(Re)staking competition intensifies, packaging BTC rushes to seize the WBTC market

Author: 0xMaiaa, BeWater Research Source: X, @BeWaterOfficial

With the launch of the first phase of Babylon mainnet a month ago, the launch of BTC LST on Pendle, and the launch of various packaged BTCs, the market attention has been continuously brought back to BTCFi.The following will cover major recent updates to BTC (re)staking and BTC anchor assets:

BTC (Re)staking:

1. The importance of ecological strategy to BTC LST

2. Pendle is entering BTCFi

3. SatLayer joins the BTC re-staking market competition

BTC anchor assets:

1. Coinbase launches cbBTC

2. Multi-chain extension of WBTC

3. FBTC’s active expansion

2/ Current BTC LST competition trend:

After Babylon Stage 1 quickly reached the 1000 BTC cap, competition between BTC LST continued to heat up, and all parties were competing for the pledge interest-generating portal for BTC and its encapsulated assets.In the past 30 days, @Lombard_Finance has achieved rapid growth, reaching its current highest TVL with a deposit of 5.9k BTC, surpassing @SolvProtocol, which was originally in the leading position for a long time.

Lombard has reached a strategic cooperation with the top restaking agreement @symbioticfi, providing its participants with a richer source of restaking income from the ETH ecosystem and opportunities for DeFi participation, thus gaining the competitive advantage at the current stage.

3/ The importance of ecological strategy to BTC LST:

In the field of BTC LST, ecological strategy has become a key influencing factor in the current competitive landscape.Unlike ETH LRT, which natively benefits from ETH and ETH L2’s mature DeFi ecosystem to support downstream applications, BTC LST currently faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, and various chains.The combination of BTC anchor assets, and integration with the re-staking platform, etc.

At the current stage, the choice of ecological strategy will affect the growth rate and early market share grabbing. The specific situation of each BTC LST provider is as follows:

4/ At this stage, @Lombard_Finance is strategically focused on the development of the ETH ecosystem.By working with @symbioticfi and @Karak_Network, Lombard provides stakers with rich external rewards beyond @babylonlabs_io, while $LBTC is the first BTC LST to receive support from the restake agreement on ETH.In addition, in terms of LST utility, Lombard is actively promoting the leverage gameplay of $LBTC on ETH, and important partners include @pendle_fi@GearboxProtocol@zerolendxyz, etc.It is worth noting that with the acceptance of $LBTC deposits by http://Ether.Fi, $LBTC will benefit from all future downstream applications related to $eBTC in the future, further enhancing its competitive advantage.

5/ Unlike Lombard’s focus strategy, @SolvProtocol@Bedrock_DeFi is actively expanding multi-chain, and ecological development covers the reception of upstream deposits and the construction of downstream applications.Currently, the main liquidity of SolvBTC.BBN and uniBTC is concentrated on the BNB and ETH chains, while also injecting BTC liquidity into other L2s.Solv’s strategy is worth mentioning that users need to deposit SolvBTC to convert to SolvBTC.BBN to participate in Babylon, which will promote the market’s demand for SolvBTC and consolidate Solv as the core business of Decentralized Bitcoin Reserve.

6/ @LorenzoProtocol and @pStakeFinance supported by @BinanceLabs will focus on the construction of the BNB chain during the initial startup phase.They have supported receiving $BTCB deposits and minted LST – $stBTC and $yBTC on the BNB chain, respectively.Lorenzo is unique in building a BTCFi-based income market, adopting a structure that separates liquid principal tokens (LPT) and earnings accumulation tokens (YAT), similar to the Pendle model, making BTC resting incomeThe gameplay is more flexible.

7/ From another perspective, the different ecological strategies of each BTC LST – the acceptance of upstream BTC derivatives and the casting of LST – will affect the liquidity and DeFi adoption of BTC anchored assets in each ecosystem.With the continued expansion of the BTC LST market, this trend will become more significant, triggering a TVL defense war between various chains.

8/ Pendle is entering BTCFi:

Recently, Pendle has integrated four BTC LSTs into its points market, including $LBTC, $eBTC, $uniBTC and $SolvBTC.BBN.The current liquidity and total TVL situation of each LST on the Pendle are shown in the figure.Among them, the actual adoption of $LBTC is higher than the surface value in the LBTC (Corn) pool.Since 37% of $eBTC is powered by $LBTC, Pendle’s integration of $eBTC will also benefit Lombard indirectly, giving $LBTC holders more opportunities to optimize their earnings strategies.

9/ Except for $eBTC, the other three LSTs are collaboratively bound with another important participant, @use_corn.Corn is an emerging ETH L2 with two unique designs, veTokenomics and Hybrid Tokenized Bitcoin.Since Corn’s gas token $BTCN will be cast through a hybrid method, the current cooperation also shows the possibility that BTC LST with a trusted basis will be accepted for casting $BTCN in the future.

The future integration path may be: Wrap BTC → BTC LST → BTCN → DeFi.This architecture adds another layer of nesting doll leverage to the BTCFi system. Although it allows users to eat more fish in more protocols, it also introduces new systemic risks, and the points systems of each protocol are over-minedThe final yield of the mine is far less than expected.Corn and Lombard’s points release status can be found at: https://x.com/PendleIntern/status/1835579019515027549

10/ Points leverage is one of the key scenarios for interest-generating asset strategies including ETH LRT and BTC LST.As a leader, Pendle’s integration of BTC LST will greatly drive the wider application trend of the DeFi ecosystem.Currently, @GearboxProtocol has introduced $LBTC in its points market, and @PichiFinance also suggests integration of BTC LST in the near future.

11/ SatLayer joins the BTC re-staking market competition: @satlayer enters the BTC re-staking field and becomes an emerging competitor of @Pell_Network.Both accept restaking from BTC LST and use it to provide security for other protocols, similar to @eigenlayer’s practice.As a pioneer in BTC restaging, Pell has accumulated $270 million in TVL, integrating almost all major BTC derivatives across 13 networks.On the other hand, SatLayer is also rapidly expanding its market after last month’s financing announcement led by @Hack_VC@CastleIslandVC.

12/ SatLayer is currently deployed in Ethereum and has supported the acceptance of WBTC, FBTC, pumpBTC, SolvBTC.BBN, uniBTC and LBTC multiple BTC LSTs, and more integration is expected.As more and more re-pled platforms appear, liquidity competition for BTC and its variant assets will become increasingly fierce.Although this provides participants with an additional layer of profit opportunities for dolls, it also shows signs of overcapacity in the supply-side infrastructure of the resting sector.

13/ Current status of BTC encapsulated tokens:

Since Justin Sun’s entry into WBTC’s hosting has caused a turmoil, competition in the packaging BTC market has further intensified.The main competitive alternative assets currently include @Binance’s $BTCB (supply 65.3k), @MerlinLayer2’s $mBTC (supply 22.3k), @TheTNetwork’s $tBTC (supply 3.6k), and @0xMantle’s $FBTC (supply3k) and various BTC LST assets mentioned above.

14/ Coinbase launches cbBTC:

Coinbase launched its encapsulated asset, $cbBTC, last week, with a supply of 2.7k.$cbBTC is deployed on Base and Ethereum networks and has received support from multiple mainstream DeFi protocols including @0xfluid, and plans to expand to more chains in the future.In addition, BTC LST @Pumpbtcxyz

After $cbBTC was launched, and @SolvProtocol quickly stated that it would cooperate with Base, demonstrating the development potential of $cbBTC in BTCFi.

15/WBTC multi-chain extension:

Despite security concerns, $WBTC still accounts for more than 60% of the packaging BTC market.@BitGo recently announced the deployment of $WBTC on Avalanche and BNB chains and the full-chain alternative token (OFT) standard by @LayerZero_Core, aiming to consolidate its market position with multi-chain expansion.

However, WBTC adoption continues to decline, and this trend will affect more DeFi protocols’ attitude towards WBTC as collateral as headquartered DeFi protocols such as @aave and @SkyEcosystem.

16/ FBTC’s active expansion:

$FBTC, co-managed by Mantle, Antalpha, and Cobo, has been deployed on Ethereum, Mantle and BNB chains.Through Sparkle Campaign, @FBTC_official is actively promoting wider adoption of $FBTC in the BTCFi field.In the BTC (re)staking field, $FBTC has been adopted by Solv, BedRock, PumpBTC and Pell to provide Sparks points incentives for early adopters.

17/ Currently, various packaged BTC assets are actively striving to be integrated into major DeFi protocols and accepted by a wide range of users in order to compete for the market position of the next $WBTC.In addition to existing packaged BTC assets, new players such as @ton_blockchain’s $tgBTC and @Stacks’ $sBTC will soon join the competition.

18/ In the current trend of continued growth in BTCFi, BTC (re)staking and BTC anchored assets are two key sectors worthy of continuous attention.

In the BTC (re)staking field, there is currently a trend of over-construction of involuntary supply side, while the market volume on the demand side is still in an unknown state.In the early competitive landscape at this stage, differentiated ecological strategies and unique downstream gameplay have become the key influencing factors in the competition of various BTC LSTs.On the other hand, the trend of various BTC-anchored assets nesting each other has also introduced new systemic risks, and there is a possibility that various protocols are over-mined and have little final returns.

Trust remains a key issue for each BTC-anchored asset.Exchange, L2 and BTC LST are actively developing their respective BTC anchor assets through different solutions, striving to be accepted by mainstream DeFi protocols and a wide range of users, thereby quickly occupying the market for WBTC loss.