The second round of Babylon’s staking arms race, Cap2, came to an end yesterday. A total of 22,854.84₿ was staked in this round, and 30,860 addresses participated. Since Cap2 no longer limits the staking hard cap and there is no Gas War, the market attention is not as high as the first round of Cap1. Together with the 1,000₿ of Cap1, Babylon’s current TVL totals 23,854.84₿, equivalent to 1.482 billion US dollars.
Currently, among the Ethereum Restaking basic protocols, Eigenlayer’s TVL is 10.658 billion USD, Symbiotic’s TVL is 1.568 billion USD, and Karak’s is 502 million USD. The TVL of Babylon, the leading player in the Bitcoin Restaking ecosystem, is an order of magnitude lower than that of Eigenlayer, the leading player in the Ethereum Restaking ecosystem.
Possible reasons for this phenomenon include: Babylon’s staking is still in its infancy, the Bitcoin community’s HODL habit, BTC has no native staking rewards (i.e., BTC cannot be staked to obtain additional BTC rewards), etc.
In addition, the AVS project in the Ethereum ecosystem has been sluggish in Q2 and Q3 of this year, and the market has reservations about the growth and even necessity of the AVS paradigm in the Bitcoin ecosystem. However, from my observation, developers are currently very active in adopting the AVS paradigm, exploring the integration of AVS in cross-chain bridge Relayer, oracle network, ZK coprocessor, Rollup shared sequencer and other scenarios.
In fact, Bitcoin Restaking & LST, Bitcoin L2, BTCFI, Inscriptions & Runes in the Bitcoin ecosystem are all designed to solve the problem of insufficient Bitcoin security budget caused by the continuous halving of Bitcoin block rewards. The Bitcoin mainnet can no longer simply serve as an infra of "digital gold" and live a good life on its own. It must also learn from Ethereum to sell its own block space to obtain rent income.
Both exchanges and institutions have seen this, but their layout strategies are completely different.
OKX, as a representative, chose to focus on the inscriptions and runes of Bitcoin, while vigorously developing Web3 wallets and related trading markets. This strategy regards Bitcoin more as a basic layer on which new applications and asset types are built.
Binance, as a representative, focuses on Bitcoin Restaking & LST. By supporting the Restaking protocol Babylon and the LST protocol Lorenzo, Solv, Pstake, etc., a complete ecosystem is created for Bitcoin. This approach aims to improve the capital efficiency of Bitcoin while sustainably increasing the utilization rate and selling price of Bitcoin block space.
Back to the current status of Babylon Cap2 staking, in this round of staking war, Lorenzo Protocol stands out and becomes a rising star in the BTC LST field. According to Dune Analytics data, Lorenzo has become one of the leading Bitcoin liquidity staking protocols in October, with deposit volume and user growth rate both ranking at the forefront. As the first Bitcoin liquidity financial layer based on the Babylon ecosystem, Lorenzo is redefining Bitcoin's liquidity and application scenarios in a new way.
One of Lorenzo's major innovations is to introduce Pendle's revenue tokenization mechanism into the Bitcoin ecosystem, seizing the key ecological position of the revenue pricing market in the Bitcoin ecosystem's LRT track. Lorenzo supports the splitting of stBTC, the LST token of his platform Wrap, into:
1. Liquidity Principal Token (LPT): represents the staked Bitcoin principal and is pegged to the native BTC at a 1:1 ratio.
2. Yield Accumulation Token (YAT): represents the income generated by staking Bitcoin.
This separation mechanism not only improves capital efficiency, but also paves the way for more complex DeFi strategies. For example, users can use LPT as collateral for lending while continuing to receive staking income through YAT.
In addition, Lorenzo also allocated additional LRZ token airdrops to YAT holders on top of Babylon points and Lorenzo points. Cap1 allocated $1.5 million worth of LRZ tokens, and Cap2 allocated $3 million worth of LRZ tokens. Later, Lorenzo will launch the YAT trading market to price the yield of BTC LST assets.
Another highlight of Lorenzo is its innovative staking mechanism:
1. Circular staking: By cooperating with external DEX, users can stake BTC and borrow more BTC, thereby amplifying the staking income.
2. Leveraged staking: Lorenzo provides internal liquidity, allowing users to achieve maximum leverage with one click.
These features significantly improve capital utilization and make Lorenzo stand out in the highly competitive BTC LST market.
On the technical level, Lorenzo is built on Babylon's Bitcoin shared cryptoeconomic security protocol (aka, AVS). This not only ensures a high level of security, but also lays the foundation for future integration with other high-quality Bitcoin staking projects. In addition, Lorenzo's smart contracts have been audited by multiple well-known security audit companies, further enhancing the reliability of the protocol.
In terms of market performance, Lorenzo has shown strong growth momentum. Since the beginning of September this year, its market share has increased significantly, and its average daily deposit volume and user activity have shown an upward trend. This growth is largely due to its innovative product design and effective market strategies.
To further expand the ecosystem and give back to the community, Lorenzo recently teamed up with Bitcoin L2 @BSquaredNetwork, Babylon Ecosystem AVS Universal Layer @Pell_Network and BTCFI aggregator @avalonfinance_ to launch the "Gold Miner" event on BNB Chain. The event provides:
- Up to 30% APY compound income
- Reward pool totaling 1 BTCB and 11 BNB
- Weekly draws for 11 consecutive weeks, 10 lucky users share 1 BNB every week
This event not only provides users with considerable profit opportunities, but also demonstrates Lorenzo’s ambition in cross-chain cooperation and ecosystem expansion. After all, whether a network effect can be formed is a key strategic point for the LRT protocol to achieve a stable growth flywheel.
Of course, we also need to recognize that the BTC LST field is still in its early stages and faces some practical challenges:
1. Regulatory uncertainty: As DeFi becomes mainstream, regulators may increase their scrutiny of such innovative financial products.
2. Technical barriers: The Turing-incomplete design of the Bitcoin network makes it more challenging to implement complex programmable finance.
3. Market volatility: Sharp fluctuations in Bitcoin prices may affect staking returns and overall protocol stability.
4. Intensified competition: As more players enter the BTC LST market, continuous innovation is needed to maintain a competitive advantage.
In summary, BTC LST not only provides a new way for Bitcoin holders to capture value, but also shapes the future of the Bitcoin ecosystem. With more innovation and adoption, we may be witnessing the beginning of Bitcoin's transformation from a simple store of value to a true financial infrastructure. Lorenzo Protocol has grabbed a good ecological niche in this paradigm revolution, and in the TVL battle of the BTC LST ecosystem, it has achieved exponential growth in the near future with its excellent product mechanism and market strategy of giving real money to the community.
The end.
#LorenzoProtocol#BTCFi#Babylon
