Authors: @BMANLead, @Wuhuoqiu, @Loki_Zeng, @Kristian_cy

The big event of Crypto in 2024, as the price of Bitcoin is infinitely close to the $100,000 mark, the boots have fallen. With the Bitcoin halving and the adoption of ETFs, Trump is about to use Bitcoin as a strategic reserve. As Bitcoin goes deeper into the deep water of traditional finance, it 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, transaction.

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

In the past, Bitcoin was only stored in wallets and tended to remain stationary in time and space. More than 65% of Bitcoins have not been touched in more than a year, and "BTC should only be kept in wallets" is like a stamp of thought.

So BTCFi has not been optimistic for a long time.

Although the starting point of the birth of Bitcoin is to hedge the traditional financial system, and as early as 2010, Satoshi Nakamoto wrote on the forum that Bitcoin will support the financial system he designed many years ago. There are various possible scenario types, including a variety of DeFi scenarios. However, as Bitcoin’s positioning gradually moves closer to digital gold, the exploration of Bitcoin’s DeFi or financial scenarios has gradually ceased.

In another timeline, Rune Christensen announced the vision of MakerDAO in March 2013, followed by the first DEX on ETH in 2016 - OasisDEX Officially launched. In 2017, Stani Kulechov, who was still a student, founded AAVE in Switzerland. In August 2018, Bancor and Uniswap, which everyone is familiar with, were launched respectively, kicking off the magnificent Defi Summer. This also announces the future of DeFiThe future possibility is temporarily in the hands of ETH at that time point.

But when the timeline of Bitcoin advanced to 2024, Bitcoin returned to the center of the crypto world, and the price of Bitcoin reached 99,759 US dollars, infinitely close to 100,000 US dollars. mark, the market value exceeds 2 trillion, BTCFi has become a conspiracy worth 2 trillion US dollars, and people’s innovation and discussion of BTCFi have quietly emerged...

1. Bitcoin’s 2 Trillion US Dollar Conspiracy: BTCFi

Although Ethereum opened the era of Defi's voyage, for Bitcoin, although BTCFi will be late, it will never be absent. Ethereum, as the experimental field of Defi, has learned a lot from Bitcoin. Today’s Bitcoin is just like Europe in the fifteenth century, at the dawn of the New World.

1.1 BTC changes from a passive asset to an active asset

The continuous improvement of the Fomo attributes and active management motivations of Bitcoin holders will promote the transformation of Bitcoin from a passive asset to an active one assets, providing soil for the development of BTCFi.

Institutional positions continue to increase. According to feixiaohao data, a total of 47 companies currently hold $141.342 billion in BTC, accounting for 7.7% of the total BTC circulation. This trend has continued to accelerate after the passage of BTC ETF. Since the beginning of the year, BTC spot ETH has brought a net inflow of nearly 17,000 BTC. Compared with early miners and coin hoarders, institutions are more sensitive to capital utilization efficiency and rate of return. , not only has a higher tendency to participate, but is also likely to become an active promoter of BTCfi.

The rise of inscriptions and BTC ecology has made the composition of the BTC community more complicated. Traditional BTC holders pay more attention to security and place it at a higher priority, while new members are more interested 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 have all found ways to achieve economic circulation by relying on internal or external income without relying on token incentives.

Under the influence of multiple factors, the Bitcoin community’s interest in scalability and BTCFi has been significantly increased. Forum discussionsThe discussion tends to be more positive. The [Proposal to Disable Inscriptions] proposed by Bitcoin Core developer Luke Dashjr last year did not receive support and was officially closed in January this year.

1.2 The improvement of infrastructure objectively paves the way

The objective technical limitations are also the reason why Bitcoin has long been regarded as only a value storage tool. Little by little, things are changing. The route battle from 2010 to 2017 finally ended with BTC forking into BTC and BCH, but the improvement of scalability did not stop. After the two upgrades of SegWit and Taproot paved the way for asset issuance, inscriptions began to appear on in people's careers. Extensive asset creation has brought about objective needs for transactions and financialization. With the emergence of Ordinal, Side-chain, L2, OP_CAT, BitVM and other technologies, the construction of BTCFi scenarios has become truly feasible.

1.3 Huge demand drives development

In terms of transaction volume, the diversification of assets has promoted transactions frequency increase. Data from The Block shows that the average daily BTC transfers in the past year have exceeded 500k/day, with RUNES and BRC-20 already taking the lead. Next, the needs for transactions, lending, credit derivation, and interest generation will also become smoother. BTCFi 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 capitalization, has extremely high potential. Currently, the total value locked (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 comparison, the ratio of TVL to market capitalization of other mainstream public chains is much higher, ETH is 15.7%, Solana and BNBChain are 5.6% and 6.8% respectively. Calculated based on the average of the three, BTCFi still has 65 times of room for growth. .

The TVL to market capitalization ratio of mainstream public chains with smart contract functions is much higher: 14% for Ethereum, 6% for Solana, and approximately 10% for Ton.is 3%. Even at 1%, BTCFi has the potential to grow tenfold.

Source: Defillama, Coinmarketcap

< p style="text-align:center"> 2. The first year of BTCFi

So in 2024, when BTC is soaring to 2 trillion, it will also usher in The first year of BTCFi.

Bitcoin plus "finance" instantly opens up 2 trillion possibilities and expands the boundaries of Bitcoin time and space.

As we said at Frontier: The essence of finance is the allocation of assets across space and time.

Then Bitcoin Finance BTCFi is the mismatch of Bitcoin across space and time.

Cross-time allocation: Improve the interest-earning attributes of Bitcoin, such as staking and time locks , interest, options, etc., for example:

@babylonlabs_io that opens the time dimension to Bitcoin

Bitcoin interest-earning entrance @SolvProtocol

"Semi-centralization may be the optimal solution" @Lombard_Finance

@LorenzoProtocol "with Pendle"

Chain @use_corn for BTCFi

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

Custody platform @AntalphaGlobal, @ Cobo_Global、@SinohopeGroup

Lending star @avalonfinance_

CeDeFi pioneer @bounce_bit

Wrapped BTC in full bloom

Rising star of stable currency @yalaorg

Financial applications are not only returning Arrived at BTC Brand-new possibilities have also been born in the careers of ecological participants. BTCFi innovative projects have begun to be born in a spurt, and a Bitcoin financial landscape has been formed:

< /p>

Source: ABCDE Capital

Whether it makes "digital gold "Whether it has interest-earning attributes or makes it more liquid, these two core functions of BTCFi are related to BTC’s current main narrative fits perfectly. Regardless of whether the market is bullish or bearish, as long as BTC remains unchanged and as long as BTC is still the most recognized digital gold in the industry, the BTCFi track is unlikely, or "does not need" to be falsified.

Take the corresponding gold as an example. Generally speaking, the value of gold has three major supports:

Jewelry and industrial purposes

Investment

Strategic reserve needs of central banks

In terms of investment demand, gold ETFs drove gold prices soaring after they were passed 20 years ago 7 times. The reason is that before ETFs, there was only one channel for gold investment: physical gold. The insurance, transportation and storage requirements involved were too high for many people. Gold ETFs do not require storage and can be traded like stocks. The "paper gold" is undoubtedly a revolutionary existence, which greatly enhances the liquidity and investment convenience of gold.

Looking at BTC, the BTC ETF is obviously not as transformative as the gold ETF, because the original door for users to trade this "digital gold"The threshold is not high, ETFs just go a step further in terms of compliance, supervision and ideology. Therefore, the driving effect on BTC prices is likely to be less than that of gold ETFs. But BTCFi, by giving Bitcoin the time + space financial allocation attributes, makes BTC more "useful" than before, corresponding to the jewelry and industrial uses of gold. Therefore, compared to Bitcoin ETF, BTCFIi may be more helpful in improving the value and price of BTC in the long run.

2.1. Time: Improve the interest-earning attribute of Bitcoin 2.1. Time: Improve the interest-earning attribute of Bitcoin

2.1.1. Babylon that opens the time dimension to Bitcoin

The most inescapable concept of BTCFI should be Babylon, because it has Babylon has the true concept of "on-chain interest-earning BTC".

As we all know, the POW used by BTC does not have the concept of inflation/interest generation, so it cannot have a relative certainty every year like ETH's POS ( Additional issuance income of about 3-4% (adjusted according to the pledge ratio curve). 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 cannot throw BTC directly to Eigenlayer, these are basically two different chains. It is technically impossible to completely replicate an Eigenlayer on the BTC chain. After all, BTC does not even have a Turing-complete smart contract. So is it possible to move Eigenlayer’s core Restaking for POS Security to BTC? 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 It does not involve terms such as bridge or third-party wrap that are common threats to security and decentralization in the EVM ecosystem. Because Bitcoin's script allows the concept of "time lock", which allows users to customize a lockPeriodically, during this period, the Bitcoin (UTXO) cannot be transferred, so its function is similar to the pledge of the POS chain. Babylon uses this function so that the BTC participating in Staking will not leave the BTC chain, but will be locked on a "Staking address" of Bitcoin through time lock technology.

Source: Babylon

BTC is locked through a script. So assuming that something goes wrong and requires the Slashing mechanism, 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 signatures at the same time, When signing a message, 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 when doing evil, Babylon has implemented a set of "automatic Slashing" mechanisms in disguise.

Through "Restaking" technology, Babylon is mainly used to improve the security of the POS chain. However, if you want to implement a complete Eigenlayer technology stack (such as functions like EigenDA) or a more complex slashing mechanism, this will require the collaboration of other projects within the Babylon ecosystem.

Babylon adopts an innovative approach: locking Bitcoin through self-custody, combined with the staking and slashing functions on the chain, providing BTC holders with a A trustless way to obtain income. Prior to this, BTC holders who wanted to earn income usually had to rely on financial management platforms such as centralized exchanges (CEX), or convert BTC to WBTC to participate in the Ethereum DeFi ecosystem. These methods are inseparable from the assumption of trust in centralized security.

So, although Babylon is targeting Ethereum’s Eigenlayer Restaking ecosystem, but since BTC naturally lacks a staking mechanism, we are more inclined to regard Babylon as an important part of building the BTC Staking ecosystem.

2.1.2 Bitcoin Interest-earning Entrance Solv Protocol

When it comes to the Staking ecological niche, one must not Without mentioning another project - Solv Protocol. Solv is not a direct competitor of Babylon, but by introducing a staking abstraction layer as a technical architecture, it is able to create a variety of LST (liquidity staking token) products. The income sources of these LSTs can be very diverse, for example:

Staking income from the staking agreement (such as Babylon);

Income 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 performed well. According to DeFiLlama data, SolvBTC’s TVL (Total Locked Volume) currently has surpassed the Lightning Network on the Bitcoin mainnet and ranks first.

Source: Solv

Its interest-earning methods include but are not limited to the following:

SolvBTC - can be minted on 6 chains, 10 Fully circulated on the chain, connected to more than 20 Defi protocols to earn income

SolvBTC.BBN - BTC can be entered into Babylon through Solv to earn income

SolvBTC.ENA - BTC can enter Ethena through Solv to earn income

SolvBTC.CORE - BTC can enter Core through Solv to earn income

SolvBTC.JUPITER and other subsequent net value growth yield-bearing assets

Source: Solv

So instead of thinking of Solv as a BTC Staking Agreement, we prefer to describe it as "BTC Yu'E Bao". Solv provides diversified income sources, whether it is staking income, node income, or trading strategy income, allowing BTC holders to have a more flexible way of income.

What is interesting is that Solv currently shows the most eye-catching data performance among all BTCFI protocols:

Wide coverage: Solv is currently circulating in 10 blockchains and connected to more than 20 DeFi protocols.

Innovative cooperation: For example, the cooperation between Solv and Pendle provides Bitcoin users with a fixed income APY of close to 10%, and LP market making income can reach 40% .

Wide acceptance: The number of SolvBTC holders has exceeded 200,000, and the total market value exceeds $1 billion.

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

Based on these achievements, Solv Protocol has achieved a leading position in the BTCFI field and continues to carry out product iterations. The next focus will be on launching more types of LST products. It is reported that Solv plans to join forces with Jupiter to launch a new product called SolvBTC.JUP to use Perp DEX’s market making profitsIntroducing BTC LST products to further expand the boundaries of BTC Staking.

At the same time, Babylon provides a Trustless mechanism that enables BTC holders to obtain Staking-like benefits. This also paves the way for projects to compete for an ecological niche similar to Lido, that is, to create LST liquid assets similar to stETH. Although Babylon realizes the safe locking of Bitcoin and provides basic income, if you want to further release the liquidity of BTC and increase income, the BTC locked on Babylon can participate in the EVM and non-EVM ecology in the form of warrant tokens. DeFi applications. Making full use of the unique composability characteristics of blockchain will become the key to the construction of the LST ecological niche. SolvBTC.BBN is a successful case.

In addition to Solv, there are other heavyweight projects on the market that are also competing for the LST ecological niche, 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 richer income types, including re-pledge income, verification node income and trading strategy income. With this diversified revenue model, Solv provides Bitcoin users with more flexible and diverse choices.

2.1.3 BTCHub of Move ecosystem: Echo protocol

Echo is BTCFi of Move ecosystem The center provides a one-stop financial solution for Bitcoin in the Move ecosystem, allowing BTC to seamlessly interoperate with the Move ecosystem.

Echo is the first to introduce BTC liquidity staking, re-staking and revenue infrastructure into the Move ecosystem, introducing a new liquid asset class to the Move ecosystem. By cooperating with the Bitcoin ecosystem, Echo seamlessly integrates all native BTC2 layer solutions, including Babylon, and supports various BTC liquidity staking tokens, making Echo a key entry point for attracting new capital into the Move DeFi ecosystem.

Echo's flagship product aBTC is a cross-chain liquid Bitcoin token backed by BTC at a 1:1 ratio. This innovation promotes Bitcoin's DeFi interoperability and enables users to Earn real returns in ecosystems like Aptos, and aBTC will be fully supported across the entire Aptos DeFi network

Echo is introducing re-staking for the first time through its innovative product eAPT. Move Ecosystem. This will enable Re-Staking to secure the MoveVM 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 4 products surrounding Bitcoin for the move ecosystem:

Bridge: BTC L2 assets can be bridged to Echo , making Move ecology and BTC L2 Interoperability;

Liquidity staking: pledge BTC on Echo to earn Echo points;

Re-pledge: Synthesize the Move ecosystem's LRT token aBTC, so that Bitcoin can interoperate in the Move ecosystem and obtain multi-layer superimposed benefits;

Lending : Deposit APT, uBTC and aBTC provides pledge lending services, and the profits from the lending business are shared with users to obtain nearly 10% of the APT income.

2.1.4 "Semi-centralization may be optimal. The core feature of Lombard is the balance between security and flexibility of its LBTC 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 capitalization of RenBTC and TBTC and WBTC is a typical example of this trade-off. Although fully centralized management can provide the greatest flexibility, its development ceiling is relatively limited due to the assumption of trust and potential security risks. This is also one of the reasons why WBTC’s market capitalization ratio is always lower than the total market capitalization of BTC.

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

Source: Lombard

Compared with the traditional multi-signature Mint/Burn model, Lombard introduces the more secure "Consortium Security Alliance" concept. This concept first appeared in the early alliance chains. Unlike many current DeFi projects, especially the multi-signature nodes controlled by the project parties in cross-chain bridge projects, Lombard’s security alliance is composed of highly reputable nodes, including the project parties. , well-known institutions, market makers, investors, exchanges, etc., 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 mode, while retaining Multi-signature 2/3 data notarization features full-chain circulation, flexible casting and redemption. 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 the mechanism design and market capitalization. Except for high-market value public chains such as BTC, ETH and Solana, the vast majority of decentralized projects may not be as good 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 Security Alliance's design, Lombard also uses CubeSigner, a hardware-backed, unmanaged key management platform. There are strict policy restrictions in various aspects such as preventing key theft, mitigating breaches, hackers and internal threats, and preventing key abuse, adding another lock to the security of LBTC.

The US$16 million seed round financing led by Polychain also undoubtedly declares Lombard’s rich resources in the circle, which is beneficial to its Consortium’s node reputation. As well as the subsequent docking of Defi and other public chain projects, it will be of great help.help. LBTC will definitely be one of the most powerful competitors of WBTC.

Source: Lombard

2.1.5 Lorenzo "comes with Pendle"

Compared with Lombard's unique advantages in asset security, Lorenzo as Binance Investment’s Babylon LST The entrance also exhibits attractive features.

In the current round of DeFi innovation, most traditional DEX and lending protocols still continue the inertia of DeFi Summer, or are "resting on their laurels." After the collapse of Terra on the stablecoin track, except for Ethena, which can barely be considered a relative innovation, the rest of the innovations appear lackluster. The only tracks worthy of attention are LST (liquidity re-staking tokens) and LRT (liquidity re-staking tokens), which benefit from the LST effect brought about by Ethereum's transformation to POS, as well as the impact inspired by Eigenlayer Restaking Leverage effect.

In this track, 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 flowed to Pendle. The design of separation of principal and interest brings a new way of playing to DeFi: users who want to control risks can obtain a complete hedging mechanism through Pendle, while aggressive players who pursue higher returns can increase their returns by adding leverage in disguise.

Lorenzo is clearly hoping to put it all together in this track. After Babylon turns on the staking function, its LST product has the operability of principal and interest separation similar to LRT assets such as stETH, Renzo, and EtherFI. Lorenzo’s LST product can be split into two tokens: the liquidity principal token LPT (stBTC) and the yield accumulation token YAT. Both tokens are freely transferable and tradeable, and holders can use them to earn income or withdraw their staked BTC respectively. This design not only improves the flexibility of assets, but also provides users with more investment options.

Source: Lorenzo

Through this design, Lorenzo unlocks participation in staking BTC based on Babylon More possibilities in DeFi. 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 can learn from and implement most of the innovative gameplay currently on Pendle.

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 Undoubtedly worthy of the market's attention. 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 Corn, a chain born for BTCFi

Corn is the first Bitcoin-based chain Bidang Gas's Ethereum L2 solution aims to provide users with a variety of financial services, including lending, liquidity mining and asset management. The chain is entirely built around the financial needs of Bitcoin. It is unique in that it maps Bitcoin (BTC) to the network’s native Gas token BTCN, allowing Bitcoin to be more widely used in the Ethereum ecosystem. .

Core features:

BTCN token:

Corn introduced the BTCN token as a gas fee for transactions on the Corn network. BTCN can be viewed 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, increasing the efficiency of Bitcoin usage, 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, thereby Generate additional revenue. Users can pledge BTCN to obtain network income, participate in liquidity mining, borrowing, and develop derivatives markets based on BTCN, etc.

Token economic model:

Introduction of $CORN and $popCORN. $CORN is the basic token that users can obtain by staking BTCN or participating in liquidity provision; $popCORN is a governance token obtained by locking $CORN, giving users the right to participate in governance and obtain additional rewards. This model encourages users to hold tokens for the long term and enhances community participation through dynamic weighting and locking mechanisms.

Corn provides an innovative L2 solution designed to create more revenue for Bitcoin holders by introducing Bitcoin to the Ethereum ecosystem Chance.

2.2. Space: Improving the liquidity of Bitcoin

2.2.1 Custody platform Antalpha, Cobo, Sinohope

Although decentralization is absolutely "correct" in the circle, if the black swan event of FTX thunderstorm is excluded, the top leaders in the circle Centralized exchange/custody/ But in terms of financial security, the financial services platform actually performs much better than most decentralized platforms. The losses caused by hacking of non-custodial wallets/Defi protocols every year are an order of magnitude greater than those of centralized custody platforms.

So the leading Bitcoin custody and financial service platform also plays a role in releasing Bitcoin liquidity and giving Bitcoin the allocation function across time or space. Play an unyielding role.

Take the following three examples:

Antalpha - has the largest Bitcoin community in the circle , Bitmain’s strategic partner, ecological product Antalpha Prime develops around the BTC ecosystem and provides institutions with hardware in BTC productionEnergy financing services, such as mining machine financing, electricity bill financing, BTC custody storage MPC solution, etc.

Cobo - I think everyone in the circle knows the name of Shenyu. The Cobo managed wallet was co-founded by Shenyu and Dr. Jiang Changhao. So far, there have been more than 100 million addresses and a transfer volume of US$200 billion. Nowadays, Cobo has a variety of solutions such as MPC and smart contract wallets. It is a one-stop wallet provider trusted by many institutions and users.

Sinohope - a Hong Kong licensed listed company, in addition to wallet solutions, it also provides one-stop full-stack blockchain solutions, including L1/L2 Browser, Faucets, basic Dex, lending, NFT Market Place and other comprehensive services.

Several platforms have a large number of real B-side users, and the security level has always been online, so in fact many Dei protocols have cooperated with the above platforms, here is the center The concepts of decentralization and decentralization are not so clear-cut. Everything starts from the perspective of security and trust, and a relatively stable balance point is found between technology and commercialization.

2.2.2 Lending Star Avalon

Avalon is a decentralized lending platform that focuses on To provide liquidity to Bitcoin holders. Users can borrow and lend using Bitcoin as collateral, and Avalon uses smart contracts to automate the management of 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 , meeting the liquidity needs of Bitcoin users.

Collateral management: Avalon adopts an over-collateralization mechanism. Users need to provide Bitcoin in excess of the borrowed 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, and SwellBTC and others will carry out some cooperation to expand the user base.

2.2.3 CeDeFi Pioneer Bouncebit

BounceBit is a platform that focuses on empowering Bitcoin assets. A powerful innovative blockchain platform, through the integration of centralized finance (CeFi) and decentralized finance (DeFi), as well as the re-pledge (Restaking) strategy, it transforms Bitcoin from a passive asset to an active asset in the crypto ecosystem. Active participant.

Features of BounceBit:

BTC re-staking: BounceBit allows users to deposit Bitcoin Agreement to obtain additional income through re-pledge. This increases the asset’s liquidity and income opportunities. 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’s native token) for verification. Validators accept both BBTC (Bitcoin tokens issued by BounceBit) and BB tokens as pledges, which enhances the network's flexibility and security while expanding the participant base.

BounceClub: BounceBit provides the BounceClub tool, so even users without programming foundation can create their own DeFi products.

Liquidity custody: BounceBit introduces the concept of liquidity custody to keep mortgaged 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 income opportunities for Bitcoin holders through innovative re-pledge mode and dual-coin PoS consensus, and promotes the growth of Bitcoin. Applications in the DeFi ecosystem. Its liquidity hosting and BounceClub tools also make DeFi development simpler and more friendly.

2.2.4 Stablecoin Rising Star Yala

Yala is a stablecoin and liquidity protocol on BTC. Yala allows it to The stable currency $YU can flow freely and safely between various ecosystems, releasing BTC liquidity and bringing huge financial vitality to the entire crypto ecosystem.

Core. Products include:

Over-collateralized stablecoin $YU: This stablecoin is generated by over-collateralized 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.

< p style="text-align: left;">MetaMint: The core component of $YU, allowing users to easily use native Bitcoin to mint $YU in various ecosystems, injecting Bitcoin liquidity into these ecosystems. < /p>

Insurance derivatives: Provide comprehensive insurance solutions within the DeFi ecosystem and create arbitrage opportunities for users.

Yala’s series of infrastructure and The product serves its vision - to introduce Bitcoin liquidity to various crypto ecosystems. Through $YU, Bitcoin holders can earn additional income in various cross-chain DeFi protocols while maintaining the security of the Bitcoin main network. and stability; through the governance token $YALA, Yala Achieve decentralized governance of various products and ecology

2.2.5 Wrapped BTC where a hundred flowers bloom

WBTC

Wrapped Bitcoin (WBTC) is an ERC-20 token that connects Bitcoin (BTC) to the Ethereum (ETH) blockchain . Each WBTC consists of 1 Bitcoin as a backing ensures that its value is linked to the price of BTC, which enables Bitcoin holders to use their assets in the Ethereum ecosystem and participate in decentralized finance (DeFi) applications. Improved the liquidity and usage scenarios of Bitcoin in the DeFi field

WBTC has always been the leader of Wrapped BTC, but in 8.On March 9, WBTC custodian BitGo officially announced that its joint venture with BiT Global plans to migrate WBTC’s BTC management address to the joint venture’s multi-signature. On the surface, it is an ordinary corporate cooperation, but because behind BiT Global is Sun Yuchen. Control caused an uproar. MakerDAO immediately launched a proposal to ‘reduce the size of WBTC collateral’, requiring the WBC-related guarantee amount in the core treasury to be reduced to 0. The market's concerns about WBTC have also given new opportunities to the new Wrapped BTC.

BTCB

BTCB is a Bitcoin token on Binance Smart Chain that allows Users conduct transactions and use on BSC. BTCB is designed to increase Bitcoin’s liquidity while taking advantage of BSC’s low transaction fees and fast confirmation times.

Binance is actively expanding the functions of BTCB and plans to launch more BTCB-related decentralized finance (DeFi) products on BSC. These new products will include lending, derivatives trading, etc., aiming to increase the use value and liquidity of BTCB. The application of BTCB on BSC is already supported by multiple DeFi protocols, including Venus, Radiant, Kinza, Solv, Karak, pStake, and Avalon. These protocols allow users to use BTCB as collateral for operations such as lending, liquidity mining, and stablecoin minting.

Binance hopes to strengthen BTCB’s market position through these measures and promote wider adoption 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 contract based on discrete logarithms (DLC) technology-based Bitcoin asset, designed to provide users with a secure, privacy-protecting way to create and execute complex financial contracts. Its core feature is complete decentralization. Users do not need to rely on third-party custody or multi-signature mechanisms when using dlcBTC, ensuring that users have complete control over their assets, thus reducing the risks caused by centralization. also, iBTC’s security is due to its unique self-packaging mechanism. Users’ Bitcoins are always under their control, and only the original depositor can withdraw funds, which effectively prevents the risk of asset theft or confiscation.

iBTC also uses zero-knowledge proof technology to enhance the privacy and security of transactions. Users can perform complex financial transactions within the contract 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 of their assets.

iBTC 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 solutions, there are also various BTC solutions such as FBTC, M-BTC, SolvBTC, etc.

4. Conclusion:

It has been 15 years since the birth of Bitcoin. Bitcoin is no longer just a digital gold, but a US$2 trillion financial system. Group after group of Builders are continuously 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: lending, payment, transactions, etc. Typical cross-time allocation: pledge, interest, options. As the market value of Bitcoin reaches US$2 trillion, demand for Bitcoin's cross-time allocation gradually emerges, forming the BTCFi scene.

2. Bitcoin is about to become a U.S. reserve and will further become an allocation asset for institutions and institutions. It will create a large number of institutional-level financial needs around Bitcoin, such as lending, Pledge, etc., to generate institutional-level BTCFi projects;

3. The improvement of underlying infrastructure such as Bitcoin asset issuance, second-layer network, and pledge will also pave the way for the BTCFi scenario. smoothed the road;

4. The TVL of the Bitcoin network is approximately 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 think BTCFi still has room to grow tenfold.

5. BTCFi revolves around two major directions of Bitcoin. First, improving the interest-earning attribute of Bitcoin. Representative projects include Babylon, Solv, Echo, Lombard, and Lorenzo. , Corn, etc.; 2. Improve the liquidity of Bitcoin, representative projects include Wrapped BTC, Yala, Avalon, etc.;

6. With BTCFi With the development of Bitcoin, 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 ETF 20 years ago pushed the price of gold up 7 times. Its essence is to transform gold from a passive asset. It has become 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 has a huge impact on the value and price of Bitcoin.