How OmniBOLT is bringing Derivative products collateralized in USDT to Bitcoin’s Blockchain
By: Operator Omnibolt
Tags: Lightning Network, Smart Contracts, Derivatives, Defi, Usdt

How OmniBOLT is bringing Derivative products collateralized in USDT to Bitcoin’s Blockchain Operator@OmniBOLT Apr 7·3 min read

Copyright@OmniBOLT

The decentralized derivatives market on the Ethereum blockchain and other smart contract platforms is robust, and now, OmniBOLT is making the same accessibility available through Bitcoin. Utilizing the Lightning Network and its own OMNI technology, a layer two scaling solution that enables faster transactions on the largest cryptocurrency network, OmniBOLT can offer derivatives products that are collateralized in USDT to Bitcoin network users. As the largest stablecoin by total market capitalization, making its non-volatile characteristics leverage-able on the most prominent decentralized network will open up new doors for what’s possible using the Bitcoin blockchain.

Dollar-Backed Derivatives Meet the Bitcoin Blockchain

OmniBOLT is able to offer this innovation through its on-chain protocol, Omnilayer. Using Omnilayer, anyone can issue smart on-chain assets, such as USD-pegged synthetic tokens, right on top of the OmniBOLT network. Through this process and decentralized technology like atomic swaps, a user can easily deposit collateral in the form of USDT on the Omnilayer and use the collateralized deposit as a way for them to create stable and value-backed derivative tokens. With nominal fees and almost instantaneous transaction finality, this methodology will soon be able to rival platforms like Etheruem in functionality, cost, and speed.

This method has been tested through decentralized lending and borrowing platforms, proving to be highly effective using over-collateralization as a means of deposit. The process is even safer through the collateralization of USDT when compared to a cryptocurrency like BTC, ETH, or any other network utility token. By using a dollar-backed stablecoin, there is a much smaller likelihood of experiencing a massive and instantaneous drop in price, which would in turn deleverage stablecoin-collateralized assets minted using these deposits. Although this hasn’t yet been experienced through the collateralization of non-fiat-backed cryptocurrencies, the possibility of it occurring is much more likely than a regulated USD-pegged option.

Why USDT is a logical Choice for Integration

With many users around the globe opting to use USDT as an alternative store and transfer of value to their fiat currencies, this will enable them to receive entirely new use cases for their holding. USDT, also known as Tether, offers its holders all the underlying benefits that blockchain technology allows without the excess volatility encountered from a maturing and relatively new market. With each USDT token pegged one-to-one with $1 held in a regulated savings account, these tokens can offer stable savings and transfer opportunities with much greater usability than the traditional US dollar.

Unlocking New Capabilities for the Lightning Network

Through the usage of OminBOLT and the OmniLayer, users will be able to receive the functionality of a decentralized smart contract platform, but all on top of Bitcoin. This will offer many new features on the blockchain, such as decentralized exchanges and automated market making, decentralized lending, interest-bearing savings accounts, and more. Unlike many current iterations that use centralization or partial centralization as a means to offer faster and cheaper transactions, OmniBOLT remains fully decentralized while providing the same (if not better) capabilities.