Author: @BMANLead, @Wuhuoqiu, @Loki_Zeng, @Kristian_cy, ABCDE
The big event of Crypto in 2024 is coming as the price of Bitcoin approaches the $100,000 mark. Bitcoin halving and ETF approval, Trump is about to use Bitcoin as a strategic reserve, and as Bitcoin becomes more deeply integrated into traditional finance The deep water area also makes us rethink a question:
What is finance?
The essence of finance is the allocation of assets across space and time.
Typical cross-space deployment: lending, payment, and trading
Typical cross-time allocation: pledge, interest, options
In the past, Bitcoin was only stored in wallets, and tended to be static in time and space. More than 65% of Bitcoin has not been moved for more than a year, and "BTC should only be stored in wallets" is like a steel stamp of thought. .
Therefore, BTCFi was not favored for a long time.
Although the starting point of Bitcoin’s birth is to hedge against the traditional financial system, and as early as 2010, Satoshi Nakamoto wrote in the forum that Bitcoin will support various possible scenarios designed by himself many years ago, including a variety of DeFi scenarios, As Bitcoin's positioning gradually approaches that of digital gold, the exploration of Bitcoin DeFi or financial scenarios has gradually ceased.
In another timeline, Rune Christensen announced the vision of MakerDAO in March 2013, and then the first DEX on ETH, Oasis DEX, was officially launched in 2016. In 2017, Stani Kulechov, who was still a student, founded AAVE in Switzerland. In August 2018, Bancor and Uniswap, which are familiar to everyone, were launched, ushering in the magnificent DeFi Summer. This also announced that the future possibilities of DeFi were temporarily handed over to ETH at that time point.
But when the Bitcoin timeline advances to 2024, Bitcoin returns to the center of the crypto world, and the price of Bitcoin reaches 99,759 US dollars, infinitely close to the 100,000 US dollar mark, with a market value of more than 2 trillion. BTCFi has become a 2 trillion The conspiracy of the US dollar has quietly sparked discussions about BTCFi’s innovation…
1. Bitcoin’s $2 trillion conspiracy: BTCFi
Although it was Ethereum that opened the Age of Defi, for Bitcoin, BTCFi may be late, but it will never be absent. Ethereum, as a Defi test field, has given Bitcoin a lot of reference. Today's Bitcoin is just like the European , at the dawn of a new world.
1.1 BTC changes from a passive asset to an active asset
The continuous improvement of the Fomo attributes and active management motivation of Bitcoin holders will drive Bitcoin from a passive asset to an active asset, providing soil for the development of BTCFi.
Institutional holdings continue to increase. According to feixiaohao data, there are currently 47 companies holding $141.342 billion BTC, accounting for 7.7% of the total BTC circulation. This trend continues to accelerate after the BTC ETF was approved. Since the beginning of the year, BTC spot ETH has brought Compared with early miners and coin hoarders, institutions are more sensitive to capital utilization efficiency and return rate. They not only have a higher tendency to participate, but are also likely to become active promoters of BTCfi.
The rise of inscriptions and the BTC ecosystem has made the composition of the BTC community more complex. Traditional BTC holders are more concerned about security and place it at a higher priority, while new members have higher expectations for new narratives and new assets. interest.
ETH DeFi has gradually embarked on its own path of sustainable development. Uniswap/Curve/AAVE/MakerDAO/Ethena have all found ways to achieve economic circulation by relying on internal or external income without relying on token incentives.
Due to multiple factors, the Bitcoin community's interest in scalability and BTCFi has increased significantly, forum discussions have become more active, and the [Disable Inscription Proposal] proposed by Bitcoin core developer Luke Dashjr last year was not supported. It officially closed in January this year.
1.2 The improvement of infrastructure objectively paved the way
Objective technical limitations are also the reason why Bitcoin has long been regarded as a value storage tool, which is gradually changing. The route dispute from 2010 to 2017 ended with BTC forking into BTC and BCH. But the improvement of scalability has not stopped. After the two upgrades of SegWit and Taproot paved the way for asset issuance, inscriptions began to appear in people's businesses. The widespread creation of assets has brought about the objective demand for transactions and financialization. With the emergence of technologies such as Ordinal, Side-chain, L2, OP_CAT, BitVM, etc., the construction of BTC Fi scenarios has become truly feasible.
1.3 Huge demand drives development
In terms of transaction volume, the diversification of assets has promoted the increase in transaction frequency. The Block data shows that the average daily transfer of BTC has exceeded 500k/day in the past year, among which RUNES and BRC-20 have dominated. , credit derivation, and interest-bearing needs also become a natural thing. BTC Fi can make Bitcoin a productive asset, allowing BTC to earn income from the assets it holds.
Source: The Block
In terms of TVL, BTC, as a cryptocurrency with an absolute advantage in market value, has extremely high potential. At present, the total locked value (TVL) of the BTC network is about 1.6 billion US dollars (already included in L2 and side chains), accounting for only 1.5% of the total market value of Bitcoin. 0.14%. In comparison, the TVL to market value ratio of other mainstream public chains is much higher, ETH is 15.7%, Solana and BNBChain are 5.6% and 6.8% respectively. According to the average of the three, BTCFi is still 65 times room for growth.
The TVL to market cap ratios of mainstream public chains with smart contract functionality are much higher: Ethereum is 14%, Solana is 6%, and Ton is about 3%. Even at 1%, BTCFi has the potential to grow tenfold.
Source: Defillama, Coinmarketcap
2. BTCFi Year 1
Therefore, in 2024, when BTC is soaring to 2 trillion, it also ushers in the first year of BTC Fi.
Bitcoin plus "finance" instantly opens up 2 trillion possibilities and expands the boundaries of Bitcoin in time and space.
As we said at the forefront: the essence of finance is the allocation of assets across space and time.
Then Bitcoin Finance BTCFi is the allocation of Bitcoin across space and time.
Cross-time allocation: Improve the interest-bearing properties of Bitcoin, such as pledge, time lock, interest, options, etc., for example:
@babylonlabs_io opens the time dimension for Bitcoin
· Bitcoin interest earning portal @ SolvProtocol
"Semi-centralization may be the best solution" @ Lombard _ Finance
@LorenzoProtocol with built-in Pendle
Chain for BTCFi @ use _ corn
Cross-space allocation: Improve the liquidity of Bitcoin, such as lending, custody, synthetic assets, etc., for example:
· Custody platforms @Antalpha Global, @Cobo_Global, @SinohopeGroup
· Rising Star in Lending @ avalonfinance _
CeDeFi pioneer @bounce_bit
Wrapped BTC is flourishing
Stablecoin Rising Star @yalaorg
Financial applications have not only returned to the business of BTC ecosystem participants, but also created new possibilities. BTC Fi innovative projects have begun to emerge in a blowout manner, forming a Bitcoin financial landscape:
Source: ABCDE Capital
Whether it is to make "digital gold" have interest-bearing properties or to make it more liquid, these two core functions of BTC Fi are perfectly in line with the current main narrative of BTC. BTC is still the most recognized digital gold in the industry, so the BTC Fi track is unlikely, or "unnecessary" to be falsified.
Take gold as an example. The value of gold is generally supported by three major factors:
1. Jewelry and industrial uses
2. Investment
3. Strategic reserve requirements of central banks of various countries
In terms of investment demand, the gold ETF pushed the gold price up 7 times after it was passed 20 years ago. The reason is that before the ETF, gold investment only had one channel, physical gold, which involved insurance, transportation and storage requirements for many people. The threshold is too high. Gold ETF, a "paper gold" that does not require storage and can be traded like stocks, is undoubtedly a revolutionary existence, greatly enhancing the liquidity and investment convenience of gold.
Looking at BTC from the other side, BTC ETF is obviously not as revolutionary as gold ETF, because the threshold for users to trade this kind of "digital gold" is not high, and ETF is just a step further in terms of compliance, supervision and ideology. The driving force of BTC is unlikely to be as great as that of gold ETF. However, BTC Fi, by giving Bitcoin the time + space financial allocation attributes, makes BTC more "useful" than before, which is more like the jewelry and industrial use of gold. Compared with Bitcoin ETF, BTC FIi may be more helpful in increasing the value and price of BTC in the long run.
2.1. Time: Improving the Interest-Bearing Properties of Bitcoin2.1. Time: Improving the Interest-Bearing Properties of Bitcoin
2.1.1. Babylon opens the time dimension for Bitcoin
The most indispensable thing about the concept of BTC FI should be Babylon, because with Babylon, the concept of "BTC earning interest on the chain" in the true sense comes into being.
As we all know, the POW used by BTC does not have the concept of inflation/interest, so it is impossible to have a relatively certain (adjusted according to the pledge ratio curve) 3-4% increase in income every year like ETH's POS. As Eigenlayer brought the concept of Restaking into the circle, people suddenly realized that if Restaking is icing on the cake for ETH, then for BTC, it is undoubtedly a timely help.
Of course, you can’t just throw BTC to Eigenlayer, these are two different chains. It is technically impossible to completely replicate Eigenlayer on the BTC chain, after all, BTC doesn’t even have a Turing-complete smart contract. Is it possible to move Eigenlayer's core Restaking for POS Security to BTC? This is what Babylon does.
In short, Babylon uses existing Bitcoin scripts and advanced cryptography to simulate Bitcoin-based Staking and Slashing functions, and the whole process does not involve the common security and decryption functions of EVM ecosystems such as bridges or third-party wraps. Because Bitcoin scripts allow the concept of "time lock", which allows users to customize a lock period during which the Bitcoin (UTXO) cannot be transferred, its function is similar to that of POS chains. Babylon uses this feature to ensure that the BTC involved in staking will not leave the BTC chain, but will be locked in a Bitcoin "Staking address" through time lock technology.
Source: Babylon
BTC is locked by the script. If something goes wrong and a slashing mechanism is needed, how does Babylon do it without a contract?
This is about the advanced cryptography technology used by Babylon - EOTS (Extractable One-Time Signatures). When the signer uses the same private key to sign two messages at the same time, the private key will be automatically exposed. This is equivalent to The most common security violation assumption on the POS chain is "at the same block height, the validator signs two different blocks." By exposing the private key when committing evil, Babylon has achieved "automatic slashing" in disguise. A set of mechanisms.
Through the "Restaking" technology, Babylon is mainly used to improve the security of the POS chain. However, if you want to implement the complete Eigenlayer technology stack (such as functions similar to EigenDA), or a more complex slashing mechanism, you still need Babylon. Completed in collaboration with other projects within the ecosystem.
Babylon adopts an innovative approach: locking Bitcoin through self-custody, combined with the staking and forfeiture functions on the chain, for the first time provides BTC holders with a trustless way to obtain income. If someone wants to earn income, they usually can only rely on financial management platforms such as centralized exchanges (CEX), or convert BTC to W BTC to participate in Ethereum's DeFi ecosystem. These methods are inseparable from the centralized security. Trust assumptions.
Therefore, although Babylon is benchmarked against Ethereum's Eigenlayer Restaking ecosystem, due to the natural lack of BTC's Staking mechanism, we are more inclined to regard Babylon as an important part of building the BTC Staking ecosystem.
2.1.2 Solv Protocol, the Bitcoin Interest-earning Portal
When it comes to the staking niche, we have to mention another project - Solv Protocol. Solv is not a direct competitor of Babylon, but by introducing the technical architecture of the staking abstraction layer, it is able to create a variety of LST (liquidity staking tokens) ) products. The sources of income for these LSTs can be very diverse, for example:
Staking income from staking protocols (such as Babylon);
Revenue from POS network nodes (such as CoreDAO, Stacks);
Or income from trading strategies (such as Ethena).
Currently, Solv has launched a variety of successful LST products, including Solv BTC. BBN (Babylon LST), Solv BTC. ENA (Ethena LST) and Solv BTC. CORE (CoreDAO LST), all of which have performed well. According to DeFiLlama data, the current Solv BTC's TVL (total locked volume) on the Bitcoin mainnet has surpassed the Lightning Network and ranked first.
Source: Solv
The interest-bearing methods include but are not limited to the following:
SolvBTC - can be minted on 6 chains, fully circulated on 10 chains, and connected to more than 20 Defi protocols to earn income
Solv BTC . BBN - BTC can be used to enter Babylon to earn income through Solv
Solv BTC . ENA - BTC can be transferred to Ethena through Solv to earn income
Solv BTC . CORE - BTC can enter Core through Solv to earn income
· SolvBTC, JUPITER and other subsequent net value growth-type yield-bearing assets
Source: Solv
Therefore, rather than viewing Solv as a BTC Staking protocol, we prefer to describe it as “BTC Yu’ebao”. Solv provides a variety of income sources, whether it is staking income, node income, or trading strategy income, allowing BTC holders have more flexible ways to earn income.
Therefore, rather than viewing Solv as a BTC Staking protocol, we prefer to describe it as “BTC Yu’ebao”. Solv provides a variety of income sources, whether it is staking income, node income, or trading strategy income, allowing BTC holders have more flexible ways to earn income.
What is more noteworthy is that Solv currently has the most impressive data performance among all BTCFI protocols:
1. Wide coverage: Solv is currently circulated on 10 blockchains and connected to more than 20 DeFi protocols.
2. Innovative cooperation: For example, the cooperation between Solv and Pendle provides Bitcoin users with a fixed income APY of nearly 10%, and LP market-making income can reach 40%.
3. Wide acceptance: The number of SolvBTC holders has exceeded 200,000, and the total market value exceeds US$1 billion.
4. Strong reserves: SolvBTC’s Bitcoin reserves have exceeded 20,000.
Based on these achievements, Solv Protocol has achieved a phased leading position in the BTC FI field and continues to iterate its products. The next focus will be on launching more types of LST products. It is reported that Solv plans to launch a product called As a new product of Solv BTC.JUP, the market-making income of Perp DEX is introduced into the BTC LST product, further expanding the boundaries of BTC Staking.
At the same time, Babylon provides a Trustless mechanism that enables BTC holders to obtain Staking-like returns. This also paves the way for projects to compete for niches similar to Lido, that is, to create LST liquid assets similar to stETH. Babylon has achieved the security lock-up of Bitcoin and provided basic income. However, to further release the liquidity of BTC and increase income, the BTC locked in Babylon can participate in the DeFi of EVM and non-EVM ecosystems in the form of warrant tokens. In applications, making full use of the unique composability of blockchain will become the key to LST's niche construction. Solv BTC. BBN is a successful case.
In addition to Solv, there are other heavyweight projects in the market that are also competing for the LST ecological niche, such as Lombard and Lorenzo. These LST projects are generally consistent in their technical directions such as releasing BTC liquidity and participating in DeFi income.
Solv's core advantage is that it can provide Bitcoin users with a richer range of income types, including re-staking income, verification node income, and trading strategy income. With this diverse income model, Solv provides Bitcoin users with a more flexible and diverse choices.
2.1.3 BTCHub in the Move ecosystem: Echo protocol
Echo is the BTC Fi center of the Move ecosystem, providing a one-stop financial solution for Bitcoin in the Move ecosystem, allowing BTC to interoperate seamlessly with the Move ecosystem.
Echo is the first to introduce BTC liquidity pledge, re-pledge and yield infrastructure into the Move ecosystem, introducing a new liquid asset class to the Move ecosystem. By working with the Bitcoin ecosystem, Echo seamlessly integrates all native BTC 2 Layer solution and support for various BTC liquidity staking tokens make Echo a key entry point for attracting new capital into the Move DeFi ecosystem.
Echo’s flagship product, a BTC, is a cross-chain liquid Bitcoin token backed 1:1 by BTC. This innovation facilitates Bitcoin’s DeFi interoperability, enabling users to leverage their assets in ecosystems such as Aptos. Get real returns, and a BTC will be fully supported across the Aptos DeFi network.
Echo is bringing re-staking to the Move ecosystem for the first time through its innovative product, eAPT. This will enable re-staking to secure the Move VM chain or any project developing their own blockchain, allowing them to rely on Aptos for security and verification.
Therefore, Echo will become the BTChub of the Move ecosystem, providing the Move ecosystem with 4 Bitcoin-focused products:
Bridge: BTC L2 assets can be bridged to Echo, making the Move ecosystem interoperable with BTC L2;
Liquidity Staking: Stake BTC on Echo to earn Echo Points;
· Re-staking: Synthesize the Move ecosystem’s LRT token aBTC, making Bitcoin interoperable in the Move ecosystem and obtaining multi-layered benefits;
Lending: Deposit APT, uBTC and aBTC, provide pledge lending services, and share the profits of the lending business with users to obtain nearly 10% of APT income.
2.1.4 Lombard: "Semi-centralization may be the optimal solution"
The core feature of Lombard is the balance between security and flexibility of its L BTC assets. Generally speaking, although absolute decentralization can bring higher security, it usually makes a greater sacrifice in flexibility. For example, the huge gap between the market value of Ren BTC and T BTC and W BTC is a typical example of this trade-off. Although fully centralized management can provide the greatest flexibility, it requires trust-based assumptions and potential Security risks, its development ceiling is relatively limited. This is one of the reasons why the market value of W BTC is always relatively low in the total market value of BTC.
Lombard has cleverly found a balance between security and flexibility. While maintaining relative security, it has released the flexibility of its L BTC as much as possible, thus opening up new development space for BTC liquid assets. .
Source: Lombard
Compared with the traditional multi-signature style Mint/Burn model, Lombard introduces the more secure "Consortium Security Alliance" concept. This concept first appeared in the early consortium chain and is closely related to many current DeFi projects, especially cross-chain bridges. Unlike the multi-signature nodes controlled by the project owner, Lombard's security alliance is composed of highly reputable nodes, including project owners, well-known institutions, market makers, investors, and exchanges. The nodes reach consensus through the Raft algorithm. .
Although this mechanism cannot be completely called "100% decentralized", its security is much higher than the traditional multi-signature model, while retaining the full-chain circulation, flexible casting and redemption of multi-signature 2/3 data notarization. In addition, complete decentralization does not necessarily mean absolute security. For example, whether it is POW or POS, its attack cost and security model can be calculated based on mechanism design and market value. In addition to high-market value blockchains such as BTC, ETH, and Solana, In terms of security, most decentralized projects may not be as good as Lombard's "Security Alliance" model. Through this design, Lombard achieves a balance between security and flexibility, providing users with a reliable and efficient BTC liquidity solution.
In addition to the design of the security alliance, Lombard also uses CubeSigner, a hardware-backed non-custodial key management platform. It has strict security measures in all aspects, including preventing key theft, mitigating breaches, hackers and insider threats, and preventing key abuse. The policy restrictions add another lock to the security of LBTC.
The $16 million seed round led by Polychain undoubtedly announced the richness of Lombard's resources in the circle, which will be of great help to the node reputation of its Consortium and the subsequent docking of Defi and other public chain projects. It will definitely be one of the strongest competitors of WBTC.
Source: Lombard
2.1.5 Lorenzo with his own pendle
Compared with Lombard's unique advantage in asset security, Lorenzo, as the Babylon LST entrance invested by Binance, also shows extremely attractive characteristics.
In the current round of DeFi innovation, most traditional DEX and lending protocols still continue the inertia of DeFi Summer, or are "living off the old capital". After the collapse of Terra, the stablecoin track, except for Ethena, which can be barely regarded as a relative innovation, the rest of the innovations seem to be The only track worth paying attention to is LST (liquidity pledge token) and LRT (liquidity re-pledge token), which benefited from the LST effect brought about by Ethereum's transition to POS and the Eigenlayer Restaking effect. The leverage effect of stimulation.
In this field, the biggest winner is undoubtedly Pendle. It is no exaggeration to say that the vast majority of interest-bearing assets in the Ethereum ecosystem eventually flow to Pendle. The design of separating principal and interest brings a new way of playing to DeFi: Users who wish to control risks can obtain a complete hedging mechanism through Pendle, while aggressive players who pursue higher returns can increase their returns through disguised leverage.
Lorenzo obviously hopes to integrate all the best in this field. After Babylon launched the staking function, its LST product has the same principal and interest separation operability as LRT assets such as stETH, Renzo, and EtherFI. Lorenzo's LST product can be split into two There are two tokens: the liquidity principal token LPT (st BTC) and the yield accumulation token YAT. Both tokens are freely transferable and tradable, and holders can use them to obtain returns or withdraw pledged BTC. The design not only improves the flexibility of assets, but also provides users with more investment options.
Source: Lorenzo
Through this design, Lorenzo unlocks more possibilities for participating in DeFi based on Babylon staking BTC. For example, LPT and YAT can establish trading pairs with ETH, BNB and USD stablecoins respectively, providing arbitrage and investment opportunities for different types of investors. In addition, Lorenzo can also support lending protocols around LPT and YAT, as well as structured Bitcoin income products (such as BTC fixed-income financial products). In other words, Lorenzo supports most of the current innovative gameplay on Pendle. Can learn from and implement.
As one of the few Bitcoin ecosystem projects that Binance has personally bet on, and the only LST project with "Pendle" attributes in the current BTC FI track, Lorenzo is undoubtedly worthy of the market's attention. This project not only expands the liquidity of BTC, but also Boundaries also introduces more flexible income management and investment methods to the DeFi ecosystem, providing investors with more diversified choices.
2.1.6 ChainCorn for BTCFi
Corn is the first Ethereum L2 project that uses Bitcoin as Gas, and aims to provide users with a variety of financial services, including lending, liquidity mining, and asset management. The chain is completely centered around the financial needs of Bitcoin, and its unique The key point is that it maps Bitcoin (BTC) to the network's native Gas token BTC N, allowing Bitcoin to be more widely used in the Ethereum ecosystem.
Core Features:
BTCN Tokens:
Corn introduced the BTCN token as the Gas fee for transactions on the Corn network. BTCN can be considered as a Bitcoin mapping in ERC-20 format, similar to wBTC, but different in technical implementation. Benefits include lower transaction costs, more efficient use of Bitcoin, and creating new value capture opportunities for Bitcoin.
Ecosystem "Crop Circle":
Corn proposed an ecosystem concept called "Crop Circle", which aims to recycle the value of Bitcoin in a variety of ways to generate additional income. Users can stake BTCN to obtain network income, participate in liquidity mining, lending, development Derivatives market based on BTCN, etc.
Token economic model:
Introducing $CORN and $popCORN. $CORN is the base token that users can obtain by staking BTCN or participating in liquidity provision; $popCORN is a governance token obtained by locking $CORN, which allows users to participate in governance and receive additional rewards. This model encourages users to hold tokens for a long time and enhances community participation through dynamic weights and lock-up mechanisms.
By bringing Bitcoin into the Ethereum ecosystem, Corn provides an innovative L2 solution designed to create more yield opportunities for Bitcoin holders.
2.2. Space: Improving Bitcoin’s Liquidity
2.2.1 Hosting platforms Antalpha, Cobo, Sinohope
Although decentralization is absolutely "politically correct" in the industry, if we exclude the black swan event of FTX's collapse, the leading centralized trading/custody/financial service platforms in the industry are actually It performs much better than most decentralized platforms. The losses caused by hacking of non-custodial wallets/DeFi protocols each year are an order of magnitude higher than those of centralized custodial platforms.
Therefore, the leading Bitcoin custody and financial service platforms also play an indispensable role in releasing Bitcoin liquidity and giving Bitcoin the function of allocation across time or space.
Take the following three examples:
Antalpha - has the largest Bitcoin community in the circle, is a strategic partner of Bitmain, and its ecological product Antalpha Prime is developed around the BTC ecosystem, providing institutions with hardware energy financing services in BTC production, such as mining machine financing, electricity financing, and BTC custody. Store MPC plans and more.
Cobo - I think everyone in the industry knows the name of Shenyu. Cobo custodial wallet was co-founded by Shenyu and Dr. Jiang Changhao. So far, it has more than 100 million addresses and a transfer amount of 200 billion US dollars. Today, Cobo has multiple solutions including MPC and smart contract wallets, and is a one-stop wallet provider trusted by many institutions and users.
Sinohope - A licensed listed company in Hong Kong, in addition to wallet solutions, it also provides a one-stop full-stack blockchain solution, including L1/L2 browsers, Faucets, basic Dex, lending, NFT Market Place and other comprehensive services .
Several platforms have a large number of real B-side users, and their security level has always been online, so in fact many Dei protocols have cooperated with the above platforms. The concepts of centralization and decentralization are not so clear here. Everything starts from security and trust. From this perspective, we need to find a relatively stable balance between technology and commercialization.
2.2.2 Avalon, a new lending star
Avalon is a decentralized lending platform that focuses on providing liquidity to Bitcoin holders. Users can use Bitcoin as collateral for lending, and Avalon uses smart contracts to automate the lending process. Avalon offers fixed lending rates as low as 8 %, making it attractive in the competitive DeFi market.
Focus on Bitcoin: Avalon has launched BTC layer2 including Bitlayer, Merlin, Core, and BoB, focusing on providing lending services to Bitcoin holders and meeting the liquidity needs of Bitcoin users.
Collateral management: Avalon adopts an over-collateralization mechanism, where users need to provide Bitcoin exceeding the loan amount as collateral to reduce the risk of the platform.
Data performance: The platform has currently exceeded 300M TVL and is currently actively cooperating with a number of BTCFi projects such as SolvBTC, Lorenzo, SwellBTC, etc. to expand its user base.
2.2.3 CeDeFi Pioneer Bouncebit
BounceBit is an innovative blockchain platform that focuses on empowering Bitcoin assets. Through the integration of centralized finance (CeFi) and decentralized finance (DeFi), as well as the strategy of restaking, it transforms Bitcoin from a Transform from a passive asset to an active participant in the crypto ecosystem.
BounceBit Features:
BTC Re-staking: BounceBit allows users to deposit Bitcoin into the protocol and earn additional returns through re-staking. This increases the liquidity and profit opportunities of assets. Users can deposit multiple types of on-chain Bitcoin assets into BounceBit, including native BTC, WBTC, renBTC, etc.
Dual-currency PoS consensus mechanism: BounceBit uses a hybrid PoS mechanism of BTC+BB (BounceBit native token) for verification. Validators accept both BBTC (Bitcoin token issued by BounceBit) and BB tokens as collateral, which enhances the network's flexibility and security while expanding the participant base.
BounceClub: BounceBit provides the BounceClub tool, which allows users without programming knowledge to create their own DeFi products.
Liquidity Custody: BounceBit introduces the concept of liquidity custody to keep pledged assets liquid and provide more income opportunities.
This is different from the traditional lock-up model and brings greater flexibility to users.
BounceBit provides more profit opportunities for Bitcoin holders through its innovative re-staking model and dual-currency PoS consensus, and promotes the application of Bitcoin in the DeFi ecosystem. Its liquidity custody and BounceClub tools also make DeFi Development becomes easier and more user-friendly.
2.2.4 Yala, the rising star of stablecoin
Yala is a stablecoin and liquidity protocol on BTC. Through its self-built modular infrastructure, Yala allows its stablecoin $YU to flow freely and securely between various ecosystems, releasing BTC liquidity and bringing Bring huge financial vitality.
Core products include:
Overcollateralized stablecoin $YU: This stablecoin is generated by overcollateralizing Bitcoin. The infrastructure is not only based on the Bitcoin native protocol, but can also be freely and securely deployed in EVM and other ecosystems.
MetaMint: A core component of $YU that enables users to easily mint $YU in various ecosystems using native Bitcoin, injecting Bitcoin liquidity into these ecosystems.
Insurance derivatives: Provide comprehensive insurance solutions within the DeFi ecosystem to create arbitrage opportunities for users.
Yala's series of infrastructure and products serve its vision - to introduce Bitcoin liquidity into various crypto ecosystems. Through $YU, Bitcoin holders can earn additional income in various cross-chain DeFi protocols while maintaining The security and stability of the Bitcoin mainnet; through the governance token $YALA, Yala achieves decentralized governance of various products and ecosystems.
2.2.5 The flourishing Wrapped BTC
WBTC
Wrapped Bitcoin (W BTC) is an ERC-20 token that connects Bitcoin (BTC) to the Ethereum (ETH) blockchain. Each W BTC is backed by 1 Bitcoin, ensuring its value is consistent with the The launch of W BTC enables Bitcoin holders to use their assets in the Ethereum ecosystem and participate in decentralized finance (DeFi) applications. This greatly improves the liquidity and Usage scenarios.
WBTC has always been the leader of Wrapped BTC, but on August 9, BitGo, the WBTC custodian, officially announced that its joint venture with BiT Global plans to migrate WBTC’s BTC management address to the joint venture multi-signature. It was just an ordinary business cooperation, but it caused a stir because Sun Yuchen was the actual controller behind BiT Global. MakerDAO immediately launched a proposal to "reduce the size of W BTC collateral", requiring the WBC-related collateral in the core vault to be reduced to 0. The concerns about W BTC also provide new opportunities for the new type of Wrapped BTC.
BTCB
BTCB is a Bitcoin token on Binance Smart Chain that allows users to trade and use it on BSC. BTCB is designed to increase Bitcoin liquidity while taking advantage of BSC's low transaction fees and fast confirmation times.
Binance is actively expanding the functionality of BTCB and plans to launch more decentralized finance (DeFi) products related to BTCB on BSC. These new products will include lending, derivatives trading, etc., aiming to enhance the use value and liquidity of BTCB. BTCB’s application on BSC has been supported by multiple DeFi protocols, including Venus, Radiant, Kinza, Solv, Karak, pStake, and Avalon. These protocols allow users to use BTCB as collateral for lending, liquidity mining, and stablecoins. Coin minting and other operations.
Binance hopes to enhance BTCB's market position through these measures and promote the wider application of Bitcoin in the BSC ecosystem. The introduction of BTCB not only provides new usage scenarios for Bitcoin holders, but also injects new value into BSC's DeFi ecosystem. More liquidity.
dlcBTC (now iBTC) @ibtcnetwork
iBTC is a Bitcoin asset based on discrete logarithmic contracts (DLC) technology, which aims to provide users with a safe and privacy-preserving way to create and execute complex financial contracts. Its core feature is complete decentralization, and users When using dlcBTC, there is no need to rely on third-party custody or multi-signature mechanisms, ensuring that users have full control over their assets, thereby reducing the risks brought by centralization. In addition, the security of iBTC benefits from its unique self-packaging mechanism. The Bitcoin is always under its control, and only the original depositor can withdraw the funds, which effectively prevents the risk of assets being stolen or confiscated by the government.
iBTC also uses zero-knowledge proof technology to enhance the privacy and security of transactions. Users can perform complex financial transactions in contracts without having to disclose the specific details of the transaction, thereby protecting personal information. Through this innovative mechanism, iBTC enables Bitcoin holders are able to participate in decentralized finance (DeFi) activities while maintaining ownership and control of their assets.
i BTC is the most decentralized solution among all Wrapped BTC, which can solve the problem of opaque centralized custody during the commercialization process.
In addition to the above Wrapped BTC solution, there are also various BTC solutions such as F BTC, M-BTC, Solv BTC, etc.
3. Conclusion:
It has been 15 years since the birth of Bitcoin. Bitcoin is no longer just a digital gold, but a $2 trillion financial system. Batch after batch of builders are expanding the boundaries of Bitcoin and extending it into a new Track - BTCFi. We have the following judgments:
1. The essence of finance is the allocation of assets across time and space. Typical cross-space allocations include lending, payment, and trading. Typical cross-time allocations include pledges, interest, and options. As the market value of Bitcoin reaches 2 trillion US dollars, The demand for cross-temporal allocation of Bitcoin has gradually emerged, forming the BTCFi scenario.
2. Bitcoin is about to become the national reserve of the United States, and will further become the allocation asset of the country and institutions, which will form a large number of institutional-level financial demands around Bitcoin, such as lending, staking, etc., and generate institutional-level BTCFi projects;
3. The improvement of the underlying infrastructure such as Bitcoin asset issuance, second-layer network, and pledge also paves the way for the BTCFi scenario;
4. The TVL of the Bitcoin network is about $2 billion (including L2 and sidechains), accounting for only 0.1% of the total market value of Bitcoin, while Ethereum is 15.7% and Solana is 5.6%. We believe that BTCFi still has ten times Room for growth.
5. BTC Fi focuses on two major directions of Bitcoin: first, improving the interest-bearing properties of Bitcoin. Representative projects include Babylon, Solv, Echo, Lombard, Lorenzo, Corn, etc.; second, improving the liquidity of Bitcoin. Representative projects include Wrapped BTC, Yala, Avalon, etc.
6. With the development of BTCFi, Bitcoin will change from a passive asset to an active asset; from a non-interest-bearing asset to an interest-bearing asset.
7. Comparing the history of gold, the launch of gold ETFs 20 years ago pushed the gold price up 7 times. Its essence is to transform gold from a passive asset into a financial asset, and more financial businesses can be carried out based on gold ETFs. BTCFi also gives Bitcoin the financial attributes of time and space, improving Bitcoin's financial scenarios and value capture. In the long run, it will have a huge impact on the value and price of Bitcoin.
