On November 6, 2024, 137Labs held an X Space event themed 'After the Election, the BTC Ecosystem is About to Explode, In-Depth Discussion on the Future of BTCFi with Popular Projects.' The event invited several top experts in the field, including Fisher Yu, co-founder of Babylon, Ivan K, Chief Marketing Officer of StakeStone, Catherine, head of ecosystems and partnerships at Solv, and Matt, co-founder and CEO of Lorenzo. Together with Ivan, an analyst from 137Labs, and Oneone, the research director, they provided the audience with an in-depth analysis of the future development of BTCFi.
Under the influence of the global macro environment and election results, the Bitcoin ecosystem may usher in a new wave. During the event, guests discussed topics such as Bitcoin staking, liquidity management, institutional demand, and DeFi integration, exploring the latest dynamics and opportunities in the BTC ecosystem. Experts not only shared the progress and strategies of their respective projects but also analyzed the importance of compliance challenges, yield optimization, and security management in the BTCFi field. Through this article, you will understand the strategic layouts of leading projects in the BTCFi ecosystem and how these innovations drive Bitcoin's broader integration into the decentralized financial world. You will also see how traditional financial institutions like Wall Street are gradually exploring this field, and how compliance and technological challenges shape the future of the Bitcoin ecosystem.
Project introduction
Solv Protocol
A multi-chain Bitcoin staking platform, equivalent to 'Lido' in the Bitcoin ecosystem, focused on providing liquidity staking services. Solv's TVL has just surpassed $2 billion, with its reserve holding approximately 25,000 Bitcoins, benefiting from the rise in Bitcoin prices and platform expansion. Solv has also issued four types of liquidity staking tokens (LST), with the largest 'Babylon' having about 8,000 BTC staked on the platform. The platform adopts a multi-chain strategy, deployed across more than ten blockchains and public chain ecosystems, and through cooperation with various DeFi protocols, provides users with diverse strategy choices and liquidity support.
Lorenzo Protocol
Positioned as a 'Bitcoin liquidity layer,' focused on bringing Bitcoin's immense liquidity into the DeFi ecosystem. As Bitcoin is an off-chain asset for DeFi, it faces challenges in participating flexibly in DeFi like Ethereum and other smart contract chains due to a lack of cross-chain functionality and complex financial tools. Lorenzo Protocol is dedicated to solving this issue, launching products that inject Bitcoin liquidity into DeFi. One of its core products is stBTC, a liquidity staking token issued based on Babylon's staking, unlocking over a hundred million dollars of BTC liquidity, enabling its entry into the DeFi ecosystem. Another asset is Enzo BTC, a wrapped Bitcoin asset used for different application scenarios. More assets are planned to be launched in the future to meet the needs of different risk preferences and use cases, as Lorenzo Protocol aims to help Bitcoin holders achieve richer yields and functionality in DeFi.
Babylon
Hardcore projects focused on scientific research and development in the Bitcoin ecosystem aim to establish a staking mechanism for Bitcoin. Bitcoin is based on proof of work, while other chains, such as Ethereum, use staking to maintain security and provide users with rewards in the form of block rewards. Babylon's innovation lies in introducing a mechanism that allows Bitcoin to participate in staking and generate staking rewards, which is an unprecedented challenge in the Bitcoin ecosystem. Due to the lack of smart contract support in the Bitcoin network and limited programming flexibility, traditional staking methods cannot be directly applied. Babylon has solved this problem, allowing Bitcoin holders to stake and earn rewards without having to trust their Bitcoin to a third party, ensuring the security and autonomy of their assets. Currently, Babylon's mainnet has entered the first phase, with over $1.5 billion (approximately 10 billion RMB) worth of Bitcoin staked on the platform, marking significant progress in its technological and ecological influence.
StakeStone
As a full-chain liquidity asset protocol, it focuses on complete decentralization and supports various underlying assets. The protocol aims to enhance capital efficiency in the crypto market through automated yield optimization, providing users with diversified asset management solutions. The two core assets of StakeStone are STONE and SBTC. STONE is liquidity ETH, and SBTC is liquidity BTC.
Q1
When does Babylon expect to raise the cap again? Does this mean there will no longer be quantity and block limits? When will the unstake/withdraw function be opened in which phase?
Fisher explained the current staking and unstaking functions of the Babylon project and clarified users' doubts. He pointed out that users can unbind and retrieve their BTC at any time, and this feature has been open since its launch online without any restrictions; the project party has never restricted users from withdrawing assets.
He reviewed the strategy changes over two rounds of staking. The first round had a staking cap of 1,000 BTC, with intense competition leading to users paying high fees. To improve user experience, the second round introduced a new mechanism—a one-hour staking window lasting for ten BTC blocks, where any legitimate staking transaction within these ten blocks is recognized by the system. This significantly reduced fees and made the staking process more affordable. Currently, approximately $1.5 billion worth of Bitcoin has been staked on the platform.
Fisher revealed that the third round of staking is coming soon and is expected to take place within the next one to two months. This round will further relax block space and single-staking limits, ensuring that users can participate without paying high fees. Additionally, Fisher mentioned that after the current first phase (version 1.2) ends, the third round of staking (version 1.3) will take place, followed by Babylon entering the mainnet of the second phase—i.e., the launch of the Babylon chain. This chain will become a staking protection public chain based on PoS, at which point all BTC staked in the first phase will be upgraded to the new stage, completely removing quantity and block limits, providing a more comprehensive staking experience.
Q2
Since the launch of EIGEN Layer, many AVS projects have emerged. Which projects has Babylon partnered with so far? How is Babylon's cooperation plan being implemented?
Fisher explained in detail the differences between Babylon and EigenLayer, especially in the direction of cooperative projects. He pointed out that EigenLayer's AVS is a service-oriented architecture. Therefore, EigenLayer primarily collaborates with service-oriented projects, while Babylon's Bitcoin staking focuses on providing security and liquidity support for chains and Layer 2, with completely different types of cooperative projects.
Babylon's cooperation direction involves multiple areas, including supporting new wallet products and staking technology development, covering institutional and retail users. They also strongly support liquidity staking (LST) projects like Lorenzo. On the demand side, Babylon is promoting cooperation across multiple ecosystems, including the Cosmos ecosystem, Ethereum's Layer 2 ecosystem, and Bitcoin's Layer 2 ecosystem. Fisher mentioned that they recently announced that Corn has become the first Consumer Chain protected by BTC staking and is working closely with projects such as Cosmos Hub, Osmosis, and Axelar in the Cosmos ecosystem to promote the introduction of Bitcoin as a staking asset.
In the Ethereum ecosystem, Babylon is collaborating with SnapChain and Altlayer to develop BTC staking protection OP Rollups based on OP Stack and Arbitrum, respectively. Fisher emphasized that more collaborations and official announcements will be released in the future, showcasing Babylon's deep layout and support plan in the multi-chain and Layer 2 ecosystems.
Q3
Why are StakeStone, Solv, and Lorenzo entering the BTC ecosystem? What advantages do StakeStone and Solv have compared to other BTC ecosystem projects?
Catherine explained the background and advantages of Solv Protocol entering the BTC ecosystem. She pointed out that Solv is a project with a four-year history, relatively mature and stable in the crypto industry. This year, they chose to shift to the BTC ecosystem, despite the risky transition, they successfully seized the opportunity. Solv has always been a core project on Merlin and gradually expanded to other ecosystems. When Babylon launched its first phase, Solv quickly participated, actively investing despite facing challenges.
Speaking of Solv's advantages, Catherine emphasized that she does not want people to only see their high TVL but rather to understand Solv's contribution to ecosystem building. She cited the example of their recent entry into two new public chain ecosystems—Avalanche and Taiko. Avalanche is an established public chain, but its DeFi activity is not prominent. After Solv's entry, starting in September, they helped drive the BTC ecosystem on Avalanche, especially on the Trader Joe DEX platform, where daily trading volumes can reach $8 million. This considerable trading volume not only reflects actual user participation but also brings significant activity to the public chain ecosystem.
Catherine also mentioned that Taiko is another ecosystem they have just partnered with. Despite its short launch time, Taiko's data performance is very strong, and she believes Solv's involvement can promote Taiko's further development in the BTCFi field through various integrations and collaborations. Catherine emphasized that these actual transaction volumes and activity indicators are far more meaningful than simply pursuing TVL and provide long-term ecological value for these public chains.
Matt explained the reasons for Lorenzo Protocol's entry into the BTC ecosystem and their advantages. He mentioned that Lorenzo quickly invested fully when launching the Bitcoin liquidity staking project with Babylon and has made early arrangements, such as launching a dedicated appchain in the Cosmos ecosystem and releasing STBTC, which is now distributed across more than ten chains and plans to expand further. They believe that Bitcoin, as digital gold, will continue to have its long-term value verified and solidified, compared to other altcoins that may gradually lose their appeal, making it a long-term investment potential. Therefore, Lorenzo's strategy is to bet on the long-term development and functional expansion of Bitcoin.
Matt emphasized that Bitcoin's market share is close to 60% and continues to grow, although its application scenarios are currently limited. However, Babylon's BTC staking functionality significantly expands the boundaries of Bitcoin's use, not only giving Bitcoin staking capabilities but also allowing holders to earn passive income, while enhancing the overall security of the crypto industry. He believes this innovation is of great significance in terms of technology, economic benefits, and industry public welfare, marking a historically valuable advancement.
Lorenzo's choice to enter the BTC ecosystem aims to release Bitcoin's liquidity through the LST project. He pointed out that the current BTC-related liquidity pools (such as Uniswap) on Ethereum are relatively shallow and have not fully released liquidity. Therefore, Lorenzo is committed to leveraging the substantial opportunities brought by Babylon to inject Bitcoin liquidity on-chain, providing liquidity dividends for more DeFi projects. Additionally, as the chains and ecosystems protected by Babylon continue to expand, Lorenzo plans to develop more customized LST assets to meet different user needs in terms of yield, liquidity, and risk preferences, promoting further development and liquidity optimization of the BTC ecosystem.
Ivan mentioned that StakeStone initially focused on the native ETH staking product Stone on Ethereum, aiming to provide optimized returns for users. This year, with the emergence of multiple BTC ecosystems and Bitcoin Layer 2 solutions, they saw an opportunity to apply their experience and technology to Bitcoin staking products. Hence, they developed StoneBTC, aiming to provide users with high-yield solutions similar to Stone.
Currently, StakeStone has launched SBTC, a liquidity BTC staking token, and plans to integrate it into future StoneBTC products. Ivan explained that the core goal is to seamlessly introduce native Bitcoin assets into EVM-compatible chains, as Bitcoin lacks developer-friendly native support, making integration with EVM chains very difficult. Through SBTC, they hope to bring BTC into the EVM ecosystem to expand Bitcoin's usability and usage in DeFi scenarios.
Additionally, StakeStone plans to further enhance the yield of on-chain Bitcoin. They are dedicated to building a 'one-stop' yield platform, allowing holders of StoneBTC to earn diversified returns across various yield protocols. Their vision includes providing comprehensive yield strategies and integrating RWA returns into StoneBTC in the future. They will also inject liquidity to provide users with additional reward opportunities. Although StoneBTC has not yet been released, Ivan emphasized that they are actively developing it, planning to bring users more yield and support for DeFi scenarios.
Q4
What kind of incentives, promotions, and growth plans do StakeStone, Solv, and Lorenzo have next?
Catherine introduced Solv Protocol's plans for growth and user incentives, pointing out that Solv primarily creates profit opportunities for users through deep integration with various DeFi protocols, without the need for additional incentives. She explained that users can easily obtain returns through simple strategies. For example, in the Ethereum ecosystem, users can earn up to 7% annualized returns in Pendle, Solv-BTC, and Babylon's Corn pool. For users looking to further increase returns, they can utilize DeFi leverage strategies, such as staking Solv BTC and borrowing more Solv BTC; as long as the borrowing rate is lower than 7%, users can engage in circular borrowing to amplify returns. This strategy is applicable on both Ethereum and BNB chains.
Additionally, Catherine mentioned that they also offer high yield opportunities on other chains. Users can participate in pools on Base via Aerodrome, with annualized yields ranging from 40% to 60%, attracting many retail participants. She specifically mentioned the Taiko chain, with which Solv recently completed integration. Taiko is very supportive of BTCFi projects and plans to launch more activities. Users can access new profit opportunities through Solv BTC on Taiko, further expanding their yield sources.
Matt introduced Lorenzo Protocol's incentive and growth plan, emphasizing their strategic layout across multiple ecosystems. They are cooperating with several projects on the BNB Chain to provide liquidity support, and users can earn returns ranging from single digits to over ten percent by participating in these collaborations.
In addition, Lorenzo has made early layouts in the Blayer network, establishing in-depth cooperation with multiple leading projects to ensure the depth and stability of liquidity pools. In the Ethereum ecosystem, they have contributed over $40 million in BTC TVL to Corn. Matt emphasized that Lorenzo's core mission is to build a liquidity layer for Bitcoin, first by releasing BTC liquidity through Babylon's staking and then efficiently deploying that liquidity to different ecosystems.
Their cross-chain bridge system has a wide coverage, capable of quickly injecting liquidity into the most suitable yield scenarios. Next, Lorenzo plans to deepen cooperation with more public chains and Layer 2 and will continue to release new high-yield products in the coming weeks. These incentive measures will include yields provided by Babylon as well as incentives from their own tokens, helping users convert BTC into interest-bearing BTC and leverage more yield pools to deploy liquidity in ecosystems with demand, achieving higher returns.
Ivan introduced that StakeStone is focused on educating users on how to effectively utilize their BTC liquidity assets, such as SBTC and StoneBTC. They plan to launch more educational content to help users understand how to mint and use these assets to maximize the yield opportunities in the DeFi ecosystem.
Additionally, Ivan mentioned that they are waiting for more favorable opportunities and the launch of new yield pools to provide users with higher returns. StakeStone launched a new product today, StakeStone Vault, in collaboration with the trending RWAFi chain Plume, which reached the deposit cap within an hour and a half. They are also closely monitoring upcoming opportunities and hope to bring users more high-yield investment options.
Q5
How are Solv's BTC assets distributed on Babylon and Ethena? What considerations are behind the distribution?
Catherine explained the distribution strategy of Solv's BTC assets on platforms like Babylon and Ethena, emphasizing that all distributions are entirely decided by users, rather than arranged by project parties. Currently, Solv offers four types of LST products: Babylon, Ethena, Corn, and Jupiter, with each product representing different types of returns.
Specifically, Babylon and Corn provide staking yields, while Ethena and Jupiter base their returns on trading strategies such as delta-neutral strategies, which are generally suitable for passive investors. Catherine mentioned that users will autonomously choose based on yield changes. For example, over 3,000 BTC were once staked on Ethena, but due to the continuous increase in yield from Jupiter's JLP, users gradually shifted funds to other more attractive options, such as Jupiter.
Babylon continues to attract the most BTC, with over 8,000 BTC currently staked, and more participation is expected in the next round of staking. On the other hand, Jupiter's appeal is growing, especially due to the high yields brought by its strategy, prompting more users to shift BTC to Jupiter. Catherine emphasized that Solv's role is to provide a variety of products, allowing users to choose freely based on their own risk preferences and return goals, rather than enforcing mandatory asset allocation.
Q6
Due to the complexity of point statistics in EIGEN previously, does the Babylon PPC model help with fairness?
Fisher explained how Babylon's PPC model promotes fairness and clarified the design logic behind their point system. He pointed out that the definition of 'points' in the blockchain field is often confusing, with different projects using points to represent various levels of activity participation, and sometimes even to manipulate user behavior. However, in Babylon, points have a clear and unique definition: they are used to simulate on-chain staking rewards, which is simple and transparent.
Specifically, Fisher explained that normal on-chain staking generates block rewards; for example, Bitcoin produces 3.125 BTC per block as rewards for miners. Since Babylon has not yet launched its own chain, there are currently no actual staking rewards, so they designed a point system to substitute. In this system, each Bitcoin block virtually generates 10,000 points, which are evenly distributed among all users who staked in that block. This mechanism is fully automated, simple, and fair, without complex calculations or factors that manipulate users.
He also compared Babylon's point system with EigenLayer's point mechanism, pointing out that EigenLayer has a problem: if a large amount of TVL suddenly enters in the final phase, it will dilute the points of early users. Babylon has designed a mechanism to prevent this issue, ensuring that points are not diluted by large-scale staking later on. They employ a method that simulates on-chain staking rewards, allowing all participants to fairly obtain points. This transparent point distribution mechanism is based on the Bitcoin blockchain, allowing anyone to easily verify and calculate the number of points, ensuring there are no opaque operations or situations.
Q7
Are there more application directions in the projects that Babylon serves for the security of BTC?
Fisher pointed out that Babylon itself is a core infrastructure project closely related to the Bitcoin ecosystem, with extremely high flexibility to support various types of applications. He emphasized that Babylon does not have specific preferences or inclinations; any project can build services on its foundation.
However, Fisher mentioned that due to limited resources, Babylon's current support focuses on three main directions: Cosmos chain, Ethereum, and Bitcoin Rollup. Meanwhile, they have launched a hackathon this month to further build and expand the developer community, encouraging more developers to create decentralized applications on the Babylon chain. These are several core directions that Babylon is currently promoting, aiming to provide foundational security services for a broader blockchain ecosystem.
Q8
Given the complexity of point statistics based on pendle in Babylon, can the PPC model achieve synchronous settlement?
Fisher pointed out that the difference between Bitcoin staking and Pendle lies in the fact that Babylon's system directly identifies and calculates the points of stakers. For example, when users stake through LST provided by Solv or Lorenzo, the Babylon system considers these projects as stakers and calculates points based on their provided staking wallet addresses. This point generation is real-time on-chain, very transparent and simple, and can be completed through the program within seconds, without worrying about omissions or complex statistical issues.
When asked whether future airdrops or rewards can be accurately allocated to LST ecosystem projects, and whether disputes similar to those of EigenLayer will arise, Fisher stated that Babylon's point distribution is completely transparent and verifiable on-chain, but how to allocate and use points is managed by those projects themselves.
Catherine added that Solv places great importance on the accuracy of point distribution and believes LS projects have a responsibility to ensure users receive the correct rewards. She explained that Solv operates across multiple chains and protocols, involving complex strategy integrations, such as Pendle's YTPT and multi-layered collateral lending, which complicates point calculations. She admitted that although BD collaborations often progress quickly, the integration of technology and points can indeed slow down the pace. However, she firmly stated that Solv prioritizes user rights and will always be 'responsible to users,' ensuring that point calculations and distributions are accurate and transparent.
Q9
EigenLayer once experienced a liquidity decentralization event, as well as other protocols facing security issues, leading to liquidity collapse. How do StakeStone, Solv, and Lorenzo effectively maintain liquidity, and what remedial measures do the protocol parties have in case of security incidents?
Matt first shared Lorenzo's thoughts on liquidity management. He stated that integrating with multiple DeFi protocols is not always better, as liquidity in the market is limited, and the realization of yields remains uncertain. Therefore, Lorenzo is very cautious with their yield and integration strategies. They have introduced a system called YAT, which helps users clearly calculate and manage their yields. When users stake, they receive YAT, which clearly records the yields during each phase. This yield system not only makes the distribution process more transparent but also avoids yield calculation issues that may arise from integrating multiple complex DeFi protocols.
Matt also mentioned that to simplify future yield distribution, they are considering gradually converting points into liquidity tokens (rather than simple points) to make yield issuance simpler and more efficient. Additionally, they maintain a high level of caution for DeFi integration; although Lorenzo can quickly connect with dozens, even hundreds of DeFi protocols, they focus on collaborating with mature, audited projects, such as well-known platforms like PancakeSwap, and only select one or two leading projects within each ecosystem for cooperation.
Regarding security, Matt emphasized that they remain vigilant to potential risks and thoroughly review codes and mechanisms before integrating with partners, ensuring they understand how they operate. If security issues occur at the protocol level, Lorenzo also has contingency plans in place, such as rapid response mechanisms in the event of fund theft. They are also developing an on-chain liquidity monitoring system to promptly detect and take action in case of anomalies. This system will be promoted to partners in the future, ensuring everyone can collaborate efficiently to minimize potential losses. This multi-layered security approach is aimed at protecting users' assets and providing an efficient risk management system.
Catherine shared specific measures and thoughts from the Solv Protocol regarding liquidity and security issues. She divided her answers into three parts: the importance and cost of liquidity, liquidity monitoring, and addressing potential risks from cooperative agreements.
First, she explained the critical nature of liquidity in multi-chain deployment. Insufficient liquidity can restrict the implementation of many DeFi protocols and strategies, especially in lending protocols where liquidation requirements are typically high, and price discrepancies cannot be too large. Therefore, to support these strategies, Solv must ensure that on-chain liquidity meets standards. Providing and maintaining liquidity incurs costs, which are generally borne by Solv, as liquidity itself does not directly bring substantial returns to users but is the foundation for the ecosystem's operation. Therefore, Solv is willing to bear these costs to support users in smoothly conducting various DeFi operations.
Secondly, Catherine mentioned that Solv has established a liquidity monitoring system to track the liquidity status across various chains in real-time, ensuring timely identification and resolution of potential issues. This monitoring mechanism is crucial for maintaining the stability of the protocol and the safety of users' funds.
Finally, she discussed the counterparty risks of collaborating with other protocols. Catherine emphasized that they are very cautious when selecting cooperative agreements, especially when facing new ecosystems, even if they are backed by well-known teams or substantial funding. She cited a real example: Solv witnessed two important projects in an ecosystem being halted for several days due to small-scale attacks or vulnerabilities. Therefore, even for new ecosystems with significant funding or star project backgrounds, Solv maintains strict security reviews and does not let their reputation cloud their judgment, always prioritizing the security of user assets. Catherine emphasized that the safety of users' funds is paramount; any negligence could lead to severe consequences, and once a security incident occurs, it ultimately affects user interests. Thus, Solv will continue to rigorously examine partners' codes and mechanisms in the future to prevent potential risks.
Ivan first discussed StakeStone's SBTC asset, pointing out that it is composed of several different ERC-20 tokens, resulting in stronger overall liquidity.
In terms of security, Ivan emphasized that StakeStone has taken measures for regular audits. Every one to two months, they commission third-party audit firms to conduct comprehensive security checks to identify and fix potential vulnerabilities. In addition, StakeStone's architectural design is fully decentralized, reducing the risk of single points of failure. For example, when users mint SBTC, they automatically use custodial services, such as Copper, to ensure asset security.
He also mentioned that StakeStone has an internal monitoring system that continuously tracks asset liquidity. If the system detects any abnormal activities, the team can intervene quickly to reduce risks and protect users' assets. Overall, Ivan emphasized that through a decentralized architecture and real-time monitoring, StakeStone can effectively reduce security risks and ensure that users' funds are adequately protected.
Q10
How does StakeStone manage the distribution of these yields, and how can users flexibly choose their yield sources?
Ivan responded that users can view their portfolio and yield distribution strategies on StakeStone's official website. He explained that StakeStone adopts a 'one-stop' yield management model. Taking Stone as an example, users can earn diverse returns from multiple sources by staking Stone, such as EigenLayer, Symbiotic, and other yields, rather than being limited to a single source. Ivan pointed out that sometimes users may notice that the yield from a particular protocol is low, but they overlook the comprehensive yield, especially the additional returns from other strategies.
He further discussed the distribution model of StoneBTC, stating that StoneBTC is designed as a yield-generating asset, with its returns dynamically adjusted based on the different protocols it is connected to. For example, StoneBTC can participate in vaults like Babylon or Symbiotic to obtain specific returns. Ivan emphasized that users will be able to choose different yield strategies based on their preferences: if users wish to focus on the yields from a single ecosystem, they can choose the corresponding vault. This flexibility helps users better manage their asset yields and avoid confusion in distribution.
Ivan also stated that StakeStone has been listening to user feedback and continuously improving product design, striving to provide users with clearer and more flexible yield options.
Q11
MicroStrategy proposed the concept of BTC Yield, which means the continuous growth of BTC volume. It can be anticipated that BTCFi is a good choice. Currently, licensed institutions on Wall Street hold a large amount of non-yielding BTC assets. Is there an understanding of the demand from Wall Street institutions to explore participation in BTC ecosystem staking? Are there plans to provide services for institutions? What challenges are there in compliance, and how do you plan to address them?
Fisher stated that indeed large institutions have shown interest, and these institutions will be extremely cautious when entering the BTCFi ecosystem, with very strict compliance requirements. He pointed out that the internal decision-making process of large institutions is complex and requires multiple reviews and approvals, which slows down the progress.
However, Fisher emphasized that once these large institutions decide to enter the market, the impact will be 'earth-shaking,' potentially bringing profound changes to the entire BTCFi ecosystem. He suggested that while compliance and the cumbersome internal processes of institutions are significant challenges, the potential market momentum and impact are enormous.
Matt acknowledged that different institutions have varying requirements and compliance terms, which can sometimes seem complex and diverse. Although Lorenzo prioritizes actual needs when advancing its business, they also proactively address compliance issues. Matt emphasized that compliance is not only a requirement from large institutions for projects, but conversely, Lorenzo also reviews the sources of funds for institutions and their compliance channels for entering the ecosystem to ensure overall safety and compliance.
In the future, Lorenzo will launch relevant supporting measures, such as anti-money laundering (AML), identity verification (KYC), and due diligence (DDQ) mechanisms. These measures will provide compliance support for institutions holding large amounts of BTC and create safer and more transparent conditions for their entry into the BTC staking ecosystem.
Ivan believes that large institutions, such as MicroStrategy, may take time before truly participating in liquidity staking. He noted that these institutions tend to prefer developing their internal DeFi staking protocols rather than immediately investing in existing decentralized platforms. Ivan explained that large financial institutions and banks are already using blockchain technology for some internal transactions, such as developing their stablecoins and blockchain systems, but these operations are mainly focused on their internal dedicated blockchains rather than the open-chain environment.
He added that in the future, large companies may continue to develop and use their proprietary staking and blockchain solutions rather than immediately adopting external protocols for staking. He emphasized that this is a personal view, but indicated that the liquidity participation of these giants would not be realized quickly in the short term and would require time to develop and adapt.
Conclusion
Through this in-depth discussion in the X Space, the guests illustrated the immense potential of the BTCFi ecosystem after the elections, as well as the key innovations in Bitcoin staking and liquidity management. Whether it's Babylon's breakthroughs in expanding Bitcoin staking application boundaries, Solv's strategic layout in the multi-chain ecosystem, or Lorenzo's commitment to releasing Bitcoin liquidity, these projects demonstrate how to promote Bitcoin's broader integration into the decentralized financial world.
The insights from experts reveal the efforts in the BTCFi field to address security, compliance, and yield optimization challenges, as well as how the potential involvement of institutional investors could bring revolutionary changes to the industry. As more traditional financial giants begin to focus on this field, the Bitcoin ecosystem is evolving towards a more mature, efficient, and secure direction, creating new development opportunities for the crypto industry.
After the election, the Bitcoin ecosystem may enter a new growth phase, providing users and developers with richer application scenarios and returns, while injecting new momentum into the digitalization and decentralization transformation of the global financial system. In the future, innovations and collaborations in the BTCFi field will continue to drive the evolution of Bitcoin's role in the global economy, benefiting both ordinary users and institutional investors from this exciting transition.
This article is for sharing and communication only and does not constitute investment advice.
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