$BTC LSD: How Can It Help More Users Share $BTC Staking Rewards?

$BTC liquid staking utilizes a trustless mechanism based on cryptography to achieve secure staking of Bitcoin on the mainnet, generating yield that can also benefit from other #DeFi projects. This approach addresses the inflation and startup challenges faced by small to medium-sized #PoS chains, providing Bitcoin holders with new avenues for earning income.

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@babylon_chain is a non-custodial Bitcoin staking solution that achieves native asset staking of $BTC on layer one in a trustless manner. By re-staking, it provides security guarantees for other blockchains' POS, generating yield.

Bitcoin staked under Babylon does not leave the mainnet; security is ensured by the #PoW mechanism. The staking process operates entirely through a cryptographic method called "Extractable One-Time Signature (EOTS)," without relying on any third-party bridges or custodians. As a result, it has received a warm welcome in the highly security-conscious $BTC community.

Babylon allows Bitcoin holders to earn staking rewards while ensuring security, opening up the $BTC staking path, and fundamentally changing the gameplay of the $BTC ecosystem. Additionally, the introduction of $BTC staking can also address inflation issues for small to medium-sized POS chains (convincing everyone to stake requires offering relatively high inflation yields, such as 10-20% tokens for a one-year stake) and the difficulty of getting started (building validation nodes requires substantial capital).

$BTC Liquid Staking

Similar to traditional liquidity token solutions for $ETH, the $BTC liquid staking solution aims to provide a demand deposit for $BTC, allowing users to deposit and withdraw at will while earning interest. Moreover, the liquid staking tokens can also be utilized in other DeFi projects to earn additional yield (such as providing liquidity, lending, etc.). Staking on Babylon can be viewed as a form of fixed deposit, offering high yields but not allowing for immediate withdrawal of the deposit. At the same time, it can attract more non-mainnet $BTC users, such as those holding wBTC on Ethereum, allowing them to participate in Babylon staking.

Essentially, liquid staking can be seen as the project team borrowing users' $BTC to stake at Babylon, using the staking rewards to pay interest to users, while the bonds (liquid staking tokens) given to users can also be traded.

Currently, most of Babylon's liquid staking tokens are built on Ethereum, with plans to support multiple chains in the future. Except for Lombard, where users stake directly to Babylon, other projects adopt a custodial model, where the project team stakes on behalf of users to Babylon, supported by third-party liquidity providers.

pSTAKE

@pStakeFinance adopts an institutional custodial liquidity model, where users' funds are staked to a pSTAKE deposit address, and liquidity is provided by custodial providers like Cobo. The project then re-stakes the $BTC to Babylon.

yBTC is the official liquid staking token, which has not yet been issued. It is expected to allow users to utilize yBTC to earn yield in other DeFi projects, such as providing liquidity, lending, etc. yBTC will initially be issued on Ethereum and later on other #L2s.

Project Progress & Participation Opportunities

The v1 testnet involves depositing and withdrawing sBTC (testnet $BTC) on pSTAKE in the $BTC testnet. v2 will provide users with the ability to obtain staking rewards from Babylon on the mainnet. v3 will mint a liquid staking token called yBTC, allowing users to earn staking rewards while also utilizing yBTC to participate in other DeFi projects. v4 will diversify the yield sources.

Currently, the product is at the v1 stage, and there is no points program yet, which is expected to launch alongside the mainnet. Participating in testnet staking will bring additional point boosts. As of now, v1 has 44,813 users participating, staking 40.65 sBTC.

Lorenzo

Lorenzo has implemented a principal and interest separation model similar to @pendle_fi in its $BTC liquidity solution. The Lorenzo protocol attempts to match Bitcoin holders with project parties needing Bitcoin liquidity by issuing bonds (yield accumulation token YAT) to Bitcoin holders. Lorenzo then stakes Bitcoin liquidity on Babylon.

Users send $BTC to Lorenzo's multi-signature wallet, which is then managed by staking agents (a group of trusted Bitcoin institutions and TradFi giants), and they receive stBTC as staking proof. Lorenzo then stakes $BTC to Babylon.

After collateralizing Bitcoin liquidity, Lorenzo issues three types of tokens:

1. Liquidity Principal Token (LPT): Represents the tokenization of redeemable $BTC principal, with stBTC being Lorenzo's official LPT.

2. Yield Accumulation Token (YAT): Represents the right to claim rewards from staking projects at the end of the re-staking period. YAT can be traded and transferred, but cannot be transferred after maturity. Users can claim project rewards based on the YAT they hold. YAT is an ERC-20 token issued through re-staking to the staking agents.

3. Staking Proof Token (SPT): After users claim project rewards using YAT, YAT will automatically convert to an equivalent SPT, entering a unified queue and cannot be traded.The sole purpose of SPT is to be destroyed sequentially when users burn stBTC to withdraw BTC. The agentID associated with the burnt SPT determines which staking agent will redeem the BTC. If there are insufficient SPTs in the queue, users must wait for new SPTs to enter the queue. Users who generate SPTs by claiming YAT can prioritize redeeming $BTC using their generated SPTs.

Since LPT and YAT can both be traded, anyone holding YAT and LPT can use them to claim rewards and withdraw re-staked $BTC, respectively.

LPT, like stBTC, can be seen as another form of wrapped Bitcoin, and Lorenzo aims to eventually replace wBTC. The value of YAT comes from accrued yield and speculation on future yields, and YAT is characterized by high volatility. Trading pairs between stBTC and all YAT will be the base trading pairs. There may also be trading pairs between LPT, YAT, and assets like $ETH, BNB, and stablecoins, creating significant arbitrage and investment opportunities for investors.

In lending protocols, borrowers can use LPT and YAT as collateral to borrow any desired assets; in return, stakeholders have greater control over their investments and liquidity.

Project Progress & Participation Opportunities

Lorenzo's mainnet will launch in two phases (Lorenzo Phase One and Lorenzo Phase Two).

Lorenzo Phase One mainly tests the minting of stBTC from $BTC and the exchange of stBTC for BTC.

Lorenzo Phase Two introduces staking agents to decentralize the management of users' staked $BTC and issue liquidity re-staking tokens supported by $BTC, where staking agents can issue YAT to represent users' staked earnings. When users claim project rewards using YAT, it will automatically convert to an equivalent amount of SPT, determining which staking agent redeems the BTC.

Participating in pre-launch staking can earn rewards and points: https://t.co/h1givuciFs

Lombard

@Lombard_Finance is more decentralized, where user funds are directly staked to Babylon rather than provided by a trusted third party for liquidity. The overall architecture consists of users, Bitcoin nodes, backends, and a Consortium (used to manage the staking process, which is a decentralized state machine that achieves consensus using the Raft algorithm).

The staking process of Lombard is managed by the decentralized Consortium, where users send native $BTC to the Consortium's address. Once the backend detects a deposit at this address from a Bitcoin node, it triggers the deposit notarization process to the Consortium, which will check the transaction to verify the deposit, then stake the $BTC to Babylon and mint LBTC equal to the amount staked by the user.

Role of LBTC

LBTC is Lombard's liquid staking token, allowing holders to earn native yield through staking on Babylon. LBTC is exchangeable 1:1 with $BTC, can operate cross-chain, and is compatible with DeFi, usable as collateral for lending protocols, perp DEXs, and more. The first phase of LBTC will be issued on Ethereum, followed by expansion to multi-chain.

Project Progress & Participation Opportunities

Lombard is currently in phase one and operates in private beta mode on the Ethereum mainnet; eligible participants can stake native $BTC and mint LBTC. Notably, Lombard currently allows staking but not withdrawal, and users should continue to follow updates on X.

The second phase will begin in a few weeks and will open LBTC to the public while maintaining a deposit cap. The LBTC waitlist will manage LBTC demand and provide a mechanism to reward early participants with exclusive access and benefits over time.

LBTC Waitlist: https://t.co/kmpPxJc3D6

Solv

@SolvProtocol will tokenize staking yields and restaking yields (integrated with Babylon) from $BTC Layer 2, as well as DeFi yields from $ETH Layer 2 into SolvBTC. SolvBTC integrates seamlessly with other protocols, delivering Bitcoin liquidity into various application protocols; Solv currently supports Ethereum, BNB, ARB, and Merlin.

Solv adopts a decentralized asset management architecture, including built-in security guards, price oracles, and token modules based on liquidity strategies, establishing trustless process standards through smart contracts.

Solv also employs a custodial model, with off-chain funds held by reputable custodians.

Function of solvBTC.BBN

solvBTC.BBN is Solv's official liquid staking token, which will be integrated with various DeFi protocols.

Functions include:

1. DEX: Providing solvBTC.BBN holders with instant liquidity and high yield opportunities without the need for KYC.

2. Lending Protocol: Allows solvBTC.BBN holders to stake tokens for additional earnings while enabling borrowers to achieve leveraged positions.

3. Yield Trading Protocol: Enables users to trade future yields of BBN, manage yield volatility, and optimize returns.

Project Progress & Participation Opportunities

Since launching in April, SolVBTC has attracted over 12,000 bitcoins staked and 20,000 users participating across Merlin Chain, Arbitrum, and BNB Chain.

The total points (XP) consist of three parts: base points, acceleration points, and referral points. The total points are the accumulation of all three types of points.

Base Points

Base points are earned by depositing funds into Solv Vaults. The more funds a user deposits, the more base points they earn. Additionally, the longer the holding period, the more base points are accumulated. Base points = (points per dollar deposited) × (holding time). Points are updated daily, and a snapshot is taken to record the value of the collateral in the Vaults. Note: SolvBTC purchased from the secondary market does not generate any points.

Acceleration Points

The unlocking condition for the acceleration card is to invite three genuine investment users, with no minimum amount required. Your final point total = (base points) x (acceleration card coefficient). There are two types of acceleration cards:

1. XP Boost: Obtained after reaching a certain investment threshold; the larger the amount, the greater the multiplier. Everyone can see their acceleration and the amount needed to reach the next stage along with the corresponding acceleration coefficient, which offers significant marginal benefits.

2. Event XP Boost: Obtained by participating in events, valid for 7 days, and multiple can be stacked. In mid-April, the system will display acceleration cards and earned acceleration coefficients in your card wallet. There will be a new round of acceleration card airdrop activities in the future.

Referral Points

Users can earn 10% of the basic points (Basic XP) of their referred users, without affecting the total score of the referred users; there is no limit, and the more real users you invite, the more you can earn.

Bedrock

@Bedrock_DeFi, as a liquidity staking mechanism, was initially developed for the Eigenlayer ecosystem and has gradually evolved into the largest staking entry on IOTX, achieving a total of nearly 200 million TVL in the $ETH and IOTX ecosystems.

Recently, they have developed the $BTC liquidity staking protocol UniBTC, commissioned and supported by Babylon, allowing Ethereum users to stake wBTC with Babylon. uniBTC is currently discovered on Ethereum.

Project Progress & Participation Opportunities

Users can hold uniBTC to earn Bedrock rewards and Babylon points. It is important to note that uniBTC cannot currently be unstaked, but it can be directly sold, as it can be exchanged with WBTC at a 1:1 ratio.

Master Protocol

Master Protocol is a yield aggregation platform that aggregates $BTC ecosystem projects such as Bouncebit (stBBTC), Babylon, and BitLayer, allowing users to stake or trade through the platform.

Two main products of Master Protocol:

1. Master Yield Market: Provides yield trading opportunities, aggregates Bitcoin ecosystem assets, wraps them as MSY, and splits them into MPT (principal) and MYT (interest) for user trading.

2. LST Protocol on Botanix Spiderchain: A liquidity staking protocol that increases Bitcoin's liquidity and yield. It has not yet been launched and will collaborate with Botanix in the future.

Master Yield Market

The basic function of Master Yield Market is to aggregate Bitcoin ecosystem assets, wrap them as MSY, and split them into MPT and MYT for user trading. Its principle is similar to the Pendle protocol:

• MPT (Master Principal Token): Represents the principal; purchasing MPT can lock in profits from the underlying assets in advance, akin to fixed-income products. Whales or institutions would prefer such low-risk products. The funds purchased will move to the LST protocol and $BTC L2.
• MYT (Master Yield Token): Represents interest, MYT has a low unit price but can enhance capital utilization, akin to leveraged speculation on expected returns, making it more appealing to retail investors, with price volatility.

Points Program

Master Yield Pass is an incentive measure launched by Master Protocol, with a total of 10,000 units, which were minted for free on June 24 on Base. Currently, all NFTs have been minted for free. The rights after staking the Master Yield Pass include:

1. Earning points from the Trading Pool and Referral Pool, exchangeable for future token airdrops.

2. Platform fee dividends: Assuming the total trading volume reaches 200 million USD and platform fees reach the million-dollar level, each NFT can earn over 100 USD in dividends.(In comparison, the cumulative trading volume of the yield trading platform Pendle on Ethereum has reached several billion dollars.)

3. Future Benefits: Whitelist qualifications for #NFTs/events/#IDOs, etc.

Chakra

@ChakraChain is a #ZK-driven shared modular Bitcoin settlement layer that provides unified settlement services for all Layer 2 networks, building an aggregated liquidity and interoperability network to release Bitcoin liquidity into the entire chain ecosystem.

The funds in the Bitcoin network for Chakra will be hosted by the MPC solution provided by Cobo, which will then be staked in Babylon to earn staking rewards. After transaction retrieval and verification, tlBTC will serve as a staking certificate, allowing staked users to mint.

Function of tlBTC

tlBTC corresponds 1:1 to the amount of $BTC staked in the Bitcoin network. tlBTC has three types of uses:

1. As a staking certificate, users holding it can enjoy the staking rewards from the underlying Babylon.

2. As a liquidity asset, users can invest it into the DeFi ecosystem (Dex, Lending, Stablecoin) to earn additional revenue.

3. As a native asset for all-chain settlements, utilizing Bitcoin's strong liquidity and stability to achieve high efficiency, low latency, and low slippage settlements.

Project Progress

Recently, multiple joint testnets have been launched with Babylon, consistently ranking first in the three Cap phases. In the latest Testnet-4 Cap 3, Chakra ranked first as Babylon's Finality Provider, with a total confirmed TVL of 258.401 sBTC (accounting for 36% of Babylon's total TVL), and a total of 171,142 staking delegations (accounting for 37% of Babylon's total staking delegations).
Chakra has launched a points system on the testnet, where staking 0.0005 sBTC for one day earns 1 point, and inviting others can earn 10% of the invited person's point earnings. The testnet supports both self-custody staking and MPC staking, with both staking methods eligible to earn points.

In Conclusion

Babylon's $BTC #staking is also set to launch soon, and the changes brought by $BTC staking to the $BTC ecosystem are significant.

$BTC staking, like $ETH's DeFi, increases the overall yield of assets. Currently, the market size for $BTC earning exceeds 10 billion dollars, with yields ranging from 0.01% to 1.25%. In contrast, staking rewards for PoS blockchains typically range between 5% and 20%, allowing $BTC staking to provide yields for other PoS chains that can be tens of times greater than traditional $BTC earnings. Even though some in the $BTC community prefer a culture of holding coins, the increase in earnings is tangible. Users can earn yields from using $BTC, which overflows to $BTC L2 and other ecosystems, initiating a positive feedback loop.

Of course, $BTC staking led by Babylon cannot be compared to $ETH staking, as the $BTC chain itself does not have native yields, but is more similar to the #restaking business of @eigenlayer. The related ecosystem will also be similar to the #LRT protocol under eigenlayer.

Therefore, the monopoly pattern seen in $ETH staking is unlikely to appear in $BTC staking, and the motivation for exchanges to participate is also relatively weak, as economies of scale do not lead to more stable profits. Early projects in the $BTC staking space have opportunities for land-grabbing, and investors can easily achieve high returns from rapid growth.