Development of the BTCFi Ecosystem and Asset Accumulation Strategies

Recently, with the rise of the BTCFi concept, the on-chain liquidity of Bitcoin assets has become the focus of attention for major ecosystems and protocols. With the launch of BTC scaling solutions and the emergence of the BTC liquidity staking token (LST), Bitcoin is transitioning from a static store of value to an asset that can participate in more on-chain yield scenarios, significantly enhancing its application potential within the entire DeFi ecosystem.

Core, BOB, and Corn are representative growth cases in the BTCFi field recently: Core focuses on large-scale BTC LST assets during the growth phase; Corn collaborates with Pendle to launch a points derivative gameplay to quickly capture the incremental market; BOB attracts liquidity through rich ecology and liquid staking services. Various ecosystems have activated the liquidity of BTC assets with a series of actions centered around "yield generation." In the future, as the liquidity of BTC is gradually released, there is still significant growth potential in the on-chain accumulation scale of assets within the BTCFi ecosystem.

Background

BTC asset flow path on the chain

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

1. Layer 1: Native BTC
2. Second layer:
   • Tokenized BTC issued based on centralized custody
   • Mapped assets running on BTC L2 and sidechains
   • Liquidity Staking BTC
3. Layer Three: BTC derivative assets in various downstream DeFi scenarios

The current state of the ### BTC asset market

From the issuance situation of BTC-pegged assets on the three major networks of Ethereum, Arbitrum, and BNB, it can be seen that centralized custodial issuance of wrapped BTC still occupies the vast majority of the market share, with WBTC and BTCB combined accounting for over 75% of the overall circulation of BTC-pegged assets. In addition, LBTC and SolvBTC.BBN and other BTC LSTs have grown rapidly in recent months, becoming another emerging force in the BTC-pegged asset market.

The main application scenarios for BTC-backed assets are concentrated in lending protocols. In terms of the largest volumes, WBTC and BTCB, the largest downstream applications for both are in Aave v3 and the Venus protocol, with their TVL accounting for over 20% of their total supply, reflecting the demand for relatively stable returns in the BTCFi space from large funds.

The current total market volume of BTC LST is approximately 25.1K BTC, with the Lombard and Solv Protocols accounting for over 70% of the market share. Compared to wrapped BTC issued through centralized custody, BTC LST expands a richer application scenario as an income-generating asset. In addition to lending protocols, the points trading market has become another important downstream application for BTC LST.

BTCFi Ecosystem's Asset Accumulation Strategy

Core: Focus on the dual-driven ecological growth of incremental assets and token incentives

Core is an L1 scaling solution powered by BTC, allowing users to earn passive income through non-custodial Bitcoin staking. Currently, Core's TVL has reached $591.5M, with a growth of 4757.9% over the past six months.

The growth of Core TVL is primarily driven by the following factors:

1. Focus on the incremental market of BTC-pegged assets to enhance ecological liquidity and absorb rapidly growing Solv derivative assets.
2. Build supporting native protocols and quickly integrate with the BTCFi project to establish a complete ecological application.
3. Utilize the airdrop of the native token $CORE and market performance to support the incentive structure, forming a multi-dimensional ecological synergy effect.

Specific strategies include:

• Deep integration and collaboration with Solv derivative assets
• BTCFi ecosystem construction led by Colend and Pell Network
• The incentive structure supported by the airdrop and market performance of the native token $CORE.

Corn: The points-based derivative gameplay effectively attracts BTC LST market liquidity.

Corn is a recently launched ETH L2 network that uses a hybrid tokenized Bitcoin (BTCN) as gas fees and economic incentive tools. Currently, Corn has not yet launched its mainnet, but it has effectively attracted $425.8M in funds through a deposit activity initiated by multiple parties.

Corn's growth strategy includes:

• Collaborating with Pendle to lead the BTC LST points derivative gameplay
• The TVL BootStrap Campaign attracts initial liquidity through point incentives.

BOB: Secure bridging and strong ecosystem help consolidate assets

BOB is an innovative hybrid Layer 2 network that combines the advantages of Bitcoin and Ethereum. Currently, BOB's total TVL has reached $65.7M, with assets primarily composed of WBTC.

BOB's growth strategy includes:

• Liquidity Staking Services and Ecological Integration
• Incentive Program BOB Fusion

Summary

Core, BOB, and Corn, the three emerging forces in the BTC ecosystem, have adopted differentiated strategies in asset accumulation.

• Core provides stable returns through deep integration with the growth-phase Solv Protocol's derivative assets and the innovative introduction of a dual staking mechanism.
• Corn successfully attracted a large amount of BTC LST funds by launching a points derivative play in collaboration with Pendle.
• BOB attracts assets through extensive integration of BTCFi projects and one-click liquid staking services.

The key to effectively realizing ecological fund accumulation lies in unblocking and incentivizing large-scale incremental anchored assets, and forming combinable yield strategies through diversified DeFi applications while providing multiple incentive expectations. Currently, the TVL of BTC anchored assets in L2 and side chain expansion networks is approximately $1.6 billion, accounting for only 0.14% of the total market value of BTC. As BTC liquidity is gradually released in the future, there remains significant growth potential for the accumulation scale of BTC assets across various chains and the application scenarios of the BTCFi ecosystem.