As the market value of Bitcoin continues to hit new highs, many Bitcoin holders and institutions have gradually shifted their attention to how to improve the financial attributes of Bitcoin: If you have idle BTC, how to maximize its benefits? How to increase the passive income of Bitcoin?
On July 2, OKX Ventures announced an investment in Lombard to promote innovation in the Bitcoin re-staking ecosystem. This series of initiatives not only brings new capital opportunities to Bitcoin holders, but will also drive the growth of the DeFi ecosystem.
Next, we will explore in detail how Lombard achieves this goal.
01 Financing support and ecosystem development
As an emerging force in the Bitcoin re-staking ecosystem, Lombard is rapidly attracting market attention.
Lombard is based on Babylon and provides cross-chain liquidity staking of Bitcoin. It can be said that the Babylon protocol is the key to Lombard's success. The protocol allows Bitcoin assets to be pledged in a trustless and self-custodial manner, providing economic security for the Proof of Stake (PoS) system. Its flagship product LBTC enables Bitcoin assets to be seamlessly integrated into DeFi protocols on Ethereum and Layer 2 chains. As collateral in decentralized finance, LBTC is expected to release more than $1.3 trillion in Bitcoin for lending and trading.
Lombard recently closed a $16 million seed round led by Polychain Capital, with participation from BabylonChain, Inc., dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, and Nomad Capital.
The funds will be used to further develop the Bitcoin re-staking ecosystem, especially to advance Babylon’s staking protocol. Through Babylon, staked Bitcoin assets are converted into LBTC, enabling seamless integration into various DeFi protocols on the Ethereum mainnet and future popular Layer 2 chains.
02 Bitcoin’s Liquidity Revolution
LBTC, as Lombard's flagship product, is a yield-based, cross-chain, and highly liquid Bitcoin. It is backed by BTC at a 1:1 ratio, and achieves cross-chain liquidity and profitability of Bitcoin assets through Babylon's staking protocol. This means that Bitcoin holders can not only continue to hold and store their Bitcoin, but also earn income through staking and use it in various DeFi protocols.
First, users stake their Bitcoin into Babylon’s staking protocol, a process that is secured through Babylon’s decentralized verification system and secure key management system.
Users can then mint an equal amount of LBTC through the Lombard platform. These LBTC can be seamlessly moved across chains and used in various DeFi protocols on Ethereum and future Layer 2 chains, such as lending, trading, and staking.
The introduction of LBTC solves the problem of Bitcoin's lack of native returns and cross-chain composability in DeFi. By unlocking Bitcoin's liquidity and capital potential, LBTC not only enhances the utility of Bitcoin, but also promotes the development of the entire DeFi ecosystem.
03Multi-level components and security mechanisms
Lombard's technical architecture consists of multi-level components and security mechanisms, ensuring the security and efficiency of its system.
First, CubeSigner is a hardware-backed non-custodial key management platform developed by Cubist. It provides low-latency hardware support for cryptographic key generation, signing, and specific applications such as validator staking or unstaking. CubeSigner uses AWS's HSM encapsulated Nitro enclaves to ensure the security of the keys.
The core features of CubeSigner include:
(1) Protect against key theft: Keys are stored in secure hardware during the generation and signing process to prevent them from being extracted or stolen. (2) Reduce security vulnerabilities, hackers, and internal threats: Prevent unauthorized access through refined, instantly revocable signing session controls. (3) Prevent costly mistakes: Allows you to define custom policies for each key and use built-in policies such as validator penalty prevention policies to prevent upgrade errors and vulnerabilities in validator clients. (4) Supports multiple hosting settings: You can manage your own keys or the keys of end users. (5) Encrypted key import and export: Directly import and export encrypted keys to avoid key exposure.
Second, Lombard Consortium.
Lombard Consortium is a decentralized state machine for sharing ownership and managing assets among various members. Its main features include:
(1) Create and verify deposit addresses: When a user requests a deposit, Consortium creates a new Bitcoin address managed by CubeSigner. (2) Verify deposits and generate signature data: Confirm the existence and confirmation of the deposit transaction, verify the transaction amount and deposit address. (3) Staking and unstaking Bitcoin: Select the appropriate finality provider for staking and unstaking. (4) Pay unstaken Bitcoin: Process the payment process of unstaken Bitcoin.
Consortium is deployed on trusted network nodes through the Raft algorithm to ensure the decentralization and security of consensus and data notarization. Members can become part of Consortium through a multi-step approval and infrastructure deployment process, thereby participating in the governance and operation of Lombard.
Finally, smart contracts
Lombard's smart contract system consists of three main parts: (1) Consortium governance smart contract: reads and submits state changes related to LBTC, ensuring that all operations are transparent and verifiable. (2) ERC-20 token smart contract: mints and destroys LBTC tokens. (3) Proxy upgrade delay smart contract: delays the proxy upgrade of the smart contract for one hour to increase security.
In addition, Lombard has adopted a multi-layered protection approach in terms of security.
Lombard uses Cubist's multi-factor authentication wallet (MFA Wallets), and each transaction requires multiple security checks and approvals to prevent unauthorized access. In addition, Lombard's transactions are verified and notarized by the Lombard Consortium, composed of industry leaders, to ensure decentralized security.
Through a series of innovative initiatives and strong security guarantees, Lombard is gradually achieving its goal, bringing more opportunities and growth space to Bitcoin holders and the entire DeFi ecosystem.
summary
Lombard's rapid development and remarkable achievements are inseparable from the support of its strong ecosystem partners. By establishing partnerships with many industry giants, Lombard can receive full support and guarantees in all aspects such as technology, market and security.
Leading cryptocurrency exchanges such as ByBit, OKX, and Bitget provide Lombard with extensive market access and liquidity support, helping to promote LBTC and enhance its market influence; Shared Security Alliance and Babylon, as core partners of the Lombard staking protocol, provide seamless and secure support for the staking of Bitcoin assets, while Shared Security Alliance provides additional security guarantees; Staking Circle, Ethereum, Mantle, Zircuir, Scroll, Linea: These blockchain platforms and infrastructure projects provide technical support for LBTC's cross-chain integration and compatibility, enabling it to operate seamlessly on different blockchain networks.
In summary, Lombard is leading the innovation of the Bitcoin re-pledge ecosystem, unlocking the huge potential of Bitcoin in DeFi through its flagship product LBTC and its partnership with the Babylon protocol. With the completion of the $16 million seed round of financing, Lombard will continue to advance the development of its ecosystem and provide users with more liquidity and income opportunities.
The future development of Lombard is exciting.