How Lorenzo Protocol Powers Bitcoin DeFi with Liquid Restake

bitcoin It is the first cryptocurrency and dominates the market as the largest cryptocurrency by market capitalization.

However, as a pioneer, it suffers from limitations that have been addressed by cryptocurrencies that have followed. These limitations (Bitcoin’s slow consensus mechanism, limited data storage capacity, and lack of smart contract compatibility) mean that most of Bitcoin’s liquidity is blocked from thriving decentralized finance (DeFi) space.

This is exactly what Lorenzo Protocol aims to solve with its new Bitcoin securitization restaking protocol.

Liquid restaking builds on the existing liquid staking model, allowing investors to participate in staking on a proof-of-stake blockchain while maintaining personal liquidity.

Lorenzo Protocol’s floating re-staking allows users to stake stBTC derivative tokens representing their staked assets across multiple blockchains and earn additional returns on their staked Bitcoin.

“We are a platform that helps stakeholders lend BTC liquidity to projects that need scale and then provide returns to those projects,” said Matt Ye, founder of Lorenzo Protocol. decryption. He added that by tokenizing the lending and borrowing of BTC liquidity, it effectively creates BTC bonds.

“First of all, we are connecting all projects and BTC holders for BTC returns,” Ye said. “Second, we tokenize for staking.”

“On top of that we build a StakeFi or YieldFi application layer,” he added. The platform uses Lorenzo Appchain, an EVM-compatible Bitcoin layer 2 network secured by BabylonChain’s Bitcoin shared security. “This L2 is responsible for the issuance and settlement of these staking tokens, and is also responsible for building the DeFi ecosystem on top of these token standards,” Ye explained.

The platform’s testnet will be launched “soon,” Ye said. decryption, users can try out Lorenzo Protocol’s staking portal. “Basically, you can stake on Babylon through us and at the same time we will be minting stBTC on our own L2 and connect that to other L2 or L1 ecosystems through our bridge,” he explained.

“Eastern BTC capital can meet Western projects.”

As the Bitcoin DeFi ecosystem develops, Ye predicted “massive demand for Bitcoin liquidity” across purposes such as L2, BTC yield products, and staking portfolio management. “Every L2 is one BTC revenue stream. Trading desks, trading strategies are different things,” he said. “Given that BTC is expanding, demand from all sectors will increase.”

“We tokenize all the staking opportunities and it becomes like a marketplace,” he said, adding that the Lorenzo Protocol aims to help bridge the gap between BTC holders and staking opportunities across projects in the English-speaking world and Asia. added. Currently, he said, there is no foundation of trust and language barriers make working together impossible. He puts the Lorenzo Protocol in the middle, saying, “Eastern BTC capital could meet Western projects.”

Lorenzo also functions as a BTC bond trading protocol. “You can lend money to anyone in the world, but without a bond market or a money market, the assets are very illiquid,” Ye said. He said the BTC bond market allows holders to “maintain liquidity and safety for the financial stability of their asset investments.

Ye said the ecosystem can expand to encompass a wide range of products, including yield swap products, lending protocols, structured Bitcoin yield products, insurance products, and BTC-backed overcollateralization. stablecoin Lorenzo Protocol’s stBTC derivative token is used as collateral.

Ultimately, Lorenzo Protocol has enormous ambitions, Ye said. “My hope is that eventually BlackRock, Franklin Templeton, Brevan Howard, Two Sigma, Citadel, Fidelity, etc. will all be able to borrow BTC capital on our platform,” he added. “We want to go very institutional. we have to do that that much The world’s BTC bond exchange market.