BTC stake and wrapped Token market competition intensifies

Recently, with the launch of the first phase of the Babylon mainnet, the introduction of Pendle's BTC LST, and the rollout of various wrapped BTC assets, BTCFi has once again become the market focus. This article will explore the latest developments in BTC (re)staking and BTC pegged assets.

BTC (Re) staking Market Dynamics

Competitive Landscape

The competition between BTC and LST is becoming increasingly fierce, with various parties vying for the staking yield entry of BTC and its wrapped assets. In the past 30 days, Lombard Finance has experienced rapid growth, reaching the current highest TVL with a deposit amount of 5.9k BTC, surpassing the previously long-standing leader, Solv Protocol.

Lombard has established strategic partnerships with top re-staking protocols to provide participants with a richer source of re-staking yields and DeFi participation opportunities from the ETH ecosystem, thereby gaining a competitive advantage in the current stage.

Importance of Ecological Strategy

In the BTC LST field, ecological strategy has become a key factor in the current competitive landscape. Unlike ETH LRT, BTC LST faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination with various on-chain BTC pegged assets, and integration with re-staking platforms.

At the current stage, the choice of ecological strategy will affect the growth rate and the competition for early market share. Different BTC LST providers have adopted various strategies:

1. Lombard Finance focuses on the development of the ETH ecosystem, providing rich external rewards for stakers through collaboration with multiple re-staking protocols. In terms of LST utility, Lombard actively promotes the leveraged use of $LBTC on ETH.

2. Solv Protocol and Bedrock are actively expanding across multiple chains, with ecosystem development covering upstream deposit reception and downstream application construction. Solv's unique strategy is to require users to deposit SolvBTC to convert it into SolvBTC.BBN to participate in Babylon, driving market demand for SolvBTC.

3. Lorenzo Protocol and pStake Finance initially focused on the development of the BNB chain, supporting the reception of $BTCB deposits and minting their respective LSTs. Lorenzo built a yield market based on BTCFi, adopting a structure that separates liquid principal tokens and yield accumulation tokens.

Pendle enters BTCFi

Pendle has integrated four BTC LSTs ($LBTC, $eBTC, $uniBTC, and $SolvBTC.BBN) into its points market. The actual adoption of $LBTC is higher than the surface numbers, as 37% of $eBTC is backed by $LBTC. Pendle's integration of BTC LSTs will drive a broader trend of application in the DeFi ecosystem.

SatLayer joins the competition

SatLayer enters the BTC re-staking field, becoming an emerging competitor to Pell Network. Both accept BTC LST for re-staking and use it to provide security for other protocols. SatLayer is currently deployed on Ethereum and supports multiple BTC LSTs, with more integrations expected.

BTC Wrapped Token Market

Market Status

The competition in the BTC market is intensifying, with major alternative assets including $BTCB, $mBTC, $tBTC, $FBTC, and various BTC LST assets.

Coinbase launched cbBTC

Coinbase has launched the custodial-backed wrapped asset $cbBTC, deployed on the Base and Ethereum networks, and has received support from multiple mainstream DeFi protocols. Several BTC LST providers have stated they will collaborate with Base, showcasing the development potential of $cbBTC in BTCFi.

Multi-chain expansion of WBTC

Despite security concerns, $WBTC still accounts for over 60% of the wrapped BTC market. BitGo announced the deployment of $WBTC on Avalanche and BNB Chain, and is expanding across multiple chains through LayerZero's cross-chain interchangeable token standard. However, the adoption rate of WBTC continues to decline, and some leading DeFi protocols are starting to remove it from their collateral lists.

FBTC's positive expansion

$FBTC has been deployed on Ethereum, Mantle, and BNB chains. Through the "Sparkle Campaign", FBTC is actively promoting widespread adoption in the BTCFi space. Multiple BTC (re) staking platforms have adopted $FBTC, offering Sparks points incentives for early users.

Summary

BTCFi continues to grow, and BTC (re) staking and BTC anchored assets are two key areas worth paying attention to. In the field of BTC (re) staking, there is a trend of over-construction on the supply side, while the market size on the demand side is not yet clear. Differentiated ecological strategies and unique downstream applications have become key to competition. The interlocking of BTC anchored assets introduces new systemic risks, along with the possibility of being over-mined.

For BTC-backed assets, trust remains a core issue. Exchanges, L2, and BTC LST providers are actively developing their own BTC-backed assets, striving to be accepted by mainstream DeFi protocols and users in order to capture the market share lost by WBTC.