With the launch of Babylon and the opening of Lorenzo staking, let’s talk about the recent development of the BTC ecosystem. From the time Ordi made the BTC ecosystem popular to now, BTC has actually quickly compressed the route that ETH has taken - first the on-chain assets (ERC20) became popular - then the expansion plan (Rollup) - and then Staking/Restaking. But because there is no stabilizing force like ETH Foundation and Vitalik Buterin to set the direction, BTC is basically in a situation where all flowers bloom at once. Ordinal became popular on the asset side first, and then Brc20, Arc20, Src20, Orc20 and other XX20s poured out like crazy. Many people were delighted last year that the BTC security model was likely to be solved (after another 20 to 30 years and four or five halvings, the block reward can be so small that it can be ignored. There must be enough TX on the chain to pay the miners for the service fees). At the end of last year, when Inscription was frantically issuing new shares, the service fee did exceed the block reward. You can see from this chart that the most expensive day was 300BTC in service fees.


Let’s look at August again…only a few BTC in transaction fees were collected every day. Rune was popular for a short time in April and May, and then it died down. After ETH’s ICO in 2017, the next expansion plan was represented by Merlin, which first took ETH’s EVM ready-made technology stack + a multi-signature side chain to run (Polygon - it was also called Matic at the time, and it did the same thing). Then, compared with the official Rollup on the ETH side, BTC has much more expansion plans. I drew a simple picture, which is basically like this (on-chain assets are also included as a technical branch)

Currently, Taproot Asset can only be used for transfer. The most BTC Native (that is, starting from the UTXO feature) is definitely RGB (will the mainnet be delayed in September?), RGB++ & UTXO Stack, and Unisat’s Fractal (recently very popular).   There is actually a route missing in the diagram, which is the 1.5-layer contract virtual machine extension. The representative is undoubtedly Arch Network. The recently discussed OP_NET is also considered, but Arch uses ZKVM and OP_NET uses WASM.   Because the technology stack of the expansion solution is so messy, even messier than the assets, it is really hard to say who will come out on top in the end. We can only say that each has its own advantages and disadvantages. Leave it to time and the market. This is a pessimistic view. Maybe it is not impossible to disprove all of them in the end. After all, BTC’s current main narrative of “electronic gold” does not need to be expanded. The expansion is more for the service of “on-chain assets”. If the on-chain asset route does not take off, the expansion will naturally lose its meaning. Finally, let’s talk about the third stage (Staking/Restaking). This route is actually more solid than the previous two routes, because it does not conflict with the electronic gold narrative at all, and it is even a perfect supplement - releasing the liquidity of gold and turning gold into an interest-bearing asset! The most important project at this stage is undoubtedly Babylon, because BTC does not have the natural POS Yield like ETH. Under the premise of the existence of Lido, EigenLayer’s Restaking narrative is more like a Booster for ETH itself, or icing on the cake. Babylon is a timely help for BTC. By restaking BTC in a trustless way and generating yield, BTC is no longer an interest-free "gold" asset. Two other worth mentioning in this route are Solv and DLC.Link. The former gives BTC interest + SolvBTC liquidity in the form of Cefi+Defi (one of the entrances to Babylon), while the latter uses DLC technology to mint dlcBTC in the current environment where WBTC is suffering from a trust crisis. "Trustless Bridge" BTC to ETH, Solana and other chains to participate in the Defi ecosystem, which is easy to understand and can be simply regarded as a decentralized and secure version of WBTC. Let's get back to the point, back to Babylon and Lorenzo. Babylon is undoubtedly benchmarked against the ecological niche of EigenLayer, so there will naturally be an asset entrance, that is, the ecological niche of LST/LRT is also extremely important. EigenLayer has Etherfi, Renzo, Puffer, etc., and Babylon also has Solv, Lombard, and Lorenzo are competing for the entrance. The differentiation of each company is greater than that of several leading projects on Eigen's LRT side. For example, in addition to Babylon, Solv also has income on Cefi, Defi, and various BTC/ETH-related projects and cooperation income with the second layer with Ethena, Merlin, Arb, etc.Lombard has advantages in capital and circle resources. At the same time, the LBTC it issued is also the most secure one. The CubeSigner (a professional non-custodial key management platform) + Consortium (a consortium chain node network composed of industry leader nodes) used is the most balanced solution I have seen in terms of security and flexibility. Lorenzo directly integrates the principal and interest separation function of Pendle into it, with the liquidity pledge token stBTC for the principal part of BTC (the same for each pledge project), and the liquidity pledge token YAT for the interest part (different for each pledge project). Lorenzo is also the only project on the market that provides users with a dual incentive system of YAT and points LST. The current total limit is 250BTC (to ensure user benefits), and there is a capacity of about dozens of BTC, which is expected to be full soon. First come first served. Finally, compared with the two directions of issuing assets and expanding capacity on the BTC chain, BTC’s interest / Liquidity release is a more visible and tangible direction, which can be seen from Binance's layout in this direction, especially the asset entry. Among the projects mentioned above, Binance has invested in Renzo, Puffer, Babylon, Solv, and Lorenzo. So you know, this track needs to be taken seriously!