The ALEX Layer: From DeFi Protocol to the Finance Layer of Bitcoin

ALEX is evolving from a standalone DeFi platform into an ecosystem of financial applications. Not only will ALEX continue expanding its suite of DeFi modules, but it will also be providing developers with the tooling, grants, and mentorship to build their own financial Dapps.

ALEX will become the finance layer of Bitcoin by combining the best features of the L1 and L2s, essentially the world's most reliable, safest, and trustable Bitcoin DeFi platform. The scalability, security, and ease-of-use will be unparalleled, attracting the builders and users of the Bitcoin economy.

A Track Record of Excellence

Before crypto the ALEX team was building billion dollar quant businesses on Wall Street. We came to DeFi to build the future of finance and that future had to be built on the foundation of Bitcoin. Bitcoin is unique; it is the first blockchain and 14 years later is still unmatched in market cap, security and decentralization.

ALEX was launched on the Stacks smart contract layer and quickly rose to the top. ALEX has captured 92% of Stacks TVL at the end of Q2, according to Messari’s “State of Stacks” report.

ALEX did it through consistent execution of our roadmap and delivering:

• The deepest AMM liquidity pools
• The fastest BRC20 DEX
• Attractive Yield earning opportunities 
• Launchpad on Bitcoin for emerging projects
• Bridges link to a multichain world 

We’ve become the highest ranked Bitcoin DeFi on Coingecko in market cap with our communities following multiples of the competition.

Back to Bitcoin L1

Bitcoin had been purely the “money layer” of crypto until January 2023. The Ordinals protocol, allowed for tracking and transfer of individual satoshis able to store up to 4MB of data thanks to the Taproot upgrade. Bitcoin became a blockchain not only for NFTs but by March for fungible tokens as well with the BRC20 standard created by @domodata (now an ALEX advisor).

ALEX seized the opportunity to bring faster confirmation speed and the UI of a CEX order book to the BRC20 market. B20byALEX marked its transition from a DeFi protocol, to redefining the boundary between Bitcoin layers to deliver users the best features of each.

ALEX succeeded B20 with the ALEX launchpad on Bitcoin L1 to further expand Bitcoin’s potential beyond a cryptocurrency into an ecosystem. It was through building and the meticulous work of harmonizing L1 and L2 peg-in, peg-out and building an on-chainer indexer that it became clear: we can best contribute to Bitcoin as providers of financial infrastructure.  

Beyond DeFi to the Finance Layer of Bitcoin

The clearest value proposition in crypto is that Bitcoin has a market cap of over $500B and less than .01% is deployed in DeFi. Ethereum, by comparison, has 27% percent of its $200B market cap in DeFi. 

If BRC20 is a speedrun of the early days of the ERC20 standard, Dapps that unleash Bitcoin’s market cap are a x1000 opportunity waiting to happen. Ordinals and BRC20 have begun attracting fresh developer attention, there will be a gold rush in Bitcoin finance, it’s not a matter of “if” but “when.”

By building financial infrastructure, ALEX will be providing “shovels” when it happens. Experience taught us that Bitcoin script is restrictive and a high barrier to entry. ALEX will provide Bitcoin financial infrastructure including APIs, SDKs, grants and technical assistance to new builders.

ALEX will catalyze the growth of the Bitcoin financial ecosystem by laying down the framework upon which countless applications, platforms, and solutions can be built. This goes beyond providing tools and services to actively shaping the future of Bitcoin finance, where every financial function finds its decentralized counterpart.

How the ALEX Community Benefits

Cultivating a financial ecosystem lays the groundwork to grow ALEX users, TVL and the revenue potential of our core trading infrastructure. The ALEX Layer initiates a positive feedback loop of growth. As more projects are built on ALEX Layer they will raise funds and launch tokens through IDOs.

Regular IDOs for emerging projects energizes our existing community and attracts new user communities along with new capital, increasing Bridge TVL. Higher Bridge TVL, in turn, increases our AMM TVL. Greater liquidity in our AMM pools improves DEX trading performance and increases the unified liquidity of the ALEX ecosystem.

This closes the cycle, as having a strong base of unified liquidity across applications attracts even more projects to build on ALEX Layer. This beneficial cycle organically grows the financial ecosystem and the momentum Bitcoin DeFi adoption, with $ALEX at the center as the ecosystem token.

On-chain Indexer

ALEX has already begun improving Bitcoin DeFi through better infrastructure. Together with pioneers like Domo (BRC20 creator and ALEX advisor) and existing off-chain indexers such as BestinSlot, OKX, Hiro systems, Unisat, and others, we are building a decentralized indexer for BRC20 tokens.

This new “indexer of indexers” does not implement an on-chain indexing engine, as parsing JSON texts at the smart contract layer is a significant challenge. The on-chain indexer, like a decentralized oracle, implements a consensus mechanism when a minimum threshold of indexers (“m-of-n”) agree to a particular BRC20 event. The indexer complements this consensus by independently verifying the Bitcoin transaction was mined, through the unique capabilities of the Stacks layer, including programmability and reading the Bitcoin state.

Building an on-chain indexer provides a more reliable and trust minimized way to track BRC20 global state. The current reliance on centralized off-chain indexers creates “centralization risk” of indexer error causing a loss of user funds. The Bitcoin fungible token ecosystem is elevated and brought a step closer to immutability, through our efforts and collaboration with our partners. This is a preview of the immense potential to be unlocked by combining the best features of L1 assets with L2 capabilities. 

LISA

ALEX is also building LISA (Liquid Stacking Service), our liquid stacking product. The LISA token represents the STX stacking position in perpetuity. Its intrinsic value grows every cycle as BTC rewards are converted to STX (off-chain), injected into LISA and stacked to compound the return.

Long Term Roadmap

In the long term the tokenization of Real World Assets (RWA) has always been at the heart of our vision. Globally there is over $360T in real world assets that will be progressively tokenized, because blockchain is the superior technology for the settlement of wealth.

By integrating RWA with ALEX and the broader Bitcoin ecosystem, when those assets begin to transact they will come to the security of Bitcoin DeFi. That is where the infrastructure that ALEX are building today will find its ultimate use case and financial inclusion is no longer a vision but a reality.

Conclusion

Bitcoin’s greatest strengths are its security and decentralization. Its limitations in scalability and programmability are where L2 solutions fit in. ALEX will take its successes in DeFi development, our career experience in TradFi, and use both to build the finance layer of Bitcoin.

The ALEX layer will allow a seamless transition of L1 assets onto and off of smart contract layers enabling full programmability and faster settlement. Through the ALEX we can unify liquidity: any interconnected Dapps have access to the liquidity of the whole ALEX ecosystem. In practice this means perpetual futures trading, options and other financial derivatives are within reach.

The coming wave of finance devs can leverage the benefits of the ALEX layer and build without the barrier of starting from scratch. There’s $500B in Bitcoin capital waiting for the right combination of use case, security and intuitive design to be put to work. The ALEX layer provides the ideal conditions to combine builders, tech and opportunity to catalyze that game changing moment.

Get started as an early builder, apply for an ALEX Grant today: https://blocksurvey.io/buildonalex-application-form-J2LtUod1Qi2iDkJ7wpL2Ug-o