under the conditions of the general lending market.

Users can now ask realistic questions: "What can I use as collateral?" "Which stablecoins can I borrow?" "What happens if I get liquidated?" "Are the pools isolated?" "Is collateral reused?" "Which countries or regions are supported?" "Where does the liquidity come from?"

These are standard questions in normal DeFi, right? The fact that they can now be asked is progress. Bitcoin DeFi will become real when it can be compared based on actual risks and costs, not just slogans.

What Do "Soft Liquidation" and "No Re-Collateralization" Mean?

The "soft liquidation" feature is extremely important. Why? Because the liquidation mechanism significantly affects user experience.

In traditional DeFi lending, if there’s a sudden price fluctuation against collateral, liquidation (the forced sale of collateral) can be triggered. If that system is too aggressive, users might incur unexpected losses or have little time to respond. Therefore, a soft liquidation mechanism is designed to mitigate that shock. The specific effects depend on the protocol's design.

For borrowing backed by Bitcoin, the risk of liquidation is one of the major barriers.

Bitcoin holders generally prefer not to sell their BTC, right? But they might want liquidity (the ability to convert to cash quickly). Borrowing money against BTC-related collateral provides that pathway, but a sudden drop in BTC prices could jeopardize that position.

Products emphasizing "soft liquidation" aim to make that borrowing experience a bit more gentle.

Of course, this doesn’t eliminate risk. It just changes how the protocol handles stress.

Granite’s claim of "no re-collateralization" is also a noteworthy point.

Re-collateralization (when the collateral deposited is used by the lender as collateral for another transaction) became a very negative term during the last (cryptocurrency) cycle when lending services collapsed. At that time, users realized that behind products labeled "earn" or "borrow" were hidden counterparty risks (the risk of the trading partner collapsing). If collateral is reused, lent out further, or incorporated into opaque strategies, users could be exposed to risks they didn’t understand.

Protocols that do not re-collateralize collateral make clearer claims about custody (the storage and management of assets) and risk.

This doesn’t mean the system is completely risk-free. Risks from smart contracts, oracles (systems that provide external data to blockchains), liquidity risks, liquidation risks, bridge risks (mechanisms for moving assets between different blockchains), and governance risks still exist. However, it does address one of the biggest trust issues faced by centralized lending services.

Bitcoin users are particularly sensitive to the premise of custody, so the details of this design are extremely important.

Is This a Big Deal or Still Just the Beginning?

How should we perceive Granite’s launch? I think it’s best to remain calm and assess it rationally.

Just because Granite has appeared on Borrow on Bitcoin doesn’t mean that Bitcoin DeFi has explosively grown. BTC holders aren’t suddenly moving large amounts of funds into Stacks’ lending market, nor has Bitcoin overnight transformed into a DeFi ecosystem like Ethereum.

However, it does indicate that product formation is steadily progressing.

Comparison indexes, collateralized lending markets, stablecoin borrowing pathways, and clearer risk conditions are all somewhat "mundane" infrastructures necessary before large-scale adoption can occur.

Bitcoin DeFi doesn’t grow from just one big news event. It truly grows when users find cheaper, safer, clearer, and more convenient products than the options currently available.

Granite’s launch is another test to measure whether that market is beginning to form.