Lombard Finance Raises $7M to Bridge Bitcoin and DeFi, Backed by Binance Labs

Built on top of Babylon, another Binance Labs-backed Bitcoin staking project, Lombard Finance seeks to leverage Bitcoin's vast market cap—currently over $1 trillion—and channel a portion of it into DeFi.

Binance Labs, the venture capital arm of cryptocurrency exchange Binance, has announced a new investment in Lombard Finance, a platform that connects Bitcoin to decentralized finance (DeFi).

What is Lombard Finance?

Built on Babylon, a Binance Labs-backed Bitcoin staking project, Lombard Finance aims to channel a portion of Bitcoin's vast market capitalization into DeFi. By offering a liquid staking solution for Bitcoin, the platform enables holders to participate in the expanding decentralized economy and earn returns on their holdings.

Why Binance Labs Invested in Lombard

Binance Labs' interest in Lombard Finance is driven by the platform's potential to integrate Bitcoin into the growing DeFi space. Despite being the most valuable cryptocurrency, Bitcoin's utility within DeFi remains limited compared to assets like Ethereum. Lombard aims to change this by making Bitcoin more productive through its liquid staking solution, LBTC.

Andy Chang, Investment Director at Binance Labs, commented on Lombard's offering:

“Lombard’s approach to integrating Bitcoin with DeFi addresses a clear market need, and LBTC's fast growth demonstrates user interest to unlock more utility from their Bitcoin holdings.”

Lombard's Core Offering: LBTC

Earn Staking Rewards: Users who stake Bitcoin through Lombard receive staking rewards from Babylon's network. This allows them to generate passive income while still holding their Bitcoin.

Cross-Chain Compatibility: LBTC is designed to be compatible across major blockchain ecosystems, enabling users to move their Bitcoin across chains without sacrificing liquidity or security.

DeFi Integration: LBTC can be utilized in various DeFi protocols, including lending, borrowing, yield farming, and liquidity provision. This makes Bitcoin more functional within DeFi while preserving its core value.

Security: Unlike other wrapped Bitcoin solutions that rely on centralized or unsecured bridges, LBTC reportedly offers a more secure alternative backed by Bitcoin and supported by decentralized networks.

LBTC for Bitcoin

Bitcoin is often viewed as a passive store of value, with a significant portion of its $1 trillion market capitalization remaining untapped. Lombard identifies this as an opportunity.

According to Lombard, if even a small percentage of Bitcoin's value—for instance, 10%—flows into DeFi through platforms like Lombard, it could dramatically increase the total value locked (TVL) in the DeFi ecosystem. This would boost the entire decentralized economy, benefiting Bitcoin holders and DeFi users alike.

The Role of the Lombard DeFi Vault

The vault allocates deposits across various DeFi platforms, such as Aave, Uniswap, and Pendle, optimizing yields through a balanced mix of liquidity provision, lending, and yield farming. Users receive a token called LBTCv, representing their share of the vault's balance, including both principal and accumulated yield.

Future Plans for LBTC

Lombard's roadmap includes expanding LBTC's presence across multiple blockchains, beginning with Binance's BNB Chain. According to the Lombard team, over time, LBTC will become available on other chains with significant DeFi activity, such as Base, Arbitrum, Solana, and others.

Lombard is currently working on integrating LBTC with Ethereum DeFi protocols in Phase 2 of its roadmap. In Phase 3, LBTC will reportedly be available on multiple Layer-2 chains and Layer-1 networks, along with deeper integration with Babylon's Bitcoin Staking Protocol.

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