BTC Staking and BTC Pegged Asset Market Dynamics Analysis

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

BTC (Re) staking market overview

Currently, the competition between BTC LSTs is becoming increasingly fierce, with all parties vying for the entry point of staking and earning interest on BTC and its wrapped assets. In the past 30 days, Lombard Finance has achieved rapid growth, reaching the highest TVL with a deposit amount of 5.9k BTC, surpassing the Solv Protocol, which had long been in the leading position.

Lombard has gained a competitive advantage at this stage by partnering with the top re-staking protocol Symbiotic Finance, providing participants with a richer source of re-staking yields and DeFi participation opportunities from the ETH ecosystem.

The Importance of Ecological Strategy

In the BTC LST space, ecological strategy has become a key influencing factor in the current competitive landscape. Unlike ETH LRT, which benefits from the mature DeFi ecosystem of ETH and ETH L2, 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.

Different BTC LST providers have adopted various strategic layouts:

1. Lombard Finance focuses on the development of the ETH ecosystem, providing rich external rewards for stakers through collaborations with Symbiotic Finance and Karak Network. At the same time, LBTC, as the first BTC LST, has gained support from the ETH re-staking protocol.

2. Solv Protocol and Bedrock DeFi are actively expanding across multiple chains, with ecological development covering upstream deposit reception and downstream application construction. The main liquidity of SolvBTC.BBN and uniBTC is concentrated on the BNB and ETH chains, while also injecting BTC liquidity into other L2s.

3. Lorenzo Protocol and pStake Finance focused on the construction of the BNB chain during the initial launch phase, supporting the reception of BTCB deposits, and respectively minted LST - stBTC and yBTC on the BNB chain.

Pendle Enters BTCFi

Pendle has integrated four types of BTC LST (LBTC, eBTC, uniBTC, and SolvBTC.BBN) into its points market. The actual adoption of LBTC is higher than the surface figures, as 37% of eBTC is backed by LBTC, and Pendle's integration of eBTC also indirectly benefits Lombard.

Except for eBTC, the other three LSTs are all bound in collaboration with Corn. Corn is an emerging ETH L2 that features veTokenomics and Hybrid Tokenized Bitcoin as its two unique designs. This architecture adds a new layer of leverage to the BTCFi system, but it also introduces new systemic risks.

SatLayer Joins the BTC Staking Market

SatLayer, as a new entrant, competes with Pell Network. Both accept the restaking of BTC LST and use it to provide security for other protocols. SatLayer is currently deployed on Ethereum, supporting the reception of various BTC LSTs, and more integrations are expected.

BTC Wrapped Token Market Competition

Since Justin Sun's involvement in the custody of WBTC has sparked controversy, the competition in the wrapped BTC market has intensified. Major competing alternative assets include BTCB, mBTC, tBTC, FBTC, and various BTC LST assets.

1. Coinbase has launched cbBTC, with a current supply of 2.7k, which has received support from multiple mainstream DeFi protocols.

2. Despite security concerns, WBTC still holds over 60% of the wrapped BTC market. BitGo announced that it will deploy WBTC on Avalanche and BNB chains, and will achieve multi-chain expansion through LayerZero's OFT standard.

3. FBTC actively promotes the widespread adoption in the BTCFi field and has been adopted by multiple BTC (re) staking protocols.

Market Outlook

BTCFi continues to grow, BTC (re) staking and BTC pegged assets are two key areas worth paying attention to. In the BTC (re) staking field, there is a trend of excessive construction on the supply side, and differentiated ecological strategies and unique downstream gameplay have become the key to competition. Regarding BTC pegged assets, trust remains a core issue, and all parties are actively striving to be accepted by mainstream DeFi protocols and users to capture the market share lost by WBTC.