Strategy Analysis Behind BTCFi Ecosystem Growth

The liquidity of Bitcoin as an on-chain asset is gradually becoming the focus of major ecosystems and protocols. With the introduction of BTC scaling solutions and the rise of BTC liquidity staking token (LST), Bitcoin is transforming from a static store of value into an asset that can participate in more on-chain yield scenarios, enhancing its application potential across the entire DeFi ecosystem.

Core, BOB, and Corn are representative rise cases in the BTCFi field recently: Core focuses on large-scale BTC LST assets during the growth period; Corn collaborates with Pendle to launch a points derivative play to quickly capture the incremental market; BOB attracts liquidity through rich ecology and liquid staking services. The series of actions around "yield" in each ecosystem has greatly activated the liquidity of BTC assets.

1. Background

1.1 BTC asset flow path on the chain

The flow direction of BTC and its anchored assets on the chain can be divided into three layers:

• Layer 1: Native BTC
• Second Layer:
  1. Wrapped BTC issued based on centralized custody
  2. mapped assets running on BTC L2 and sidechains
  3. liquidity staking BTC
• Layer 3: Various downstream DeFi scenarios of BTC derivative assets

Current market status of 1.2 BTC assets

From the issuance situation of BTC-pegged assets on the Ethereum, Arbitrum, and BNB networks, centralized custody-issued wrapped BTC still occupies over 75% of the market share, with a total supply of WBTC and BTCB exceeding 220K. LBTC and SolvBTC.BBN and other BTC LSTs have rapidly risen in recent months, becoming a new emerging force in the BTC-pegged asset market.

The main application scenarios of BTC-pegged assets are concentrated in lending protocols. WBTC and BTCB account for more than 20% of the total supply in Aave v3 and Venus protocols, respectively.

The total market volume of BTC LST is approximately 25.1K BTC, with Lombard and Solv Protocol occupying over 70% market share. In addition to lending protocols, the points trading market has become another important downstream application of BTC LST.

2. BTCFi Ecosystem's Asset Accumulation Strategy

2.1 Core: Focus on dual-driven ecosystem growth of incremental assets and token incentives

Core is an L1 scaling solution powered by BTC, achieving passive income through non-custodial staking. Currently, the TVL has reached $591.5M, with a rise of 4757.9% in six months.

Main rise strategy:

1. Focus on the incremental market of BTC anchored assets, absorbing the rapidly rising Solv derivative assets.
2. Build a native protocol and quickly integrate with the BTCFi project to establish a complete ecological application.
3. The incentive structure is supported by the airdrop and market performance of the native token $CORE.

In-depth cooperation with Solv Protocol, SolvBTC derivative assets account for 65% of Core TVL. Colend, as the native lending protocol, undertakes most of the asset accumulation. The launch of Pell Network promotes rapid rise in ecological TVL. The airdrop and market performance of the $CORE token support the incentive structure.

2.2 Corn: The points derivative gameplay efficiently attracts BTC LST market liquidity

Corn is a newly launched ETH L2 network that uses tokenized Bitcoin as a gas fee and economic incentive tool. The mainnet has not yet been launched, but it has attracted $425.8M in funding through deposit activities.

Main rise strategy:

1. Leading the BTC LST points derivative gameplay in collaboration with Pendle
2. TVL Bootstrap Campaign attracts initial liquidity

Launch five major BTC LST asset pools on Pendle, attracting 11.4% of the total BTC LST market. Attract initial liquidity through Kernel points incentives.

2.3 BOB: Secure bridging and a strong ecosystem help assets converge.

BOB is a hybrid Layer 2 network that combines the advantages of Bitcoin and Ethereum. The current TVL has reached $65.7M, mainly from WBTC.

Main rise strategy:

1. Launches one-click liquidity staking service BOB Stake
2. is deeply integrated with multiple DeFi protocols.
3. launched the incentive program BOB Fusion

BOB Stake integrates multiple liquid staking services and DeFi platforms. It provides yield scenarios for BTC LST by integrating with protocols such as Avalon. BOB Fusion incentivizes users to participate in the ecosystem in various ways.

3. Summary

Different networks have their own characteristics in asset accumulation strategies. Core deeply integrates Solv Protocol derivative assets and introduces a dual-staking mechanism; Corn and Pendle jointly launched a points derivative gameplay; BOB attracts assets through extensive project integration and one-click liquidity staking services.

The key to effectively achieving ecological capital accumulation lies in unblocking and incentivizing large-scale incremental anchored assets, while providing diversified DeFi applications and multi-party incentive expectations. Currently, the TVL of BTC anchored assets on L2 and side chains only accounts for 0.14% of BTC's total market value, and there is still significant rise potential for the BTCFi ecosystem in the future.