BTC (Re) staking market competition intensifies, packaging BTC assets to compete for market share

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

BTC (Re)staking Market Overview

Currently, the competition among BTC LSTs is becoming increasingly fierce, with various parties vying for the staking yield entry of BTC and its derivative assets. Over the past 30 days, Lombard Finance has achieved rapid growth, reaching the highest TVL with a deposit amount of 5.9k BTC, surpassing the previously leading Solv Protocol.

Lombard has gained a competitive advantage by partnering with the top re-staking protocol Symbiotic, providing participants with a richer source of re-staking returns and DeFi participation opportunities from the ETH ecosystem.

The Importance of Ecological Strategy

In the BTC LST space, ecological strategy has become a key factor in the competitive landscape. Unlike ETH LRT, BTC LST faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination of BTC pegged assets across various chains, and integration with re-staking platforms.

Different BTC LST providers have adopted different strategic paths:

1. Lombard Finance focuses on the development of the ETH ecosystem, providing rich external rewards for stakers through cooperation with Symbiotic and Karak Network. LBTC, as the first BTC LST, has obtained support from the ETH re-staking protocol and actively promotes leveraged play on ETH.

2. Solv Protocol and Bedrock DeFi are actively expanding across multiple chains, with ecosystem development covering upstream deposit reception and downstream application construction. The main liquidity of SolvBTC.BBN and uniBTC is concentrated on the BNB and ETH chains, while also injecting BTC liquidity into other L2s.

3. Lorenzo Protocol and pStake Finance focused on building the BNB chain in the initial stage, supporting the reception of BTCB deposits, and minted LST - stBTC and yBTC on the BNB chain respectively.

Pendle Enters BTCFi

Pendle has recently 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 surface figures, as 37% of eBTC is backed by LBTC, and Pendle's integration of eBTC also benefits Lombard indirectly.

Besides eBTC, the other three LSTs have collaborated with Corn. Corn is an emerging ETH L2 with veTokenomics and a hybrid tokenized Bitcoin design. The future integration path may be: Wrap BTC → BTC LST → BTCN → DeFi, adding a new leverage layer to the BTCFi system.

SatLayer Joins the BTC Re-Staking Market

SatLayer enters the BTC re-staking arena, becoming a new emerging competitor to Pell Network. Both accept BTC LST for re-staking and use it to provide security for other protocols. Pell has accumulated a TVL of $270 million, integrating major BTC derivatives across 13 networks. SatLayer is currently deployed on Ethereum, supporting the reception of various BTC LST.

BTC Wrapped Token Market Dynamics

The competition in the BTC market is intensifying, with major alternative assets including Binance's BTCB, Merlin's mBTC, The T Network's tBTC, Mantle's FBTC, and various BTC LST assets.

A well-known exchange recently launched the custodial-backed wrapped asset cbBTC, with a current supply of 2.7k. cbBTC is deployed on the Base and Ethereum networks, has gained support from several mainstream DeFi protocols, and plans to expand to more chains.

Despite security concerns, WBTC still holds over 60% of the wrapped BTC market share. BitGo recently announced the deployment of WBTC on Avalanche and BNB chains, aiming to solidify its market position through multi-chain expansion via LayerZero's all-chain fungible token standard. However, the adoption rate of WBTC continues to decline, and some leading DeFi protocols have started removing it from their collateral lists.

FBTC is actively promoting widespread adoption in the BTCFi sector through the "Sparkle Campaign" and has been adopted by multiple BTC (re) staking platforms.

Conclusion

In the ongoing growth trend of BTCFi, BTC (re) staking and BTC pegged assets are two key areas worth paying attention to. The BTC (re) staking sector is experiencing a trend of excessive construction on the supply side, while the market size on the demand side remains unclear. Differentiated ecological strategies and unique downstream applications have become key factors in the competition among BTC LSTs.

For BTC-pegged assets, trust remains a core issue. Exchanges, L2s, and BTC LST providers are actively developing their respective BTC-pegged assets, striving to be accepted by mainstream DeFi protocols and users to capture the market share lost by WBTC.