Bitcoin 2 trillion US dollars in conspiracy: expanding the boundaries of time and space

Author: @BMANLead, @Wuhuoqiu, @Loki_Zeng, @Kristian_cy

The big event in Crypto in 2024, as the price of Bitcoin is infinitely close to the $100,000 mark, the boots landed.Bitcoin halving and ETF passed, Trump is about to use Bitcoin as a strategic reserve. As Bitcoin penetrates into the traditional financial deep waters, it also makes us rethink a question:

What is finance?

The essence of finance is the cross-space and time allocation of assets.

Typical cross-space allocation: borrowing, payment, and transaction.

Typical cross-time allocation: pledge, interest, options.

In the past, Bitcoin was only stored in the wallet and tended to be still in both time and space.More than 65% of Bitcoin have not been moved for more than a year, and “BTC should only be kept in the wallet” is like a stamp of thought.

So BTCFi has not been favored for a long time.

Although the starting point of Bitcoin was to hedge against the traditional financial system, and as early as 2010, Satoshi Nakamoto wrote on the forum that Bitcoin would support various possible scenario types he designed many years ago, including multiple DeFi scenarios,As Bitcoin positioning gradually approaches digital gold, exploration of Bitcoin DeFi or financial scenarios has gradually stopped.

On another timeline, Rune Christensen announced MakerDAO’s vision in March 2013, and then officially launched the first DEX on ETH in 2016.In 2017, Stani Kulechov, who was also a student, founded AAVE in Switzerland. In August 2018, Bancor and Uniswap, which everyone is familiar with, were launched respectively, opening up the magnificent Defi Summer.This also declares that the future possibilities of DeFi are temporarily handed over to ETH at that time node.

But when the timeline of Bitcoin advances to 2024, Bitcoin returns to the center of the crypto world, the price of Bitcoin reaches 99,759 US dollars, and its market value exceeds 2 trillion yuan. BTCFi has become a 2 trillion yuan.With the US dollar’s open conspiracy, people’s innovation and discussion about BTCFi have quietly emerged…

1. Bitcoin’s $2 trillion conspiracy: BTCFi

Although Ethereum has ushered in the era of Defi, for Bitcoin, BTCFi will be late, but will never be absent.Ethereum, as a Defi experimental field, gives Bitcoin a lot of reference. Today’s Bitcoin is just like Europe in the fifteenth century, at the dawn of the New World.

1.1 BTC goes from passive assets to active assets

The continuous improvement of Bitcoin holders’ Fomo attributes and active management motivations will drive Bitcoin from passive assets to active assets, providing a soil for the development of BTCFi.

Institutional holdings continue to increase.According to feixiaohao data, there are currently 47 companies holding $141.342 billion in BTC, accounting for 7.7% of the total BTC circulation.This trend continues to accelerate after the passage of BTC ETFs. From the beginning of the year to the present, BTC spot ETH has brought about a net inflow of nearly 17,000 BTC. Compared with early miners and coin holders, institutions are more sensitive to fund utilization efficiency and return rate., not only has a higher tendency to participate, but also has a high chance of becoming an active promoter of BTCfi.

The rise of inscriptions and the BTC ecology has made the composition of the BTC community even more complex.Traditional BTC holders pay more attention to security and place higher priority positions, and new members have higher interest in new narratives and new assets.

ETH DeFi has gradually embarked on its own path of sustainable development.For example, Uniswap/Curve/AAVE/MakerDAO/Ethena has found ways to rely on internal or external income to achieve economic cycles without relying on token incentives.

Under the influence of multiple factors, the Bitcoin community’s interest in scalability in BTCFi has been significantly improved, and the forum discussions have become more active. The [Proposal for Disabling Inscriptions] proposed by Bitcoin core developer Luke Dashjr last year was not supported.It was officially closed in January this year.

1.2 The improvement of infrastructure objectively paves the way

Technical objective limitations are also the reason why Bitcoin has long been regarded as only a store of value tool, and this is gradually changing.The route battle from 2010 to 2017 ended with BTC forking to BTC and BCH, but the scalability improvement did not stop. After the two upgrades of SegWit and Taproot paved the way for asset issuance, the inscription began to appear inIn people’s careers.The widespread asset creation has brought about objective demands for transactions and financialization. With the emergence of technologies such as Ordinal, Side-chain, L2, OP_CAT, BitVM, etc., the construction of BTCFi scenarios has become truly feasible.

1.3 Huge demand drives development

In terms of trading volume, asset diversification has driven the increase in trading frequency.According to The Block data, the average daily transfer of BTC has exceeded 500k/day in the past year, with RUNES and BRC-20 already dominating the market.Next, the demand for transactions, borrowing, credit derives, and interest generation also became smooth. BTCFi can make Bitcoin a productive asset, allowing BTC to earn profits from the assets it holds.

Source: The Block

In terms of TVL, BTC has extremely high potential as a cryptocurrency with an absolute advantage in market value.Currently, the total locked value (TVL) of the BTC network is approximately US$1.6 billion (including L2 and side chains), accounting for only 0.14% of the total market value of Bitcoin.In contrast, the TVL and market capitalization ratio of other mainstream public chains is much higher, with ETH of 15.7%, Solana and BNBChain being 5.6% and 6.8% respectively. According to the average of the three, BTCFi still has 65 times the growth space..

The TVL-to-market ratio for mainstream public chains with smart contract capabilities is much higher: Ethereum is 14%, Solana is 6%, and Ton is about 3%.Even at 1% ratio, BTCFi has the potential to grow tenfold.

Source: Defilama, Coinmarketcap

2. BTCFi First Year

So in 2024, BTC has also ushered in the first year of BTCFi as it soared to 2 trillion yuan.

Bitcoin plus “finance” instantly opened up the possibility of 2 trillion yuan, expanding the boundaries between Bitcoin’s time and space.

As we said at the forefront, the essence of finance is the cross-space and time allocation of assets.

Then Bitcoin Finance BTCFi is a disparity between Bitcoin across space and time.

Cross-time allocation: Improve the interest-generating attributes of Bitcoin, such as staking, time lock, interest, options, etc., such as:

• @babylonlabs_io to open the time dimension for Bitcoin

• Bitcoin Income Entry @SolvProtocol

• @Lombard_Finance of “Semi-centralization may be the optimal solution”

• @LorenzoProtocol with “Pendle”

• A chain created for BTCFi @use_corn

Cross-space allocation: Improve Bitcoin liquidity, such as lending, custody, synthetic assets, etc., such as:

• Hosting platforms @AntalphaGlobal, @Cobo_Global, @SinohopeGroup

• Loan Rising Star @avalonfinance_

• CeDeFi pioneer @bounce_bit

• Wrapped BTC with a Blooming Flowers

• Stablecoin Rising Star @yalaorg

Financial applications not only return to the careers of BTC ecological participants, but also create new possibilities. BTCFi innovation projects have begun to be born in a burst, and a Bitcoin financial map has been formed:

Source: ABCDE Capital

Whether it is making “digital gold” live-generating attributes or making it more liquid, the core functions of these two BTCFi are in line with BTC’s current main narrative.Whether the market is bull or bear, as long as BTC remains unchanged, as long as BTC is still the most recognized digital gold in the circle, the BTCFi track is unlikely, or “no need” to falsify.

Take the corresponding gold as an example. The value of gold usually has three major support:

• Jewelry and industrial use

• invest

• Strategic reserve demand for central banks in various countries

In terms of investment demand, gold ETFs pushed gold prices to soar 7 times after they passed 20 years ago. The reason is that before ETFs, gold investment only had one channel for physical gold, and the insurance, transportation and storage requirements involved are for many people.The threshold is too high. Gold ETF, which does not require storage and can be traded like stocks, is undoubtedly a transformational existence, greatly enhancing the liquidity and investment convenience of gold.

On the other hand, BTC ETFs are obviously not as transformative as gold ETFs, because the threshold for users to trade such “digital gold” is not high, and ETFs are just going further in the compliance, regulatory and ideological levels.Therefore, the driving effect on BTC prices is likely to be less than that of gold ETFs.But BTCFi makes BTC more “useful” than before by giving Bitcoin time + space financial allocation attributes, and corresponds to jewelry and industrial uses more like gold.Therefore, compared with Bitcoin ETFs, BTCFIi may be more helpful to the increase in the value and price of BTC in the long run.

2.1. Time: Improve the interest-generating attributes of Bitcoin Bitcoin 2.1. Time: Improve the interest-generating attributes of Bitcoin Bitcoin

2.1.1. Open the time dimension of the Babylon for Bitcoin

The most inescapable concept of BTCFI is Babylon, because with Babylon, the concept of “on-chain live-in BTC” is truly present.

As we all know, the POW used by BTC does not have the concept of inflation/interest income, so it is impossible to have a relatively certain (adjusted according to the pledge ratio curve) annually, like ETH’s POS.However, as Eigenlayer brought the concept of Restaking into the circle, people suddenly realized that if Restaking is the icing on the cake for ETH, then for BTC, it is undoubtedly a timely help.

Of course, you can’t throw BTC directly to Eigenlayer, these are simply two different chains.It is technically impossible to completely replicate an Eigenlayer on the BTC chain, after all, BTC does not even have a complete Turing smart contract.So is it possible to move Eigenlayer’s most core Restaking for POS Security to BTC to implement it?That’s what Babylon does.

Simply put, Babylon uses existing Bitcoin scripts and advanced cryptography to simulate Bitcoin-based staking and Slashing functions, and the entire process does not involve the common security and development of EVM ecosystems such as bridges or third-party wraps.A noun that creates a threat.Because Bitcoin scripts allow the concept of “time lock”, that is, users can customize a lock period, during which the Bitcoin (UTXO) cannot be transferred, its function is similar to the pledge of the POS chainNow.Babylon uses this function to make the BTC participating in staking not leave the BTC chain, but is locked on a “Staking address” of Bitcoin through time lock technology.

Source: Babylon

BTC is locked through scripts, so assuming something goes wrong requires a Slashing mechanism, how does Babylon do it without a contract?

This has to mention the advanced cryptography technology used by Babylon – EOTS (Extractable One-Time Signatures). When the signer signs two information at the same time with the same private key, the private key will be automatically exposed.This is equivalent to the most common security breach assumption on the POS chain – “At the same block height, the validator signs two different blocks.”By exposing the private key by doing evil, Babylon implements a set of mechanisms of “automatic slashing” in disguise.

Through the “Restaking” technology, Babylon is mainly used to improve the security of POS chains.However, if you want to implement a complete Eigenlayer technology stack (such as features like EigenDA), or a more complex slashing mechanism, this also requires other projects within the Babylon ecosystem to be completed in a coordinated manner.

Babylon adopts an innovative approach: self-custodial locking of Bitcoin, combined with on-chain staking and confiscation functions, provides BTC holders with a trustless way to obtain profits for the first time.Before this, if BTC holders want to earn profits, they usually could only rely on financial management platforms such as centralized exchanges (CEX), or convert BTC to WBTC to participate in Ethereum’s DeFi ecosystem.All of these methods are inseparable from the assumption of trust in centralized security.

Therefore, although Babylon is targeting Ethereum’s Eigenlayer Restaking ecosystem, because BTC naturally lacks the staking mechanism, we prefer to regard Babylon as an important part of building the BTC staking ecosystem.

2.1.2 Bitcoin Income Generation Entrance Solv Protocol

Speaking of the staking niche, we have to mention another project – Solv Protocol.Solv is not a direct competitor to Babylon, but by introducing the technical architecture of staking abstraction layer, it can create a variety of LST (liquidable staking tokens) products.The sources of income for these LSTs can be very diverse, such as:

• pledge proceeds from pledge agreements (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 SolvBTC.BBN (Babylon LST), SolvBTC.ENA (Ethena LST) and SolvBTC.CORE (CoreDAO LST), all of which have performed well.According to DeFiLlama data, SolvBTC’s current TVL (total locked volume) has surpassed the Lightning Network on the main Bitcoin network and ranks first.

Source: Solv

Their methods of surviving include but are not limited to the following:

• SolvBTC – Can be cast on 6 chains, fully circulated on 10 chains, and connected to more than 20 Defi protocols to earn profits

• SolvBTC.BBN – BTC can earn money by entering Babylon through Solv

• SolvBTC.ENA – BTC can earn money by entering Ethena through Solv

• SolvBTC.CORE – BTC can earn money by entering Core through Solv

• Resume net value growth-bearing assets such as SolvBTC.JUPITER

Source: Solv

Therefore, instead of seeing Solv as a BTC staking protocol, we prefer to describe it as “BTC Yu’ebao”.Solv provides a diverse source of income, whether it is pledge income, node income, or trading strategy income, allowing BTC holders to have more flexible income methods.

What is important is that Solv currently shows the most impressive data performance among all BTCFI protocols:

• Wide coverage: Solv has been circulated on 10 blockchains and has been connected to more than 20 DeFi protocols.

• Innovation collaboration: For example, Solv’s partnership with Pendle provides Bitcoin users with nearly 10% fixed income APY, and LP market-making returns can reach 40%.

• Wide acceptance: SolvBTC has exceeded 200,000 holders, with a total market value of over $1 billion.

• Strong reserves: SolvBTC’s Bitcoin reserves have exceeded 20,000.

Based on these achievements, Solv Protocol has achieved a phased leading position in the field of BTCFI and has continued to iterate its products.The next focus will be on launching more types of LST products.It is reported that Solv plans to join hands with Jupiter to launch a new product called SolvBTC.JUP, introducing the market-making income of Perp DEX into the BTC LST product, further expanding the boundaries of BTC staking.

Meanwhile, Babylon provides a Trustless mechanism that enables BTC holders to earn staking-like gains.This also paves the way for projects to compete for a niche similar to Lido, namely creating LST liquid assets similar to stETH.Although Babylon has implemented secure lockdown of Bitcoin and provides basic returns, if we want to further release BTC liquidity and improve returns, BTC locked on Babylon can participate in the EVM and non-EVM ecosystems in the form of warrant tokens.In DeFi applications.Making full use of the unique composability characteristics of blockchain will become the key to the construction of LST ecological niches, and SolvBTC.BBN is a successful case.

In addition to Solv, there are other heavyweight projects on the market that are also competing for LST niches such as Lombard and Lorenzo.These LST projects are generally consistent in technical directions such as releasing BTC liquidity and participating in DeFi income.

The core advantage of Solv is that it can provide Bitcoin users with a wider variety of revenue types, including re-staking income, verification node income and trading strategy income.With this diverse revenue model, Solv provides Bitcoin users with more flexible and diverse options.

2.1.3 BTCHub of Move Eco: Echo protocol

Echo is the BTCFi hub of the Move ecosystem, providing a one-stop financial solution for the Move ecosystem’s Bitcoin, allowing BTC to seamlessly interoperate with the Move ecosystem.

Echo is the first to introduce BTC liquid staking, re-staking and income infrastructure into the Move ecosystem, introducing new liquid asset classes to the Move ecosystem.Through collaboration with the Bitcoin ecosystem, Echo seamlessly integrates all native BTC2 layer solutions including Babylon and supports a variety of BTC liquid staking tokens, making Echo a key entry point to attract new capital into the Move DeFi ecosystem.

Echo’s flagship product aBTC is a cross-chain liquid Bitcoin token supported by BTC at a 1:1 ratio.This innovation promotes Bitcoin’s DeFi interoperability, enabling users to gain real benefits in ecosystems such as Aptos, and aBTC will be fully supported throughout the Aptos DeFi network.

Echo introduces restaking into the Move ecosystem for the first time with its innovative product eAPT.This will enable restaking to protect the MoveVM chain or any project that develops its own blockchain, allowing them to rely on Aptos for security and verification.

Therefore, Echo will become the BTChub of the Move ecosystem, providing 4 products around Bitcoin for the move ecosystem:

• Bridge: BTC L2’s assets can be bridged to Echo, making the Move ecosystem interoperable with BTC L2;

• Liquidity staking: Pledge BTC on Echo to earn Echo points;

• Re-staking: Synthesize the LRT token aBTC of the Move ecosystem, so that Bitcoin can interoperate in the Move ecosystem and obtain multi-layer superposition benefits;

• Lending: deposit APT, uBTC and aBTC, provide pledged lending services, and share the profits of the lending business to users to obtain nearly 10% APT income.

2.1.4 “Semi-centralization may be the optimal solution” Lombard

The core feature of Lombard is the balance of security and flexibility of its LBTC assets.Generally speaking, although absolute decentralization can bring higher security, it usually makes greater sacrifices in flexibility.For example, the huge gap between RenBTC and TBTC’s market cap and WBTC is a typical example of this trade-off.Although fully centralized management can provide maximum flexibility, its development ceiling is relatively limited due to the need for assumptions based on trust and potential security risks.This is also one of the reasons why WBTC’s market value has always been low in the total market value of BTC.

Lombard cleverly finds a balance between security and flexibility.While maintaining relative security, the flexibility of its LBTC is released as much as possible, thus opening up new development space for BTC liquidity assets.

Source: Lombard

Compared with the traditional multi-signal style Mint/Burn mode, Lombard has introduced the more secure “Consortium Security Alliance” concept.This concept first appeared in early alliance chains. Unlike many current DeFi projects, especially multi-signature nodes controlled by the project party in cross-chain bridge projects, Lombard’s security alliance is composed of highly reputable nodes, including the project party., well-known institutions, market makers, investors and exchanges, etc., and consensus is reached between nodes through the Raft algorithm.

Although this mechanism cannot be completely called “100% decentralization”, its security is much higher than the traditional multi-signature model. At the same time, it retains the full-chain circulation of 2/3 of the data notarization, flexible casting and redemption of 2/3 of the multi-signature data notarizationCharacteristics.Furthermore, complete decentralization does not necessarily equate to 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 capitalization.In addition to high-cap public chains such as BTC, ETH and Solana, most decentralized projects may not be as safe as Lombard’s “Security Alliance” model in terms of security.Through this design, Lombard achieves both security and flexibility, providing users with a trusted and efficient BTC liquidity solution.

In addition to the design of the Security Alliance, Lombard also uses CubeSigner, a hardware-supported unmanaged key management platform.There are strict policy restrictions in preventing key theft, mitigating violations, hacking and internal threats, and preventing key abuse, adding a lock to the security of LBTC.

The $16 million seed round of financing led by Polychain undoubtedly announced Lombard’s richness in the circle, which is of great help to its Consortium’s node credibility and subsequent connections to Defi and other public chain projects.LBTC will inevitably be one of WBTC’s most powerful contenders.

Source: Lombard

2.1.5 Lorenzo with “Pendle”

Compared with Lombard’s unique advantages in asset security, Lorenzo, as the Babylon LST entrance of Binance Investment, also shows extremely attractive features.

In this current round of DeFi innovation, most of the traditional DEX and lending agreements still continue the inertia of DeFi Summer, or are “living old capital”.After the Terra collapsed, except for Ethena, which was barely considered relatively innovative, the rest of the innovation seemed unremarkable.The only tracks worth paying attention to are LST (liquidity staked tokens) and LRT (liquidity restaked tokens), which is due to the LST effect brought about by Ethereum’s transformation to POS and the inspired by Eigenlayer RestakingLeverage effect.

The biggest winner in this track is undoubtedly Pendle.It is no exaggeration to say that most of the income-generating assets in the Ethereum ecosystem eventually flow to Pendle.The design of separation of principal and interest has brought a new way of playing to DeFi: users who want to control risks can obtain a complete hedging mechanism through Pendle, while radical players who pursue higher returns can increase their returns by adding leverage in disguise.

Lorenzo obviously wants to be a big hit in this track.After Babylon turns on the pledge function, its LST products have similar principal and interest separation operational properties as LRT assets such as stETH, Renzo, and EtherFI.Lorenzo’s LST product can be split into two tokens: liquid principal token LPT (stBTC) and earnings accumulation token YAT.Both tokens are freely transferred and traded, and holders can use them to earn or withdraw pledged BTC respectively.This design not only improves asset flexibility, but also provides users with more investment options.

Source: Lorenzo

With 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 is able to support lending protocols around LPT and YAT, as well as structured Bitcoin earnings products (such as BTC’s fixed income wealth management products).In other words, Lorenzo can learn from and implement most of the innovative gameplay on Pendle at present.

As one of the few Bitcoin ecological projects that Binance has personally bet on, and the only LST project in the current BTCFI track with its own “Pendle” attribute, Lorenzo is undoubtedly worthy of the market’s focus.This project not only expands the boundaries of BTC liquidity, but also introduces more flexible income management and investment methods to the DeFi ecosystem, providing investors with more diversified choices.

2.1.6 The chain created for BTCFi Corn

Corn is the first Ethereum L2 case to use Bitcoin as Gas, aiming to provide users with a variety of financial services, including lending, liquidity mining and asset management.The chain is entirely centered around Bitcoin’s financial needs, and its uniqueness is that it maps Bitcoin (BTC) into the network’s native Gas token BTCN, allowing Bitcoin to be used more widely in the Ethereum ecosystem.

Core features:

BTCN Tokens:

Corn introduced BTCN tokens as a Gas fee for trading on the Corn network.BTCN can be considered as a Bitcoin mapping in ERC-20 format, similar to wBTC, but differs in technical implementation.The benefits of using BTCN as Gas include reducing transaction costs, improving Bitcoin usage efficiency, and creating new value capture opportunities for Bitcoin.

Ecosystem “Crop Circle”:

Corn proposed an ecosystem concept called “Crop Circle” that aims to recycle the value of Bitcoin in a variety of ways, resulting in additional benefits.Users can pledge BTCN to obtain network income, participate in liquidity mining, borrowing, and develop derivatives markets based on BTCN.

Token Economic Model:

Introduce $CORN and $popCORN.$CORN as the base token, users can obtain it by pledging BTCN or participating in liquidity provision; $popCORN is the governance token obtained by locking $CORN, giving users the right to participate in governance and receive additional rewards.This model encourages users to hold tokens for a long time and enhances community engagement through dynamic weighting and locking mechanisms.

Corn provides an innovative L2 solution designed to create more profit opportunities for Bitcoin holders by introducing Bitcoin into the Ethereum ecosystem.

2.2. Space: Improve Bitcoin liquidity

2.2.1 Hosting Platforms Antalpha, Cobo, Sinohope

Although decentralization is absolutely “political correctness” in the circle, if the black swan event of FTX burst is removed, the centralized transaction/custody/financial service platform in the circle is actually a top financial service platform in terms of capital security.It performs much better than most decentralized platforms, and the losses caused by hacking of unmanaged wallets/Defi protocols every year exceed the centralized hosting platform by an order of magnitude.

Therefore, the leading Bitcoin custody and financial service platforms also play a role in releasing Bitcoin liquidity and giving Bitcoin a cross-time or space allocation function.

Take the following three examples:

• Antalpha – has the largest Bitcoin community in the circle, Bitmain is a strategic partner of Bitmain, and the ecological product Antalpha Prime focuses on the development of the BTC ecosystem to provide institutions with hardware energy financing services in BTC production, such as mining machine financing, electricity bill financing, BTC custodyStorage MPC solutions and so on.

• Cobo – I think everyone in the circle knows the name of Shenyu, everyone knows it. Cobo custodial wallet was co-founded by Shenyu and Dr. Jiang Changhao. So far, there have been more than 100 million addresses + 200 billion US dollars transfer amount.Today, Cobo has multiple solutions such as MPC, smart contract wallet, and is a one-stop wallet provider trusted by many institutions and users.

• Sinohope – Hong Kong licensed listed companies, in addition to wallet solutions, also provide one-stop full-stack blockchain solutions, including L1/L2 browsers, Faucets, basic Dex, lending, NFT Market Place and other comprehensive services.

Several platforms have a large number of real B-end users, and the security level has always been online, so many Dei protocols have cooperated with the above platforms. Here, the concepts of centralization and decentralization are not so clear, everything is from security and trust.From an angle, we find a relatively stable balance between technology and commercialization.

2.2.2 Loan Rising Star Avalon

Avalon is a decentralized lending platform focused on providing liquidity to Bitcoin holders.Users can borrow Bitcoin as collateral, 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, and users need to provide Bitcoin that exceeds the borrowed amount as collateral to reduce the risk of the platform.

• Data performance: The platform has now exceeded 300M TVL, and is currently actively cooperating with a number of BTCFi projects such as SolvBTC, Lorenzo, SwellBTC, etc. to expand the user base.

2.2.3 CeDeFi Pioneer Bouncebit

BounceBit is an innovative blockchain platform focusing on empowering Bitcoin assets. Through the integration of centralized finance (CeFi) and decentralized finance (DeFi), and restaking (Restaking) strategies, Bitcoin will be transformed from one.A passive asset is transformed into an active participant in the crypto ecosystem.

Features of BounceBit:

• BTC re-staking: BounceBit allows users to deposit Bitcoin into the protocol and obtain additional benefits through re-staking.This increases liquidity and earnings opportunities for assets.Users can deposit various 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.Verifiers accept BBTC (BounceBit-issued Bitcoin Token) and BB tokens as pledges, which enhances the flexibility and security of the network and expands the participant base.

• BounceClub: BounceBit provides BounceClub tools, so that users without a programming foundation can create their own DeFi products.

• Liquidity Custody: BounceBit introduces the concept of liquidity custody to keep the mortgaged assets liquid and provide more profit opportunities.

This is different from the traditional lock-up model and brings greater flexibility to users.

Through the innovative re-staking model and dual-currency PoS consensus, BounceBit provides Bitcoin holders with more profit opportunities and promotes the application of Bitcoin in the DeFi ecosystem.Its liquidity hosting and BounceClub tools also make DeFi development easier and more friendly.

2.2.4 Stablecoin Rising Star Yala

Yala is a stablecoin and liquidity protocol on BTC. Through its own modular infrastructure, Yala allows its stablecoin $YU to flow freely and safely among various ecology, releasing BTC liquidity and providing the entire crypto ecosystem belt.Come with huge financial vitality.

Core products include:

• Over-solidated Stablecoin $YU: This stablecoin is generated by over-solidated Bitcoin. The infrastructure is not only based on the Bitcoin native protocol, but can also be deployed freely and securely in EVM and other ecosystems.

• MetaMint: The core component of $YU allows 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 range of infrastructure and products serves its vision—introducing Bitcoin liquidity into various crypto ecosystems.Through $YU, Bitcoin holders can earn additional benefits in various cross-chain DeFi protocols while maintaining the security and stability of the Bitcoin main network; through the governance token $YALA, Yala realizes the various products and ecosystemsDecentralized governance.

2.2.5 Wrapped BTC with a Blooming Flowers

WBTC

Wrapped Bitcoin (WBTC) is an ERC-20 token that connects Bitcoin (BTC) with the Ethereum (ETH) blockchain.Each WBTC is backed by 1 bitcoin, ensuring its value is pegged to the price of BTC.The launch of WBTC enables Bitcoin holders to use their assets in the Ethereum ecosystem to participate in decentralized finance (DeFi) applications.This greatly improves Bitcoin’s liquidity and usage scenarios in the DeFi field.

WBTC has always been the leader of Wrapped BTC, but on August 9, WBTC custodian BitGo officially announced that its joint venture with BiT Global plans to move WBTC’s BTC management address to the joint venture for multiple signings, which is an ordinary enterprise on the surface.The cooperation caused a huge uproar because it was Sun Yuchen’s actual control behind BiT Global.MakerDAO immediately launched the proposal to reduce the scale of WBTC collateral, requiring the WBC-related guarantee amount in the core vault to be reduced to 0.The concerns about WBTC in the market have also given new opportunities for the new Wrapped BTC.

BTCB

BTCB is a Bitcoin token on Binance Smart Chain that allows users to trade and use on BSC.BTCB is designed to improve Bitcoin liquidity while leveraging BSC’s low transaction fees and fast confirmation time.

Binance is actively expanding the capabilities 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., aim 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 stablecoin minting.

Binance hopes to enhance BTCB’s market position through these measures and promote the wider use of Bitcoin in the BSC ecosystem.The introduction of BTCB not only provides new usage scenarios for Bitcoin holders, but also injects more liquidity into BSC’s DeFi ecosystem.

dlcBTC (now iBTC) @ibtcnetwork

iBTC is a Bitcoin asset based on discrete logarithmic contract (DLC) technology designed to provide users with a secure, privacy-protected way to create and execute complex financial contracts.Its core feature is complete decentralization. When users use dlcBTC, they do not need to rely on third-party custody or multi-sign mechanisms to ensure that users have complete control over their assets, thereby reducing the risks brought by centralization.In addition, the security of iBTC is due to its unique self-packaging mechanism, and users’ Bitcoins are always under its control, and only the original depositors can withdraw funds, which effectively prevents the risk of assets being stolen or confiscated by the government.

iBTC also utilizes 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 to participate in decentralized finance (DeFi) activities while maintaining ownership and control over assets.

iBTC is the most decentralized solution of all Wrapped BTC, which can solve the problem of centralized hosting opacity during commercialization.

In addition to the above Wrapped BTC solutions, there are also a variety of BTC solutions such as FBTC, M-BTC, SolvBTC, etc.

4. Conclusion:

It has been 15 years since Bitcoin was born. Bitcoin is no longer just a digital gold, but a 2 trillion dollar financial system. Builders are continuously expanding the boundaries of Bitcoin and extending into a new one.The track – BTCFi.We have the following judgment:

1. The essence of finance is the allocation of assets across time and space. Typical allocations across space: lending, payment, transactions, etc. Typical allocations across time: pledge, interest, and options.As Bitcoin’s market value reaches US$2 trillion, the demand for cross-time air conditioning around Bitcoin has gradually emerged, forming a BTCFi scenario.

2. Bitcoin is about to become a national reserve in the United States and will further become an allocated asset for countries and institutions, forming a large number of institutional-level financial needs around Bitcoin, such as lending, pledge, etc., and generating institutional-level BTCFi projects;

3. After the improvement of underlying infrastructure such as Bitcoin asset issuance, layer two networks, and pledges, it also paved the way for the BTCFi scenario;

4. The TVL of the Bitcoin network is about US$2 billion (including L2 and side chains), 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 is still ten times moreGrowth space.

5. BTCFi is based on two major directions of Bitcoin. First, improve the interest-generating attributes of Bitcoin. It represents the projects including Babylon, Solv, Echo, Lombard, Lorenzo, Corn, etc.; Second, improve the liquidity of Bitcoin, it represents the projects including Wrapped.BTC, Yala, Avalon, etc.;

6. With the development of BTCFi, Bitcoin will change from passive assets to active assets; from non-interest-generating assets to interest-generating assets.

7. Compared with the history of gold, the launch of gold ETFs 20 years ago drove gold prices to rise by 7 times. The essence is to turn gold from a passive asset to a financial asset, and more financial businesses can be carried out based on gold ETFs.Today, 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 increase in the value and price of Bitcoin.