BTC ( Re) staking and encapsulated BTC market competition analysis

With the launch of the first phase of the Babylon mainnet, Pendle's integration of BTC LST, and the introduction of various wrapped BTC assets, BTCFi has once again become the focus of market attention. This article will explore the latest developments in BTC (re) staking and the field of BTC pegged assets.

BTC (Re) Staking Market Overview

After rapidly reaching the 1000 BTC limit in Babylon Stage 1, the competition between BTC LSTs continues to heat up. In the past 30 days, Lombard Finance has achieved rapid growth, reaching the current highest TVL with a deposit amount of 5.9k BTC, surpassing the Solv Protocol, which had originally held a long-term leading position.

Lombard has established a strategic partnership with leading re-staking protocols to provide its participants with a richer source of re-staking yields and DeFi participation opportunities from the ETH ecosystem, thus gaining a competitive advantage at this stage.

The Importance of Ecological Strategy

In the BTC LST field, ecological strategy has become a key influencing factor in the current competitive landscape. Unlike ETH LRT, which benefits inherently from the mature DeFi ecology of ETH and ETH L2, BTC LST is currently facing more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination of BTC pegged assets across different chains, and integration with re-staking platforms.

Main participants' strategies

1. Lombard Finance: Focused on the development of the ETH ecosystem, providing rich external rewards for stakers through partnerships with multiple re-staking protocols. Actively promoting leveraged play of $LBTC on ETH, collaborating with several important DeFi protocols.

2. Solv Protocol and Bedrock DeFi: Actively expanding across multiple chains, ecosystem development includes the reception of upstream deposits and the construction of downstream applications. Solv's strategy requires users to deposit SolvBTC to convert it into SolvBTC.BBN to participate in Babylon, thereby driving market demand for SolvBTC.

3. Lorenzo Protocol and pStake Finance: The initial focus is on the development of the BNB chain, supporting the receipt of $BTCB deposits. Lorenzo has built a yield market based on BTCFi, using a structure that separates liquid principal tokens and yield accumulation tokens.

Pendle Enters BTCFi

Pendle has integrated four types of BTC LST ($LBTC, $eBTC, $uniBTC, and $SolvBTC.BBN) into its points market. The actual adoption of $LBTC is higher than the superficial figures, as 37% of $eBTC is supported by $LBTC, and Pendle's integration of $eBTC also indirectly benefits Lombard.

Apart from $eBTC, the other three LSTs are all bound in cooperation with Corn. Corn is an emerging ETH L2, featuring two unique designs: veTokenomics and Hybrid Tokenized Bitcoin. The potential integration path in the future may be: Wrap BTC → BTC LST → BTCN → DeFi.

SatLayer Joins the BTC Re-Staking Market

SatLayer enters the BTC re-staking space, becoming an emerging competitor to Pell Network. Both accept BTC LST for re-staking and use it to provide security for other protocols. SatLayer has supported the reception of multiple BTC LSTs and is expected to integrate more.

BTC Wrapped Token Market

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

Main Development

1. A well-known exchange has launched a custodial supported wrapped asset $cbBTC, with a current supply of 2.7k, and has received support from multiple mainstream DeFi protocols.

2. $WBTC still holds over 60% of the wrapped BTC market share, recently announcing its deployment on Avalanche and BNB chains, and expanding across multiple chains through a fully chain-compatible token standard. However, the adoption rate of $WBTC continues to decline, with several leading DeFi protocols beginning to remove it as collateral.

3. $FBTC has been deployed on Ethereum, Mantle, and BNB chains, actively promoting adoption in the BTCFi space through the "Sparkle Campaign."

Summary

In the ongoing growth trend of BTCFi, BTC (re) staking and BTC pegged assets are two key sectors worth continuous attention. The field of BTC (re) staking has shown a trend of excessive construction on the supply side, while the market scale on the demand side remains unclear. Differentiated ecological strategies and unique downstream plays have become key factors in the competition among BTC LSTs.

For various BTC-pegged assets, trust remains a key issue. Exchanges, L2s, and BTC LST parties are actively developing their respective BTC-pegged assets through different solutions, striving to be accepted by mainstream DeFi protocols and a wide range of users, thereby rapidly capturing market share.