Article reprinted from: Weilin
Author: Weilin, PANews
In the decentralized finance (BTCFi) ecosystem, Core is an L1 blockchain driven by Bitcoin and compatible with EVM, with validation nodes maintained simultaneously by miners, Bitcoin staking, and staking of Core's native tokens. With its innovative Satoshi Plus consensus, Core combines delegated proof of work (DPoW) and delegated proof of stake (DPoS) to provide Bitcoin holders with long-term and robust yield opportunities.
Currently, about 75% of global Bitcoin mining hash power has contributed to the Core model through DPoW, and over 9,000 Bitcoins have participated in its staking through non-custodial Bitcoin staking. Core is unlocking the potential of Bitcoin, making it a major protector and core asset of future decentralized finance.
On November 19, Core completed the Fusion upgrade, introducing two innovative products: Core dual staking and Core LstBTC. This article will delve into the important changes brought about by this upgrade and explore the trends of institutional adoption of BTCFi.
Deeply integrated into the Bitcoin community, innovatively launching Satoshi Plus consensus.
The foundation of Core is its innovative Satoshi Plus consensus mechanism, in which the DPoW mechanism allows Bitcoin miners to settle hash power on the Bitcoin mainnet through syntax like OP_Return and delegate it to preferred validation nodes to earn CORE token rewards. In this way, Core not only gains protection from Bitcoin miners but also enhances miners' earnings, especially in the context of reduced Bitcoin block rewards. Core's block rewards supplement the gap left by the halved rewards.
On the other hand, the delegated proof of stake (DPoS) in Satoshi Plus consensus allows CORE token holders to support network security by delegating CORE to validation nodes. Thus, they participate in the election of these validators and earn CORE token rewards for securing the chain. The key to this mechanism is the 'hybrid score,' which selects the top 27 validators by calculating delegated hash and delegated shares, updating every 24 hours to ensure the decentralization and stability of the network.
The third important component of the Satoshi Plus consensus is non-custodial Bitcoin staking, which since its launch in April 2024, has seen the delegated amount by Core blockchain validators exceed 9,000 Bitcoins. This method centers around absolute time locks, a local function of Bitcoin that allows holders to lock their Bitcoin for a predefined period during which it cannot be spent. While the Bitcoin remains locked on the Bitcoin blockchain, stakers delegate that Bitcoin to elect Core validators, who secure Core and earn CORE token rewards. Through this process, Bitcoin holders earn CORE token rewards daily without relinquishing custody of their assets or incurring counterparty risks.
It is noteworthy that Core has a deep connection with the Bitcoin community, especially with miners and Bitcoin holders. This sets Core apart from other Bitcoin L2 or sidechain projects. Over 75% of global mining hash power supports the Core network through delegated proof of work (DPoW), contributing hash power to the on-chain validation nodes and thus earning security rewards. The zero-risk, non-asset transfer features of non-custodial Bitcoin staking make many large Bitcoin holders and institutions willing to trust Core's technology and delegate their Bitcoins to validation nodes to maintain network security. Unlike other Bitcoin projects, Core pays greater attention to meeting Bitcoin holders' concerns about security and practical needs while providing yield opportunities.
Key points of the Fusion upgrade: Introduction of dual staking and LstBTC.
In January this year, the Bitcoin spot ETF was approved, and in November, the results of the U.S. elections were announced, subsequently, the cryptocurrency industry once again reached a peak of attention.
In this context, on November 19, Core further launched the Fusion upgrade. The Fusion upgrade enhances Core's BTCFi ecosystem through Core dual staking and LstBTC, providing more efficient participation pathways for institutions.
The launch of the dual staking product aims to address the potential imbalance in community reward distribution that may arise when Bitcoin stakers lock their assets during non-custodial staking and receive CORE token rewards through validation nodes. Especially in the case of substantial institutional Bitcoin staking, the released CORE rewards will increase accordingly. Against this backdrop, to encourage Bitcoin stakers to redelegate the CORE rewards they receive back to validation nodes, dual staking enhances user participation willingness by providing higher annual percentage yields (APY). Dual staking is divided into four levels, with yield ratios varying based on the ratio of staked CORE to Bitcoin. They are Base, which is 0 CORE:1 BTC; Boost, which is 1,000 CORE:1 BTC; Super, which is 3,000 CORE:1 BTC; and Satoshi, which is 8,000 CORE:1 BTC, with this level receiving the highest yield ratio.
The foundation of dual staking is to further develop the non-custodial Bitcoin staking launched in April, allowing Bitcoin stakers to stake CORE tokens and receive higher validation node rewards; on the other hand, it also incentivizes CORE token holders to achieve higher staking rewards by holding and staking small amounts of Bitcoin (minimum participation is 0.01 BTC) compared to single staking of CORE tokens. With the staking mechanism, Core strengthens its alignment with Bitcoin, while also enabling many institutions to explore Bitcoin yield possibilities while enhancing the security and sustainability of the Core blockchain.
Overall, the Fusion upgrade brings significant and beneficial impacts to the entire Core ecosystem. Before the Fusion upgrade, delegated proof of work had already attracted over half of the total Bitcoin hash power. However, not all hash power delegators were clear on how to handle their CORE token rewards. Although CORE is the most useful token on the Core blockchain (used to pay gas fees, staking, and governance), miners often do not pay attention to non-mining activities. The CORE tokens introduced by the Fusion upgrade enhance staking utility, which can incentivize miners to stake their CORE rewards to earn yields from Bitcoin reserves.
Furthermore, prior to the upgrade, Bitcoin stakers earned CORE tokens, which they could also stake, but the staking of CORE is independent of their primary interest in Bitcoin staking. By dual staking, Bitcoin stakers also stake CORE tokens, closing the economic value loop and further aligning Bitcoin with CORE assets. This capability enhances Bitcoin stakers' commitment to the earnings and security of Core.
Before Fusion, the three components of the Satoshi Plus consensus operated essentially in isolation. Even though miners and Bitcoin stakers were closely connected to the Core community, after dual staking, these components integrated, aligning all stakeholders around the Core network and the CORE token.
Another key part of this upgrade is LstBTC, which allows Bitcoin stakers to maintain their liquidity in the Core DeFi ecosystem while staking BTC. Additionally, they will earn CORE tokens as rewards during staking. While earning Bitcoin staking rewards, users can use their LstBTC for lending, exchanging, re-staking, and participating in other on-chain activities.
Over 200 projects in the ecosystem, institutional adoption becomes a trend.
As the Core network continues to develop, more decentralized finance projects are being built on its platform. Currently, the number of ecological projects on the Core chain has exceeded 200, including Pell Network, Solv Protocol, Avalon Finance, DeSyn Protocol, Colend, and others. The addition of these projects not only promotes the expansion of the Core ecosystem but also provides momentum for its TVL (Total Value Locked) growth.
In 2024, data growth on the Core chain was significant: by the third quarter, its TVL grew by 614%, and the amount of Bitcoin and CORE tokens staked increased by 85%. As of December 12, Core's TVL had surpassed $983 million, with over 31.5 million independent addresses on-chain, completing 327 million transactions.
Core's innovation has not only attracted Bitcoin holders but also garnered institutional interest. In June 2024, Core launched its first yield-generating Bitcoin exchange-traded product (ETP), providing investors with the opportunity to earn yields through non-custodial Bitcoin staking. In collaboration with DeFi Technologies' subsidiary Valour, this ETP offers investors a 5.65% yield, becoming an important avenue for institutional investors to enter the BTCFi ecosystem.
In addition, Core has established strategic partnerships with several custodial service providers such as Fireblocks, Copper, Cactus, and Hashnote. These companies are key service providers involved in Core's dual staking. One of the main reasons custodial service providers have become critical competitive areas for Bitcoin staking protocols and second layers is that most Bitcoin holders prefer to manage their assets through trusted custodial service providers. These providers typically offer zero-risk, stable return solutions, which is their primary consideration. Now, these providers collectively become the institutional force unlocking the potential of BTC for Core.
It is worth mentioning that after the success of MicroStrategy's Bitcoin strategy, many publicly listed companies followed suit and bought Bitcoin and other crypto assets, while the listed company DeFi Technologies announced in November the launch of a strategy called CoreFi, further enhancing Core's appeal among institutional investors. The CoreFi strategy is inspired by the successful experiences of MicroStrategy and Metaplanet. The CoreFi strategy provides investors with a regulated investment approach to obtain leveraged Bitcoin and CORE return pathways, enabling investors to achieve high Beta exposure to Bitcoin and BTCFi.
On December 9, the Core Foundation announced a partnership with BitGo, making BitGo the first custodial institution supporting user participation in Core's 'dual staking.' This collaboration marks a further breakthrough for Core in terms of institutional adoption.
Through the Fusion upgrade, Core has not only enhanced the scalability and flexibility of the decentralized finance ecosystem for Bitcoin but also provided more yield opportunities for Bitcoin holders and institutions. The introduction of dual staking and LstBTC has solidified Core's position in the BTCFi field.
In the future, with the launch of more innovative features and the growth of market demand, Core is expected to play an increasingly important role in the Bitcoin ecosystem, becoming a bridge connecting Bitcoin holders with BTCFi. For investors, Core's innovations bring new vitality to the market.
