Compared with ETH interest-earning, BTC interest-earning track is still a blue ocean. Master aims to open up a user entrance for the track by integrating income and simplifying operations.
Written by Alex Liu, Foresight News
BTC is the asset with the strongest consensus and the largest market value in the crypto industry, and it has reached the extreme in the field of decentralized value storage. However, nothing can be perfect. Does such an asset have any flaws at present?
Yes! Most of the liquidity is locked on the chain and cannot generate interest and create income for holders. Here is a simple example:
Xiao Zhang and Xiao Li entered the cryptocurrency circle at the same time. Under the recommendation of a big shot, Xiao Zhang heavily invested in Bitcoin and stopped operating after transferring it to a cold wallet; Xiao Li bought Ethereum and interacted with various DeFi protocols on the chain. The two often communicated and Xiao Zhang gradually learned that Xiao Li pledged his ETH in the LST protocol, deposited it in EigenLayer to participate in "restaking", bought Pendle's PT to lock in 20+% annualized returns, and deposited it in Blast to accumulate points and finally get airdrop tokens. Although the returns of various financial management behaviors are high and low, and the price of Ethereum fluctuates, the number of ETH tokens in his hands is indeed increasing day by day.
But Xiao Zhang still has so much BTC in his hands. Since Bitcoin itself does not support smart contracts, he cannot find a native and convenient place to "utilize" his BTC.
Xiao Zhang is a little anxious. He thinks: "When there are opportunities everywhere, it is a crime to leave assets idle without generating income." Just like the real estate in hand, although it will not affect its own value when it is idle, it "loses" the rent. How can I make the BTC in my hand "earn interest"?
BTC interest, mismatch between track potential and infrastructure
Compared with ETH interest-earning, BTC interest-earning track is still a blue ocean.
Bitcoin's proof-of-work (PoW) mechanism limits holders from earning returns through direct staking. Despite Bitcoin's dominance in market capitalization, a large amount of Bitcoin is underutilized. Especially in comparison with Ethereum - although Ethereum is much smaller than Bitcoin in total market capitalization (Ethereum's market capitalization is $400 billion, about 1/3 of BTC), it has dozens of times the total locked value (TVL) of BTC in the decentralized finance (DeFi) field.
Total locked-in amount of each chain, ratio of locked-in amount to market value Data source: DeFiLlama
According to the data in the above figure, only 5% of BTC needs to enter the interest-bearing track for its TVL to exceed the Ethereum mainnet; and if the ratio of locked-up volume to market value reaches the same level as Ethereum, a huge market with a locked-up volume of over 150 billion will be born! This shows the huge potential of the track. However, the infrastructure construction of the BTC interest-bearing track is not mature now, which is undoubtedly a mismatch between the track potential and infrastructure. How to reverse the situation, attract users and expand the market?
The development of Bitcoin’s Layer 2 (L2) solutions has provided new opportunities for it to earn interest, but these solutions are currently not friendly enough to retail investors. Master Protocol’s vision is to solve this problem through its product innovation and become the user entrance of the track.
What can Master Protocol bring to Bitcoin?
Current status of Bitcoin interest
As mentioned above, a large amount of Bitcoin liquidity is being locked on the chain, and their interest-earning potential has not been fully released. In order to solve this inefficiency problem and release the massive liquidity of BTC, the industry has developed a variety of Bitcoin Layer 2 solutions, using different technical solutions to promote BTC staking and the generation of income.
Well-known Layer 2 solutions such as Babylon, Botanix's Spiderchain, Bitlayer, BounceBit, B², and Merlin have created a variety of methods to support Bitcoin staking. Except for Babylon's use of remote staking, most Layer 2 solutions use bridge or mirror technology to transfer native Bitcoin to the Proof of Stake (PoS) chain.
Through liquidity staking protocols such as Master Protocol, pStake, Bedrock, Pell, and Lorenzo, users can stake Bitcoin on various Layer 2s and receive LST (Liquid Stake Tokens) as their staking certificate. This operation allows users to reinvest their LST in a variety of scenarios, while ensuring returns without affecting liquidity. In addition, through the adoption of re-staking protocols, users can further stake LST to obtain LRT (Liquid Restake Tokens), further enhancing their investment capabilities and asset liquidity.
Staking and re-staking will provide users with network and protocol rewards, so the above LST and LRT are interest-bearing assets. We classify them as single-layer/double-layer yield tokens. Looking ahead, with the development of the new AVS (Active Validating Service) on Babylon, the value of the application chain is more widely recognized, and the growth of DApps and Memes on other Layer 2, more new interest-bearing tokens will be created in the Bitcoin ecosystem.
Master Product Positioning
There are already multiple Layer2 solutions and liquidity staking protocols (LST protocols) in the Bitcoin ecosystem, such as Botanix Spiderchain. These protocols aim to improve the scalability and liquidity of Bitcoin, but their complexity (such as the need to frequently switch networks, multiple bridge assets, etc.) makes it difficult for ordinary users to participate. Master Protocol attempts to simplify this process while increasing user participation through its product portfolio, especially the Master Yield Market and the Liquidity Staking Protocol (LST protocol) on Botanix Spiderchain.
Master Protocol has two main products:
Master Yield Market: Provides yield trading opportunities, aggregates Bitcoin ecosystem assets, packages them into MSY, and then splits them into MPT (principal) and MYT (interest) for users to trade.
LST Protocol on Botanix Spiderchain: Improving Bitcoin liquidity and yield through a liquid staking protocol.
Bitcoin Ecosystem and Master Protocol’s Product Positioning
In this way, Master Protocol can play a synergistic role among multiple protocols in the Bitcoin ecosystem, which is beneficial to the development of the entire ecosystem. By packaging and aggregating the interest-bearing assets of the Bitcoin ecosystem issued by various protocols, Master Protocol can serve as a one-stop Bitcoin ecosystem income trading center. Users can access the income opportunities of different protocols in the ecosystem through this "entrance", saving the trouble of repeatedly comparing and switching among the dazzling array of protocols. As a user entrance, in addition to the adoption of Master Protocol itself, multiple Bitcoin ecosystem protocols that cooperate with it can also be diverted.
All of this is based on Master Protocol’s core product, Master Yield Market.
Master Yield Market
The basic function of Master Yield Market is to aggregate Bitcoin ecosystem assets, package them into MSY, and then split them into MPT and MYT for users to trade. Its principle is similar to the Pendle protocol:
MPT (Master Principal Token): represents the principal. Purchasing MPT can lock in the profits of the underlying assets in advance, which is equivalent to a fixed-income product.
MYT (Master Yield Token): represents interest. The unit price of MYT is low, but it can improve the utilization rate of funds, which is equivalent to leveraging and speculating on expected returns.
Master Yield Market can be simply understood as Pendle on BTC. This is a very high evaluation, and it also symbolizes unlimited potential - Pendle is the only DeFi protocol that has broken the circle this year. Both the platform and the coin price have developed very well, which has fully driven the development of on-chain interest rate derivatives. In TradeFi, interest rate derivatives occupy most of the market positions in the derivatives market. As of June 2023, the overall derivatives market position has reached 714.7 trillion US dollars, of which the open interest position of interest rate derivatives has reached 573.7 trillion US dollars, accounting for 80.2% of the share. This is precisely the track that is easiest for institutions to enter. Since the BTC ETF has been officially approved by the SEC, perhaps the interest rate trading platform on BTC will be successfully adopted by institutions one step ahead of Ethereum, bringing greater imagination space.
Master Yield Market Interface
Currently, Master Yield Market has cooperated with many partners, such as Botanix, BounceBit, Bitlayer, etc., and supports assets including BounceBit's native assets stBB and stBBTC, etc. Planned launches in the near future include Pell protocol assets on BounceBit and Bitlayer, Bedrock (uniBTC) and pSTAKE (yBTC) assets on Babylon, Lorenzo protocol assets on multiple BTC Layer 2, and Master Protocol assets (mpBTC) on Botanix Spiderchain, etc.
Master Yield Market will integrate these diverse assets and provide users with transactions in the form of MPT and MYT. These strategic integrations will provide better accessibility to the Bitcoin ecosystem, significantly enhance Bitcoin’s liquidity and capital utilization, and drive the ecosystem towards prosperity.
In the future, Master Yield Market will also support USDT and other BTC assets (ETH, BSC and other multi-chains), such as using wBTC to directly purchase MPT and MYT corresponding to the underlying assets of each ecological project. This is equivalent to Master Protocol helping these projects to do asset routing to achieve the required cross-chain transactions, giving users a smooth and seamless interactive experience.
In this way, retail investors also have the opportunity to simply get started with interest rate trading (yield trading) in the Bitcoin ecosystem, which is also the core advantage of Master Protocol. However, even the best protocols rely on user adoption. To achieve this, Master Protocol chooses to incentivize users through Master Yield Pass.
Master Yield Pass
Master Yield Pass is an incentive launched by Master Protocol. There are 10,000 of them, which were minted for free on Base on June 24. At present, all NFTs have been minted for free and can be purchased on secondary NFT markets such as Opensea. Its current price in the secondary market is only 0.001 ETH, which is about 3 US dollars, and the cost is extremely low. If you are optimistic about the BTC interest-bearing track, you can consider buying it to ambush future airdrops/trading income.
The benefits after staking Master Yield Pass include:
Earn points from the Trading Pool and Referral Pool, which can be exchanged for token airdrops in the future.
Platform fee dividends. Assuming the total transaction volume reaches $200 million and the platform fee reaches the million-dollar level, each NFT can receive more than $100 in dividends. (In comparison, the cumulative transaction volume of Pendle, a yield trading platform on Ethereum, has reached billions of dollars.)
Future rights: such as whitelist qualifications for NFT/activities/IDO, etc.
Master Yield Pass Minting and Staking Page
Trading Pool and Referral Pool are the main ways to play, but it should be noted that they also use two independent points calculation systems, and the points bonuses are not shared with each other.
Trading Pool
Earn points based on your trading volume, and stake Yield Pass to get a 3x bonus.
Points calculation rules
Personal total points = personal total transaction amount x points bonus coefficient;
The amount of airdrops that an individual can receive = the total points of the individual during the event / the total points of the entire network during the event * the total amount of airdrops
1 - Staked Pass Holder
Hold and pledge Yield Pass to get 3 times the points bonus
If the user's total transaction amount is 1,000 USDT, the points that the user can obtain are: 1,000 (total transaction amount) X 3 (Yield Pass bonus) = 3,000 Points
2 - Unstaked Pass Holders and Non-Pass Holders
Only basic transaction points can be obtained
If the total transaction amount of a user is 1,000 USDT, the points that the user can obtain are: 1,000 (total transaction amount) X 1 (no bonus) = 1,000 Points
Referral Pool
Earn points based on the number of invites, and get bonuses by staking Yield Pass.
Referral Pool Score Panel
1 - Points calculation rules
Stake Pass Holder: 200 points can be automatically mined every day. The actual points obtained are calculated by multiplying the points by the buff bonus. The calculation formula is: Points = 200 (daily basic points) * [100% (basic coefficient) + 2% (each Holder Buff bonus) * Number of Holders + 1% (each non-Holder Buff bonus) * Number of non-Holders + 50% * Inviter points bonus]
For example, if A stakes NFT, invites 50 staked Holders and 100 non-Holders who meet the transaction volume verification of $100, and joins B's team, and B's points bonus is 50%, then A can get a single-day point of: 200 x (100% + 50 x 2% + 100 x 1% + 50% * 50%) = 650 points
Unstaked Pass Holders and non-Pass Holders: no automatic mining points, no buff bonus
2 - As the host
Only the pledged Pass Holder can be the inviter
If the invitee is a Pass Holder and has pledged: Each invitee can provide a 2% Buff bonus, and both parties can receive 1 random points bonus packet
If the invitee is a non-staked Pass Holder or non-Pass Holder: Each invitee can provide a 1% Buff bonus (the invitee must complete at least 100 USDT of transaction volume to complete valid user verification. After the verification is completed, both parties can receive a random bonus point.
3 - As an invitee
If the invitee is a Pass Holder and has pledged, the invitee can enjoy 50% of the inviter's Buff bonus after joining the team (if the inviter's current Buff bonus is 50%, the invitee can get 25% of the Buff bonus after joining the team)
If the invitee is a non-staked Pass Holder or non-Pass Holder, no bonus will be given; if the user completes the valid user verification (transaction volume reaches 100 USDT), he/she will receive a participation award (random red envelope, 10-200 points)
Genesis Master Pass
Genesis Master Pass Staking Page
In addition to the Master Yield Pass, the first NFT series Genesis Master Pass launched by Master Protocol is also in progress. Participating in the staking task can also earn airdrop points. This series can currently be purchased in secondary markets such as Opensea. Interested readers can learn about and participate in it through official documents and tutorials.
Participate in the BTC ecosystem through Master Protocol
In general, Master Protocol's Master Yield Market simplifies the process of Bitcoin interest-earning, enabling retail investors to directly trade Bitcoin's LST and LRT assets using USDT, ETH, or WBTC, thereby unlocking considerable income opportunities in a simple and efficient way. While having innovative products, it incentivizes users through multiple equity NFT series, promotes trading activities and user acquisition, and accelerates its own adoption. The BTC interest-earning track, where track potential and infrastructure are mismatched, has ushered in its own "user entrance". Perhaps after truly finding Project Market Fit (the fit between products and markets), the potential released by this sleeping dragon will surprise all of us.
Now, Xiao Zhang can pledge his Bitcoin liquidity on Botanix Spiderchain through Master Protocol, a one-stop Bitcoin income portal, purchase PT whose underlying asset is BounceBit stBBTC to lock in income, buy uniBTC YT issued by Bedrock on Babylon, and plan for token airdrops of the two major protocols, Bedrock and Babylon - earning interest on his BTC in a variety of ways, and no longer have to envy Xiao Li.
To learn more about Master Protocol, visit its official website, Twitter, Discord, and Telegram.
References
[1] All Chains TVL - DefiLlama https://defillama.com/chains
[2] Master Yield Market: A Revolutionary Step in Bitcoin Yield Trading https://www.morningstar.com/news/accesswire/880956msn/master-yield-market-a-revolutionary-step-in-bitcoin-yield-trading
[3] Master Protocol Launches BTC LSDFi Product, Master Yield Market https://www.binance.com/en/square/post/2024-06-22-master-protocol-launches-btc-lsdfi-product-master-yield-market-9812392963426
[4] Introducing Master Yield Market: Unlocking Multiple Benefits of Bitcoin Yield Trading
https://medium.com/@MasterProtocol_/introducing-master-yield-market-unlocking-multiple-benefits-of-bitcoin-yield-trading-bdf659459ae4
[5] Unveiling: Genesis Master Pass Mint Time and Exclusive Early Bird Campaign
https://medium.com/@MasterProtocol_/unveiling-genesis-master-pass-mint-time-and-exclusive-early-bird-campaign-07bac2f64504
