BTC (Re) staking and anchored asset market competition intensifies

Recently, with the launch of the first phase of the Babylon mainnet, Pendle supporting BTC LST, and the introduction of various wrapped BTC assets, BTCFi has once again become the focus of market attention. This article will analyze the latest developments in BTC (re) staking and BTC pegged assets.

BTC (Re) staking market landscape

After quickly reaching the 1000 BTC cap in Babylon Stage 1, competition among BTC LSTs has intensified. In the past 30 days, Lombard Finance has experienced rapid growth, achieving a current highest TVL with a deposit amount of 5.9k BTC, surpassing the long-time leader Solv Protocol.

Lombard has gained a competitive advantage in the current stage by partnering with the top restaking protocol Symbiotic, providing participants with richer restaking yields and DeFi participation opportunities from the ETH ecosystem.

Ecological strategy becomes a key factor

In the BTC LST field, ecological strategy has become a decisive factor in the current competitive landscape. Unlike ETH LRT, BTC LST faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination with various on-chain BTC pegged assets, and integration with re-staking platforms. Currently, the choice of ecological strategy directly affects the growth rate and the competition for early market share.

Lombard Finance focuses on the development of the ETH ecosystem. By collaborating with Symbiotic and Karak Network, it provides rich external rewards for stakers beyond Babylon. $LBTC, as the first BTC LST to receive support from the ETH re-staking protocol, is actively promoting leveraged strategies on ETH, with major partners including Pendle, Gearbox Protocol, and Zerolend.

Solv Protocol and Bedrock DeFi adopt a multi-chain expansion strategy, with ecosystem development covering upstream deposit reception and downstream application construction. The main liquidity of SolvBTC.BBN and uniBTC is concentrated on the BNB and ETH chains, while also injecting BTC liquidity into other L2s.

Lorenzo Protocol and pStake Finance are focusing on the BNB chain in the initial phase. They have supported the reception of $BTCB deposits and have minted LST - $stBTC and $yBTC on the BNB chain respectively. Lorenzo's feature lies in building a yield market based on BTCFi, utilizing a structure that separates Liquidity Principal Tokens (LPT) and Yield Accumulation Tokens (YAT).

Pendle Enters BTCFi

Pendle has integrated four types of BTC LST into its积分市场, including $LBTC, $eBTC, $uniBTC, and $SolvBTC.BBN. The actual adoption of $LBTC is higher than the surface value, as 37% of $eBTC is supported by $LBTC, and Pendle's integration of $eBTC also benefits Lombard indirectly.

Except for $eBTC, the other three LSTs have collaborated with the emerging ETH L2 Corn. Corn features two unique designs: veTokenomics and Hybrid Tokenized Bitcoin, which may create an integrated path of Wrap BTC → BTC LST → BTCN → DeFi in the future, adding new nested leverage to the BTCFi system.

SatLayer Joins the Re-staking Market

SatLayer enters the BTC re-staking space, becoming an emerging competitor to Pell Network. Both accept BTC LST re-staking and use it to provide security for other protocols. Pell has accumulated a TVL of 270 million USD, integrating major BTC derivatives across 13 networks. SatLayer is deployed on Ethereum, supporting the reception of multiple BTC LSTs and planning for further integrations.

Competition for BTC Pegged Assets Intensifies

The competition in the BTC market is further intensifying, with major alternative assets including $BTCB, $mBTC, $tBTC, $FBTC, and various BTC LST assets.

A well-known cryptocurrency exchange has launched a wrapped asset $cbBTC supported by its custody, which has gained support from multiple mainstream DeFi protocols and plans to expand to more chains. Several BTC LST projects have also quickly expressed their intention to collaborate with the chain where this asset is located.

Despite security concerns, $WBTC still accounts for over 60% of the wrapped BTC market. Its issuer recently announced the deployment of $WBTC on Avalanche and BNB chains and is conducting multi-chain expansion through the omnichain fungible token (OFT) standard. However, the adoption rate of WBTC continues to decline, and several leading DeFi protocols have started removing it from their collateral lists.

$FBTC has been deployed on the Ethereum, Mantle, and BNB chains, actively promoting adoption in the BTCFi space through the "Sparkle Campaign". Multiple BTC (re) staking projects have adopted $FBTC and provided point incentives for early users.

Summary

In the continuously growing trend of BTCFi, BTC (re) staking and BTC pegged assets are two key sectors worth paying attention to. The BTC (re) staking field has shown a trend of excessive construction on the supply side, while the market size on the demand side remains unknown. Differentiated ecological strategies and unique downstream applications have become key factors in the competition among various BTC LSTs.

The trend of BTC pegged assets being intertwined introduces new systemic risks, while there is also the possibility of various protocols being over-mined with minimal returns. For BTC pegged assets, trust remains a key issue. Exchanges, L2, and BTC LST parties are actively developing their own BTC pegged assets, striving to gain acceptance by mainstream DeFi protocols and a broad user base in order to capture the market share lost by WBTC.