Rebar Labs aims to launch the first Bitcoin-based platform to protect traders from maximum extractable value (MEV) strategies such as frontrunning by the end of 2024, CEO Alex Luce said in an interview.
Bitcoin’s emerging ecosystem, comprised of native decentralized exchanges (DEXs) and layer 2 (L2) scaling solutions, has revitalized the oldest blockchain network but also introduced new risks to traders, including harmful MEVs.
“If you’re talking about MEV right now, the most obvious example in Bitcoin is front-running,” Luce said. “This happens quite often.”
Source: Rebar Research Institute
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Rebar’s Shield could become the Bitcoin equivalent of Ethereum’s Flashbots, which have protected about $43 billion worth of DEX transactions on MEV since 2021, according to Dune Analytics.
Shield is designed to promote interoperability between Bitcoin’s fragmented DEX ecosystem while protecting traders from harmful MEVs.
“In Bitcoin, these DEXes have poor interoperability and liquidity is fragmented,” Luce said. “This is where a good MEV comes in. Someone can come in and help level the price and help users execute.”
Rebar’s Shield also aims to improve the profits of Bitcoin (BTC) miners who process transactions and post them to Bitcoin’s blockchain ledger.
“We are talking to all the large miners in this space right now,” Luce said, adding that Rebar intends to launch Shield with a “significant chunk” of the Bitcoin network hashrate on board.
source: Dipilama
Bitcoin began as a simple peer-to-peer payment protocol, but the 2021 Taproot upgrade allows the network to support more complex activities, including the creation and trading of other types of tokens and the issuance of non-fungible tokens (NFTs).
Bitcoin-based decentralized finance is still in its infancy and mostly limited to cryptocurrency-based traders.
“Currently, daily trading volume is up to several million units. It doesn’t matter. What we’re really seeing in this space right now is kind of an early beta phase with not a lot of users interacting,” Luce added.
“The target user today is very different from the target user we expect 12 or 24 months from now.”
Meanwhile, Bitcoin-based L2s such as Babylon, Core Chain, Rootstock, and Stacks are gaining attention.
The total value locked in Bitcoin’s L2 stood at around $2 billion as of October 18, according to data from DefiLlama.
“If we don’t do well in Bitcoin in the next 12 months, we will likely move to L2,” Luce said. “I think it would be a missed opportunity if that happens because Bitcoin is such a great market.”
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