Written by: CryptoMemento
Compiled by: Vernacular Blockchain
The crypto bear market has turned again.
It is most appropriate to write something about Bitcoin at this time. With news emerging about many Restaking protocols, we have a lot to talk about.
In today’s article, we will take you to understand the positioning changes of Bitcoin on the Bitcoin Staking/Restaking track, the uses of Bitcoin liquid staking, active participants, and future trend predictions.
Abstract: The core of Bitcoin is stability and security, but among hot topics such as Ordinals, Bitcoin NFTs, and Inscriptions, the Bitcoin community is experiencing a Bitcoin renaissance, and entrepreneurs are trying to build the Bitcoin layer and ecosystem system. Bitcoin is a permissionless protocol that anyone can build on, including those who wish to build Bitcoin-powered financial systems and credit systems. Bitcoin staking and re-staking may follow a similar path, with major projects (such as Babylon) continuing to build the foundation of "legitimacy", while numerous liquid re-staking protocols compete and define their roles, eventually expanding the boundaries and forming a networked ecosystem. system. Currently, the heavy-staking track includes projects such as Babylon, Lorenzo, Pell Network, OrangeLayer Protocol, Chakra, Bedrock, and Lombard, with dozens more projects expected to join the space. The track remains on the verge of a major breakthrough. Currently, Babylon is temporarily ahead of the local heavy-staking industry, but it is still worth paying attention to new players with technological innovation and iteration. The important goals of these projects are to find the path with the lowest incentive cost, establish an effective incentive and transmission mechanism, obtain enough TVL (total locked volume), and ultimately form a flywheel effect.
Before discussing the Bitcoin Staking and Restaking tracks, I would like to outline the evolution of Bitcoin’s positioning and identity since its birth:
Let’s fast forward to 2023 and 2024, and assets like Ordinals, Bitcoin NFTs, Memes, Inscriptions, and Runes are starting to rise like crazy. Investors enjoying the soaring prices of these assets propose a "new" Bitcoin that transforms Bitcoin from a "medium of value" to a "culture." Based on the consistent (albeit somewhat far-fetched) spirit of Bitcoin, they attempt to provide a pricing framework to reassess the value of Bitcoin and naturally create a need for credit and income for Bitcoin holders.
Adhering to the principle that existence is reasonable, it is unrealistic to expect Bitcoin income products to disappear. Therefore, we no longer judge Bitcoin extremists or Bitcoin fundamentalist culture because Bitcoin is a permissionless protocol that anyone can build on, including those who wish to build a Bitcoin-powered financial system — —This inevitably introduces credit and leverage.
At this stage, the narrative of this track can basically return to “making BTC more capital efficient”. According to Mikhil Pandey, co-founder and chief strategy officer of Persistence Labs, the obstacles to making Bitcoin more capital efficient can be roughly crystallized into the following factors:
It is undeniable that gaining more based on Bitcoin The track of diversified returns is still in the early exploration stage, especially after the collapse of centralized institutions such as Celsius, BlockFi and FTX in 2022. Centralized return platforms/projects for crypto assets need to rebuild more trust in the process of market expansion.
To understand Bitcoin Staking, you first need to understand how Staking is generated and where the rewards come from.
The biggest feature of Bitcoin, Ethereum and Solana blockchains is that they establish a trustless network. Miners and nodes around the world update the entire network status (data, transactions, balances, etc.) based on certain consensus rules and maintain consistency. Among them, the PoW network relies on computing power (mining), while the PoS chain requires blockchain validators to pledge Tokens before proposing or voting for blocks. This enables PoS protocols to hold violators accountable and confiscate their staked tokens as punishment. Of course, honest participants receive block rewards, a mechanism designed to maintain and achieve network consistency.
As mentioned in our previous Bitcoin bi-weekly report, Bitcoin Staking is the second largest unified track in the Bitcoin ecosystem after Bitcoin L2, and the primary market and entrepreneurs have a relatively unified consensus on this. . The logic is as follows: Due to the lack of external economic incentives, the security of many emerging PoS chains (new projects are always emerging, mostly PoS chains) is limited by the scale of the on-chain economy, and there are control risks. The Bitcoin Staking and Restaking protocols provide security for PoS networks by introducing Bitcoin, the most consensus asset.
We can get some information about this track from the Ethereum ecosystem project EigenLayer and its ecosystem projects.
EigenLayer is an Ethereum-based Restaking protocol that allows pledged ETH on the Ethereum network to enhance network security through Restaking. It enables the secure operation of other blockchain protocols and applications by leveraging already staked ETH on Ethereum, a process called Restaking. Restaking allows Ethereum validators to use some or all of their staked ETH to support other Active Validation Services (AVS) such as bridge protocols, orderers, and oracles. Typically, these services require their own staking and verification mechanisms to secure the network, but with EigenLayer’s heavy-staking functionality, they can gain Ethereum-level security without attracting large amounts of capital themselves.
EigenLayer has the following features:
Build a new security sharing model: Allow different blockchain protocols to share Ethereum’s security infrastructure without the need to build a large validator network, significantly reducing the startup costs of new blockchain protocols. Additionally, heavy staking increases the overall network’s resistance to attacks, as attacking any protected protocol would require overcoming the additional security that comes from heavy staking.
Improve the capital efficiency of ETH: the same ETH can serve multiple networks at the same time. Users can enjoy the original staking rewards while receiving additional rewards by participating in other AVS protocols.
Lower the threshold for participation: Through the heavy pledge mechanism, small stakers can also participate in Ethereum’s network security. Stakeholders do not need to meet the full staking threshold of 32 ETH; individual stakers can participate through Liquid Staking Token (LST).
Increase decentralization: By staking small amounts, the entire network can be less dependent on large stakers.
Currently, EigenLayer supports two restaking methods: native restaking and liquid restaking.
Native Restaking involves Ethereum PoS node validators connecting their staked ETH in the network to EigenLayer to participate in the AVS verification process.
Liquid Restaking allows the circulation of pledge certificates issued by LSP (Liquid Staking Protocol). These certificates represent the original rights to pledge ETH and can be used freely in various decentralized finance (DeFi) protocols without affecting the stakers' rights in Ethereum. Staking status and reward collection on. Additionally, Liquid StakingToken (LST) can be used to generate additional revenue in DeFi protocols or be sold on the market without having to wait for long staking periods, thereby earning EigenLayer platform points and other benefits.
In contrast, native Restaking does not involve intermediate Tokens, reducing the risks caused by Token fluctuations or mismanagement, but Liquid Re-Staking has better liquidity and shorter asset unlocking and transfer times.
Currently, the EigenLayer ecosystem has begun to support multiple AVS and integrate with several well-known DeFi protocols and other blockchain services. It allows the use of different types of proof of collateral (such as LST and native ETH) to support these services, improving capital utilization efficiency.
Currently, Bitcoin Staking and Restaking may follow a similar path. Mainstream projects (such as Babylon) continue to build "orthodox" foundations, while many Liquid-heavy staking protocols compete and define their roles, eventually expanding the boundaries and forming a networked ecosystem.
After looking at most of the projects in this track, we can identify several common narratives they use to justify their existence and convince the market of their adaptability sex. Here are some familiar phrases, but please be wary:
Bitcoin is the most secure blockchain in existence, and no asset has a stronger foundation of trust than Bitcoin.
Unlock the economic potential of Bitcoin and make $1.5 trillion worth of Bitcoin flow, providing holders with sustainable income opportunities.
By inheriting Bitcoin’s trustless foundation, we build a BTC financial system relying on Bitcoin’s original security to gain returns or make BTC more capital efficient.
We bridge the gap between PoW and PoS blockchain systems, leveraging the security of Bitcoin.
Bitcoin pledged derivative assets have huge market potential, including the construction of collateralized stablecoins, borrowing and derivative revolving loans, structured products, liquidity management agreements, income management or interest rate swap agreements, and governance rights management agreements.
To gain an in-depth understanding of the current heavy staking circuit, we have reviewed several projects and provided brief introductions and comments.
1) Babylon
Babylon is an infrastructure/common middleware for secure sharing of Bitcoin. The team has developed two security sharing mechanisms: the Bitcoin timestamp protocol and the Bitcoin staking protocol to share Bitcoin security to the PoS chain or Layer 2 in a trustless and self-custody manner, thereby obtaining corresponding security returns while demonstrating to reduce their own inflation.
Current development stage: Bitcoin staking testnet-4 has been launched.
Brief comment: At present, most heavy-collateral protocols choose Babylon as the starting point for project power, hoping to use more asset layer protocols as "agents" to build more diverse asset sources and cost sharing. Of course, these projects also require Babylon as a source of revenue.
2) Lorenzo
Based on Babylon, Lorenzo allows Bitcoin holders to convert BTC to stBTC, participate in Bitcoin staking and receive rewards without locking up funds. At the same time, Lorenzo divided Liquid RestakingToken (LRT) into Liquidity Principal Token (LPT) and Yield Accumulation Token (YAT), and plans to build interest rate swaps, borrowing agreements, structured BTC income products and stable coins in the future. This project focuses on building an efficient Bitcoin liquidity allocation market and liquidity assetization.
Current development stage: Beta mainnet has been launched.
Current data: Invitation only, 1000 BTC has been deposited on the Beta mainnet.
Brief comments: One of the participants, the biggest highlight of marketing is the participation of BN.
3) Pell Network
Pell Network is an Active Verification Service (AVS) network built on the heavy-staking protocol in the Bitcoin ecosystem. Its goal is to aggregate BTC and its LSD liquid assets scattered on various Layer 2 into a unified Pell network ledger, thereby creating a decentralized AVS ecosystem service network.
Current Total Locked Volume (TVL): 172 million USD
4) OrangeLayer Protocol
OrangeLayer is an infrastructure that provides Bitcoin staking and aims to bring Bitcoin’s cryptoeconomic security to Ethereum ecosystem and provide a wider range of Bitcoin Protection Services (BPS). Unlike protocols such as EigenLayer and Babylon that rely on ETH or BTC as security, OrangeLayer supports the conversion of all forms of Bitcoin (native, wrapped, or pegged) into yield-generating assets.
Current development stage: testnet stage, scheduled to be launched on the mainnet in the third quarter of 2024.
5) Chakra
Chakra is a Bitcoin heavy-staking protocol driven by zero-knowledge (ZK). The team proposed the concept of SCS (Settlement Consumer Service) to integrate Bitcoin heavy-staking into the PoS system. The project plans to integrate with Babylon.
Current development stage: Testnet has been launched.
Current Total Locked Volume (TVL): 257.64 BTC
6) Bedrock
Bedrock is a liquidity-heavy pledge protocol developed by RockX. Currently supporting uniETH, uniIOTX and uniBTC as base assets for heavy-collateral operations, enabling holders to earn more through ecosystem integration.
Current Total Locked Volume (TVL): 141.55 million USD
7) Lombard
Lombard is a Bitcoin staking protocol. When users stake Bitcoin through Babylon, Lombard will use LBTC Token to release liquidity and revenue representation of the staked Bitcoin, thereby unlocking liquidity. Lombard plans to integrate LBTC into Ethereum’s DeFi protocol later this year.
Current development stage: internal testing stage.
Some interesting things are happening in the Bitcoin field.
I’m personally excited about how these building blocks come together. The following is my summary and outlook on the current status of Bitcoin staking and re-staking. Of course, given the significant changes in the industry, these views may need to be continuously iterated and adjusted.
Credit can provide a more complex and efficient economic structure, but the current market is still dominated by a small number of large Bitcoin holders who make up the majority of TVL. The market lacks dynamism and requires further education.
トラック全体がまだ急速にダイナミックに変化している段階にあることに注意する必要があります。主要プロジェクトの市場での位置付けやソリューションも常に更新されます。
現在、バビロンはテクノロジーの蓄積（新規プロジェクトにおける長距離攻撃や高インフレ、セキュリティ問題に対処するためのビットコインタイムスタンプとビットコインステーキングプロトコル）と制度的承認を利用して、地元の重ステーキング産業チェーンの上流をリードしています。 Babylon の安定性、セキュリティ、効率の指標には時間の検証が必要であり、再ステーキング プロトコルは Babylon に大きく依存していることに注意してください。技術革新と反復による新たなプレーヤーに今後も注目していきます。
このトラックに参加するプロトコルのほとんどは、液体再テイキングを提供するものであり、柔軟かつ効率的な方法でサプライヤーに直接サービスを提供します。市場はいまだ構造調整段階にあり、絶対的な交渉力を持つリーダーはまだ出現していない。将来的には、この分野で数十のプロジェクトが立ち上がることが予想されます。
PoW から PoS への市場の魅力は十分に大きいですが、2 つのエコシステムの間には依然としてかなりのギャップがあり、EigenLayer などのサービスプロバイダーは強力なユーザー心理を確立しています。ビットコインエコシステムのステーキング重視のプロトコルが既存の市場を獲得できるかどうかはまだ分からない。
過去の経験から判断すると、Active Verification Service (AVS) は多くのプロトコルのロードマップ計画に組み込まれることが予想されます。差別化を図るための最も直接的な方法は、補助金やカスタム パートナーシップ契約を通じて、ヘビーステーク企業に独占的な AVS アクセスを提供することです。これらは徐々に競争上の優位性を築き、プロジェクトによってはネットワーク効果を生み出すこともあります。
イーサリアムのステーキングトラックと比較すると、ビットコイントラックはまだアウトブレイク前の段階にあります。量と質の点で、ビットコインエコシステムは依然として一定量のテクノロジーと時間の蓄積を必要とし、新しいチェーンセキュリティマイクロサービスに対するさらなる需要を開拓しています。
この段階での軌道プロジェクトの重要な目標は、最も低コストのインセンティブ経路を見つけ、効果的なインセンティブと伝達メカニズムを確立し、十分な TVL を獲得し、最終的にプラスのフライホイール効果を生み出すことです。
The above is the detailed content of Ascendant, an overview of Bitcoin Staking and Restaking projects. For more information, please follow other related articles on the PHP Chinese website!
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