Comprehensive Interpretation of BTCFi: From Lending to Staking, Establish Your Own Mobile Bitcoin Bank

As Bitcoin's position in the financial market becomes increasingly consolidated, BTCFi( Bitcoin finance) is rapidly becoming the frontier of cryptocurrency innovation. BTCFi encompasses a range of Bitcoin-based financial services, including lending, staking, trading, and derivatives. This article will delve into multiple key tracks of BTCFi, including stablecoins, lending services( Lending), staking services( Staking), restaking services( Restaking), as well as the combination of centralized and decentralized finance( CeDeFi).

Overview of BTCFi Track

BTCFi is like a mobile Bitcoin bank, a series of financial activities centered around Bitcoin. According to data from CryptoCompare and CoinGecko, the BTCFi market size reached approximately $10 billion in 2023. Over the past decade, the BTCFi market has demonstrated significant growth potential, attracting more and more institutional participation, such as Grayscale(, BlackRock), and JPMorgan(. The participation of institutional investors not only brings a large influx of capital, increasing market liquidity and stability, but also enhances the maturity and regulation of the market, bringing higher recognition and trust to the BTCFi market.

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BTCFi Track Segmentation

) 1. Stablecoin track

Stablecoins are a type of cryptocurrency designed to maintain a stable value, typically pegged to fiat currencies or other valuable assets. In the BTCFi ecosystem, the stablecoin projects worth noting are mainly decentralized stablecoins.

Main projects include:

• Bitsmiley Protocol: The first native stablecoin project in the BTC ecosystem, allowing users to over-collateralize native BTC on the BTC network to mint the stablecoin bitUSD.

• Bamk.fi(NUSD): Issuing NUSD ###Nakamoto Dollar(, a synthetic dollar on Bitcoin L1.

• Yala Labs: By building a modular infrastructure independently, it allows its stablecoin $YU to flow freely and securely between various ecosystems.

• Satoshi Protocol: The first CDP stablecoin protocol in the BTC ecosystem, based on the BEVM ecosystem.

• BTU: The first decentralized stablecoin project in the Bitcoin ecosystem, using the collateralized debt position model )CDP(.

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) 2. Lending

Bitcoin Lending ( BTC Lending ) is a financial service that allows you to obtain loans by using Bitcoin as collateral or earn interest by lending Bitcoin.

Main projects include:

• Liquidium: A P2P lending protocol running on Bitcoin, allowing users to use native Ordinals and Runes assets as collateral to lend and borrow native Bitcoin.

• Shell Finance: A stablecoin protocol based on BTC L1, supporting the use of BTC, Ordinals NFTs, Runes, BRC-20, and ARC-20 assets as collateral to obtain $bitUSD.

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) 3. Staking

Staking ( is commonly recognized for its characteristics of security and stable yield. In the BTCFi field, staking has introduced the concept of shared security, providing a new dimension for the modular track.

Main Projects:

• Babylon: Bitcoin staking protocol, which allows locking Bitcoin on the Bitcoin mainnet to provide security for other POS consumption chains, while earning staking rewards on the Babylon mainnet or POS consumption chain.

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( 4. Restaking

Restaking is the act of using liquid stake tokens to stake with validators on other networks and blockchains to earn additional rewards.

Main projects include:

• Chakra: An innovative modular settlement infrastructure that employs zero-knowledge proof technology to ensure trustless security and efficiency.

• Bedrock: A multi-asset liquidity re-staking protocol supported by a non-custodial solution designed in collaboration with RockX.

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) 5. Decentralized Custody

Recently, the entity behind wBTC, BitGO, announced the transfer of wBTC control, sparking discussions in the market about the security of WBTC. Emerging decentralized custody solutions include:

• tBTC: Consider minting tBTC when bridging from BTC to ETH.

• FBTC: A new type of synthetic asset across the entire chain, pegged to BTC 1:1, supporting the circulation of all-chain BTC ###Omnichain(.

• dlcBTC: Bitcoin's non-custodial token on Ethereum, allowing Bitcoin holders to participate in DeFi protocols while retaining full ownership of their assets.

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( 6. CeDeFi

CeDeFi is a financial service that combines the characteristics of centralized finance ) CeFi ( and decentralized finance ) DeFi ###.

Main projects include:

• Solv Protocol: Unified Bitcoin Liquidity Matrix, aims to unify the trillion-dollar liquidity of Bitcoin that is currently dispersed through SolvBTC.

• Bouncebit: BTC Restaking chain, fully compatible with EVM, designed with CeDeFi product features, utilizing LCT( liquidity custody token ) for restaking and on-chain farming.

• Lorenzo protocol: A BTC liquidity financial layer based on Babylon.

( 7. DEX AMM Swap

Decentralized exchange automatic market maker swapping is a decentralized trading mechanism that operates on the blockchain.

Main projects include:

• Bitflow: Focused on sustainable BTC yields, utilizing technologies such as PSBT, atomic swaps, AMM, and Layer-2 solutions like Stacks for trading BTC, stablecoins, and more.

• Dotswap: Native AMM DEX on the BTC mainnet, supporting assets including Runes, BRC 20, ARC 20, and the latest CAT 20.

• Unisat AMM Swap: Focused on Ordinals and brc-20 wallet applications, utilizing an order book to facilitate trading in the inscription market.

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Comparison of Different Asset Classes

) Security Comparison

The BTC ecosystem pays much more attention to "security" than other ecosystems. ETH and Solana, as PoS blockchains, have some potential security risks, such as excessive centralization and liquidity risks. As a POW system, BTC theoretically does not have these issues, but the accumulation of risks from too many FI protocols may lead to systemic risks.

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) Yield Rate Comparison

BTCFi has greater potential compared to ETHFi and SolFi, as the latter two have already gone through the first phase of explosive growth in TVL, while BTCFi is still a blue ocean. BTCFi products have higher yield expectations.

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) ecological richness

The ETH ecosystem includes DeFi, NFT, RWA, and Restake, among others. The Solana DeFi ecosystem has several top projects with TVL approaching $1B. The BTCFi ecosystem is in a period of explosive growth, with Layer 2 and a large number of projects continuously emerging, VC funding increasing, and market attention rising.

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Conclusion

As the BTCFi ecosystem continues to develop, we witness healthy competition among protocols. This competition not only reduces centralized risks but also promotes the maturity and diversification of the entire BTC ecosystem. In the future, BTCFi will continue to serve as an innovation engine in the field of crypto finance, advancing the Bitcoin network towards higher-level financial applications and global participation. BTCFi is expected to become a bridge connecting traditional finance and the world of cryptocurrencies, providing global users with richer, safer, and more efficient financial services.

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