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I have seen that side chains/2nd layer solutions that utilize smart contracts on the bitcoin network are feasible and in use. If the 'programmability' feature of smart contracts is available on the bitcoin network, why is all of DeFi currently on the ethereum network instead? Does the former have inherently worse features for the usage of smart contracts? If so, what are they?

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If the 'programmability' feature of smart contracts is available on the bitcoin network, why is all of DeFi currently on the ethereum network instead?

  • Better marketing
  • More funding
  • Investors
  • Users and Exchanges that are already familiar with creating tokens on Ethereum.
  • Although projects exist, few users and devs are not interested in using them. Bitcoiners don't want to use these projects, altcoiners already have a community and things they can use so such projects end up with less volume.
  • There is a perception among people in this space that Bitcoin can only be used as digital gold.
  • Less exchanges support Liquid, Rootstock and LN

I have tried to explain 'DeFi' in https://bitcoin.stackexchange.com/a/108303/

ethereum-gas

Most of the gas used on Ethereum is either by DEX or stablecoins. Both things exist on Bitcoin sidechains.

People can have different opinions about difference in volume and usage. Even the centralized exchanges like Coinbase, Bitstamp, Bitfinex, Binance, Okex, FTX, Deribit, Bitmex etc. have different volume even though its not related to technology used by exchanges or things supported.

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If you ignore scalability and privacy, it is easier for developers to write smart contracts onchain and within Ethereum's VM. Not only can you use a Javascript like language (Solidity) but your contract can update automatically based on changes in state. Bitcoin deliberately restricts state changes to unlocking UTXOs and immediately locking them again.

You can replicate many smart contracts on Bitcoin but because Bitcoin is focused on long term scalability and privacy as much as possible is pushed offchain (you have to deal with payment channel capacity and routing etc) and requires cryptographic tricks like adaptor signatures before a transaction is broadcast onchain. This makes life harder for a developer and creates more work but at least in my view there is no alternative. You could ignore privacy but long term scalability is critical. What's the point of making something easy to use if any wide scale usage pushes transaction fees up pricing out that and other use cases? There is very little progress and activity on 2nd layer solutions for Ethereum I think partly because of the complexity of new tokens introduced and partly because then you have to struggle with the same challenges of doing smart contracts offchain as Bitcoin.

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  • You can use same language: solidity on Rootstock or even other chains like BSC, Solana etc.. Question is why someone prefers Ethereum.
    – Prayank
    Aug 27 '21 at 9:01
  • Question is Bitcoin vs Ethereum. It doesn't ask for a comparison between Ethereum and Rootstock or Ethereum and Solana. I don't know anything about Solana, presumably it uses accounts rather than UTXOs and an EVM equivalent too? I'm not particularly interested in Ethereum let alone Ethereum clones ;) Aug 27 '21 at 9:40
  • There is a lot more tooling and ecosystem around Ethereum than Rootstock. If you don't care about scalability and privacy and you're doing an academic project I'd probably recommend Ethereum over Rootstock. Aug 27 '21 at 9:43
  • Question clearly mentioned 2nd layer/sidechain
    – Prayank
    Aug 27 '21 at 9:48
  • OK maybe I should add that sidechains have different trust models and less tooling, ecosystems built around them (other than perhaps Liquid). At least in theory access to the Ethereum chain is open in a way that multisig sidechain pegs aren't. The plan for DLCs is to use payment channels, Lightning rather than sidechains. Aug 27 '21 at 9:52

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