BTC (Re)staking and the competition in the BTC collateralized asset market is heating up

Recently, with the launch of the first phase of the Babylon mainnet, Pendle's introduction of BTC LST, and the release of various wrapped BTCs, BTCFi has once again become the focus of the market. This article will delve into the latest developments in BTC (re) staking and the field of BTC-backed assets.

BTC (Re) Staking Market Overview

Currently, the competition among BTC LSTs is becoming increasingly fierce, with all parties vying for the staking income entry of BTC and its wrapped assets. In the past 30 days, Lombard Finance has rapidly risen with a deposit amount of 5.9k BTC, becoming the platform with the highest TVL, surpassing the long-term leader Solv Protocol.

Lombard has gained a competitive advantage by partnering with top re-staking protocol Symbiotic, providing users with richer ETH ecosystem re-staking yields and DeFi participation opportunities.

The Key Role of Ecological Strategy

In the BTC LST space, ecological strategy has become a key factor in determining the 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 chain BTC pegged assets, and integration with re-staking platforms.

Currently, various BTC LST providers are adopting different strategic directions:

1. Lombard Finance focuses on the development of the ETH ecosystem and collaborates with Symbiotic and Karak Network to provide rich external rewards for stakers. LBTC becomes the first BTC LST to receive support from the ETH re-staking protocol.

2. Solv Protocol and Bedrock DeFi are actively expanding across multiple chains while developing upstream deposit reception and downstream applications.

3. Lorenzo Protocol and pStake Finance initially focus on the BNB chain, supporting BTCB deposits and minting LST.

Pendle Enters BTCFi

Pendle has recently integrated four types of BTC LST (LBTC, eBTC, uniBTC, and SolvBTC.BBN) into its points market. The actual adoption of LBTC on Pendle is higher than surface values, and since 37% of eBTC is supported by LBTC, Pendle's integration of eBTC also indirectly benefits Lombard.

Except for eBTC, the other three LSTs have all collaborated with Corn. Corn is an emerging ETH L2 with two unique designs: veTokenomics and hybrid tokenization of Bitcoin.

SatLayer Joins BTC Re-staking Competition

SatLayer has recently entered the BTC re-staking space, becoming a new competitor to Pell Network. Both accept BTC LST for re-staking and use it to provide security for other protocols. Pell, as a pioneer, has accumulated a TVL of $270 million, while SatLayer is also rapidly expanding after securing funding.

BTC Wrapped Token Market Landscape

The competition in the wrapped BTC market is intensifying, with major alternative assets including BTCB, mBTC, tBTC, FBTC, etc. Coinbase recently launched cbBTC, which has received support from multiple mainstream DeFi protocols. Despite security concerns, WBTC still holds over 60% of the wrapped BTC market share, but its adoption rate continues to decline.

FBTC is actively promoting adoption in the BTCFi space through the "Sparkle Campaign" and has been accepted by multiple BTC (re) staking platforms.

Future Outlook

BTCFi continues to grow, with BTC (re) staking and BTC pegged assets being two key areas worth paying attention to. There is a trend of excessive supply-side construction in the BTC (re) staking field, while the market size on the demand side has yet to be clarified. Differentiated ecological strategies and unique downstream applications have become the key to competition.

In terms of BTC pegged assets, trust remains a core issue. Exchanges, L2s, and BTC LST providers are actively developing their own BTC pegged assets, striving for recognition from mainstream DeFi protocols and users to capture the market share lost by WBTC.