The Avalanche bridge has been updated to include native support for Bitcoin (BTC), with the cross-chain smart contracts platform seeing a 7.4% increase in its native token AVX as a result, despite DeFi activity is going down.
The news comes after the company announced that it would be adding BTC support to its platform back in October. The update is part of a wider effort by Avalanche to expand its ability to interact with other blockchains.
AVAX, the native token of the network, had an increase of 7.4 percent, beating both bitcoin and ether (ETH), which each experienced an increase of 0.64 percent and 2.34 percent, respectively.
Now, according to a blog post, the cross-chain bridge that the smart contracts platform Avalanche uses has been updated to include support for native bitcoin (BTC).
Using the recently released ‘Core’ wallet, users will now be able to bridge native bitcoin and receive exposure to the Avalanche DeFi ecosystem as a result of the update.
Platypus, a decentralized finance (DeFi) technology based on AVAX, has a Bitcoin pool with $11.7 million in total value locked (TVL), and it provides dividends ranging from 23.72 percent to 62.84 percent.
Additionally, a BTC.b to AVAX pool that offers payouts of 17.5 percent has been made available on the competing site TraderJoe.
The Avalanche bridge with Ethereum went live in August of last year and allows users to move ERC20 tokens from the Ethereum network to the Avalanche network.
Avalanche has been compared to the Lightning Network because both are designed to create a layer two payment channel system where transactions can be made instantaneously and scalability isn’t an issue. But while the Lightning Network is built specifically for Bitcoin, Avalanche is built on top of the Ethereum network, meaning it can handle ERC20 tokens as well as ETH itself.
In order to have this function work, however, both networks need to communicate with each other.
The decision to add support for Bitcoin into Avalanche’s wallet is significant for two reasons. First, it means users will be able to bridge their Bitcoin with other payment channels within Avalanche and receive exposure to the overall ecosystem as a result of the update. In other words, users will be able to participate in Avalanche-based DeFi projects – like AVAX – without having to first convert their cryptocurrency into fiat currency. Second, this gives potential investors another reason to consider adding AVAX tokens to their portfolios.
According to DefiLlama, there is presently $2.68 billion in TVL throughout the Avalanche ecosystem. This is an $11 billion decline from December as the DeFi sector contracts in response to worries about lending standards.