BTC LSD track overview: How to leverage trillions of dollars?

Babylon is a non-custodial BTC stake solution that achieves native asset stake on the BTC layer in a trustless manner through cryptography, and provides security guarantees for POS to other blockchains by re-staking, generating income.

BTC staked under Babylon stake does not leave Mainnet, and security is guaranteed by the PoW mechanism. The staking process operates entirely on a cryptographic basis with the 'Extraction Once Time Signature (EOTS)' and does not rely on any third-party bridges or custodians. Therefore, it has been well received and welcomed in the BTC community which has extremely high security requirements.

Babylon allows BTCholder to earn stake income while ensuring security, opening up the BTC staking track, and completely changing the way of BTC ecosystem. At the same time, the introduction of stake BTC can also solve the problems of inflation of small and medium-sized POS chains (if you want to convince everyone to stake, you need to provide relatively high inflation income, for example, stake for a year can get 10~15% or even 20% of the token) and the difficulty of getting started (building a verification Node requires a large amount of funds).

BTC liquid staking

Similar to the traditional LiquidityToken solution for ETH, the BTC Liquiditystake solution aims to provide interest-bearing BTC savings, allowing you to deposit and withdraw at any time. The LiquiditystakeToken can also generate income from other Decentralized Finance projects (such as providing liquidity, lending, etc.). On Babylon, staking can be seen as a fixed-term deposit with high returns, but it cannot be withdrawn immediately upon deposit.

Also, it can attract more non-mainnet BTC users, such as ETH users who hold wBTC on the Ethereum network, to participate in Babylon stake.

Liquiditystake essentially can be seen as the project party borrowing users' BTC to Babylonstake, using stake returns to pay users' Interest, and the bonds given to users (Liquiditystake tokens) can also be traded.

Currently, most of Babylon's Liquidity stake tokens are built on the ETH network, with plans to support multiple chains in the future. Except for Lombard, where users directly stake to Babylon, other projects adopt a custody model where the project team stakes on behalf of users to Babylon, with Liquidity provided by third-party institutions.

PSTAKE

pSTAKE adopts institutional custody Liquidity, users' funds stake to Pstake for Address, Liquidity is supported by institutional custody providers such as Cobo, and the project party then stake BTC to Babylon.

yBTC is the official Liquidity staking token, which has not yet been issued. It is expected to allow users to earn profits by using yBTC in other Decentralized Finance projects, such as providing Liquidity, borrowing, etc. yBTC will initially be issued on the ETH network and will be subsequently issued on other L2 networks.

Project Progress & Participation Opportunities

The content of v1Testnet is to deposit and withdraw sBTC (BTC on Testnet) on pSTAKE on BTCTestnet. v2 is to provide users with the function of earning stake rewards from Babylon on Mainnet. v3 will mint a liquidity stake token called yBTC, so that users can participate in other Decentralized Finance projects using yBTC while earning stake rewards. v4 aims to make the rewards more diversified.

The current product is in the v1 stage, and there is no points program yet, which is expected to be launched together with the Mainnet. Participating in the testnet stake will bring additional points. Currently, there are 44,813 users participating in v1, staking 40.65 sBTC.

Lorenzo

Lorenzo has implemented a similar interest and principal separation business as Pendle in the Liquidity solution of BTC.

Users send BTC to Lorenzo's long sign Wallet, which is then staked by a trusted group of BTC institutions and TradFi giants, and receive stBTC as a stake certificate, Lorenzo then stakes BTC to Babylon.

After pledging BTCLiquidity, Lorenzo issuance three types of Token:

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 earnings from the stake project at the end of the re-staking period. YAT can be traded and transferred, but is not transferable after expiration. Users can claim project rewards based on their YAT holdings. YAT is an ERC-20 Token issued by re-staking through a stake agent.
3. Stake Proof Token (SPT): After users receive project rewards using YAT, YAT will automatically convert to equivalent SPT and enter a unified queue, which cannot be traded. The only purpose of SPT is to be destroyed in sequence when users destroy stBTC to extract BTC. The agentID associated with the destroyed SPT determines which stake agent will redeem BTC. If there are insufficient SPT in the queue, users must wait for new SPT to enter the queue. Users who generate SPT by receiving YAT can prioritize exchanging BTC with their own generated SPT.

Since both LPT and YAT are tradable, anyone who owns YAT and LPT can use them separately to claim earnings and withdraw stake BTC.

LPTs like stBTC can be seen as another form of wrapped BTC, with the goal of eventually replacing wBTC. The value of YAT comes from accrued interest and speculation on future interest rates, and YAT has high volatility. The trading pairs between stBTC and all YATs will be the base trading pairs. There may also be trading pairs between LPTs, YATs, ETH, BNB, USD stablecoins, and other assets, creating great arbitrage and investment opportunities for investors.

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

Project Progress & Participation Opportunities

Lorenzo's Mainnet will be launched in two phases (Lorenzo Phase One and Lorenzo Phase Two).

Lorenzo Phase One is mainly to test the conversion from BTCmintstBTC and from stBTC to BTC.

Lorenzo Phase Two has launched a stake agent to decentralize the management of user stake BTC and issuance BTC-supported Liquidity restake Token. The stake agent can issuance YAT to represent the user's stake income. When users claim project rewards using YAT, YAT will automatically convert to an equivalent SPT, determining which stake agent will redeem the BTC.

Participating in pre-launch staking can earn profits and points:

Lombard

Lombard is more decentralized, with user funds directly staked in Babylon instead of relying on trusted third parties for liquidity. The overall architecture consists of users, BTC nodes, backends, and a consortium (which manages the stake process and serves as a decentralized state machine, achieving consensus using the Raft algorithm).

The stake process of Lombard is managed by the Decentralization Consortium, and users will send native BTC to the Address of the Consortium. Once the backend detects a deposit in this Address of the BTC Node, it will trigger the deposit notarization process to the Consortium. The Consortium will verify the transaction for the deposit, then stake BTC to Babylon and mint the user's stake amount of LBTC.

The role of LBTC

LBTC is Lombard's liquid staking token, and holders can earn native rewards through Babylon staking. LBTC is exchangeable with BTC at a 1:1 ratio and can interact cross-chain, making it compatible with decentralized finance and can be used as collateral for lending protocols, perp DEX, and more. In the first stage, LBTC will be issued on the ETH network and will later expand to multiple chains.

Project Progress & Participation Opportunities

Lombard is currently in phase one and running on the ETH mainnet in Private Beta mode, where eligible participants can stake native BTC and mint LBTC. It's worth noting that currently Lombard only supports staking and does not support withdrawals, and you can continue to follow X's updates.

The second phase will begin in a few weeks and will open LBTC to the public while maintaining the deposit limit. The LBTC waiting list manages the demand for LBTC and provides a mechanism for rewarding early participants, allowing them to gain exclusive access and benefits over time.

LBTC waitlist: _waitlist

Solv

Solv integrates Staking rewards and Restaking rewards from BTC Layer2 (integrated Babylon), and Decentralized Finance rewards from ETH Layer2 into SolvBTC, seamlessly integrating SolvBTC with other protocols, channeling BTCLiquidity into various application protocols. Solv now supports Ethereum, BNB, ARB, and Merlin.

Solv adopts the asset management architecture of Decentralization, including built-in security guards, price Oracle Machine, and module-based Token based on flow-based strategies, and establishes a Trustless process standard through smart contracts.

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

The Role of solvBTC.BBN

solvBTC.BBN is the official liquidity staking token of Solv, which will be integrated with various Decentralized Finance protocols.

Functions include:

1. DEX: Provide instant Liquidity and high-yield opportunities for solvBTC.BBN holders, no KYC required.
2. Lending protocol: Allows solvBTC.BBN holders to stake Token to earn additional income, while allowing borrowers to gain leveraged income positions.
3. Income trading protocol: enables users to trade the future income of BBN, manage income Fluctuation, and optimize returns.

Project Progress & Participation Opportunities

Since its launch in April, SolVBTC has attracted more than 12,000 BTCstake on Merlin Chain, Arbitrum, and BNB Chain, with 20,000 users participating.

The total points (XP) is composed of three parts: basic points, acceleration points, and recommended points. The total points are the accumulation of the three types of points.

Basic points

Basic points are obtained by depositing funds into Solv Vaults. The longer the user deposits, the longer the basic points obtained. And the longer the deposit holding time, the longer the basic points. Where basic points = (points per dollar deposited) × (holding time) points updated daily. The value of the collateral funds in the Vaults will be Snapshot recorded daily. Note: SolvBTC purchased from the Secondary Market will not generate any points.

Acceleration Points

The unlocking condition of the acceleration card is to invite three real investment users, with no limit on the amount. Finally, your points = (base points) x (acceleration card coefficient). There are two types of acceleration cards:

1. XP Boost: After reaching a certain investment threshold, you can obtain it. The larger the amount, the greater the multiplier. Everyone can see their own acceleration, the amount line to reach the next stage, and the corresponding acceleration coefficient. Explore it yourself, as it has a significant marginal benefit.
2. Event XP Boost: Obtained by participating in events, valid for 7 days, can be stacked long张. In mid-April, the system will display the acceleration cards and the obtained acceleration coefficients in your card pack. There will be a new round of Airdrop events for acceleration cards in the future.

Recommendation Points

After users invite new users, they can receive 10% of the downline's Basic XP, which does not affect the total score of the downline. There are no restrictions, long invite real users and long earn.

Bedrock

Bedrock, as a liquid stake mechanism, was initially developed for the Eigenlayer ecosystem, and gradually evolved into the largest stake gateway on IOTX, with a total TVL of nearly 2 billion under the ETH and IOTX ecosystems.

Recently, they developed UniBTC, a BTCLiquiditystakeprotocol, with the support and commission from Babylon, which allows wBTC stake from ETH users to be given to Babylon. uniBTC is currently found on the ETH network.

Project Progress & Participation Opportunities

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

Master Protocol

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

Master Protocol's two main products:

1. Master Yield Market: Provide yield trading opportunities, aggregate BTC ecosystem assets, package them as MSY, and split them into MPT (principal) and MYT (Interest) for user trading.
2. LST Protocol on Botanix Spiderchain: Liquiditystakeprotocol, which improves the Liquidity and yield of BTC. It has not been launched yet and will collaborate with Botanix in the future.

Master Yield Market

The basic function of Master Yield Market is to aggregate BTC ecosystem assets, package them as MSY, and split them into MPT and MYT for users to trade. Its principle is similar to the Pendle protocol:

• MPT (Master Principal Token): Represents the principal. Buying MPT can lock in the profits of the underlying assets in advance, equivalent to fixed-income products. Whales or institutions would like this low-risk product. The purchased funds will move to LSTprotocol and BTC L2.

• MYT (Master Yield Token): Represents Interest. MYT has a low unit price, but can increase the utilization of funds, equivalent to leveraging speculative expected returns, which retail investors will prefer, leading to Fluctuation in price.

Points Program

Master Yield Pass is an incentive measure launched by the Master Protocol, with a total of 10,000, minted for free on Base on June 24th. Currently, all of these Non-fungible Tokens have been minted for free. The benefits of staking Master Yield Pass include:

1. Get points from Trading Pool and Referral Pool to redeem for future Token Airdrop.
2. Platform fee Dividend: Assuming the total volume reaches 200 million US dollars, and the platform fee reaches the million-dollar level, each Non-fungible Token can receive a dividend of more than 100 US dollars. (For comparison, the income trading platform Pendle on the ETH network has accumulated a volume of several billion US dollars.)
3. Future rights: such as Non-fungible Token/activities/IDO and other Allowlist qualifications.

Chakra

Chakra is a ZK-driven shared modular BTC Settlement layer that provides unified Settlement services for all Layer 2 networks, building an aggregated Liquidity and interoperable network to unleash BTCLiquidity in the entire ecosystem.

Chakra's funds on the BTC network will be hosted by the MPC solution provided by Cobo, and then staked on Babylon to earn staking rewards. After the transaction is retrieved and verified, tlBTC will serve as a staking certificate, allowing staking users to mint.

The role of tlBTC

tlBTC and the amount of BTC staked on the BTC network correspond 1:1. tlBTC has three main uses:

1. As a stake certificate, users can enjoy the underlying Babylon stake income while holding it.
2. As a Liquidity asset, users can invest it in the DeFi ecosystem (Dex, Lending, Stablecoin) to earn additional income
3. As the native asset of the entire chain Settlement, leveraging the good Liquidity and stability of BTC to achieve efficient, low latency, and low Slippage Settlement

Project Progress

Recently, we have launched joint testnets with Babylon multiple times and have consistently ranked first in all three Cap stages. In the latest Testnet-4 Cap 3, Chakra, as the top-ranking Finality Provider of Babylon, has a total confirmed TVL of 258.401 sBTC (36% of the total TVL of Babylon) and has received a total of 171,142 stake delegations (37% of the total stake delegations of Babylon).

Chakra has launched a points system on the Testnet, where staking 0.0005 sBTC can earn 1 point per day, and inviting others can earn 10% of the invitee's points. The Testnet supports both self-hosted stake and MPCstake, both of which can earn points.

Final

Babylon's BTC staking is also about to go live, and the change in the BTC ecosystem brought about by BTC staking is huge.

BTC staking is first and foremost about increasing the overall yield of assets, just like Ethereum's Decentralized Finance. Currently, the market size of BTC staking exceeds 10 billion USD, with yields ranging from 0.01% to 1.25%. In contrast, stake rewards on PoS blockchains often range from 5% to 20%, making staking BTC for other PoS chains many times more profitable than traditional BTC staking. Even though some BTC communities prefer a 'hodl' culture, the increase in yield is tangible. Users can profit from using BTC and contribute to the BTC L2 ecosystem, thus initiating a positive feedback loop.

Of course, the BTC stake led by Babylon cannot be compared with ETH stake, because the BTC chain itself does not have native income, 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 monopolistic pattern presented in ETH stake is difficult to appear in BTC stake, and the driving force behind the exchange is also weaker because the economies of scale do not lead to more stable profits. Early projects in the BTC stake field have the opportunity to seize the market, and investors can easily obtain high returns from rapid rise.