BTC staking and the competition in the wrapped asset market intensifies

With the launch of the first phase of the Babylon mainnet and the Pendle going live with BTC LST, market attention has once again focused on the BTCFi sector. This article will explore the latest developments in BTC (re) staking and BTC pegged assets.

BTC (Re) staking Market Overview

The competition for BTC LST is becoming increasingly fierce. After Babylon Stage 1 quickly reached the 1000 BTC cap, various parties are competing for the staking yield entry for BTC and its wrapped assets. In the past 30 days, a certain platform has achieved rapid growth, reaching the current highest TVL with a deposit of 5.9k BTC, surpassing another platform that had long been in a leading position.

The ecological strategy has become a key influencing factor in the competitive landscape of the BTC LST field. Unlike ETH LRT, which benefits from the mature DeFi ecosystem of ETH and ETH L2, BTC LST faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination with various on-chain BTC pegged assets, and integration with re-staking platforms.

Strategic Analysis of Major BTC LST Providers

1. A certain platform focuses on the development of the ETH ecosystem, providing rich external rewards for stakers through cooperation with multiple re-staking protocols. At the same time, it actively promotes its LST leveraged play on ETH and establishes partnerships with multiple DeFi protocols.

2. The other two platforms adopt a multi-chain expansion strategy, with ecosystem development covering upstream deposit reception and downstream application construction. One platform's unique strategy is to require users to deposit their LST to participate in Babylon, in order to drive market demand and strengthen core business.

3. There are two platforms supported by a certain exchange, with the initial focus on the construction of the BNB chain. One of them has built a yield market based on BTCFi, using a structure that separates liquid principal tokens and yield accumulation tokens, which increases the flexibility of the yield play based on BTC restaking.

Pendle Enters BTCFi

A certain DEX has integrated four types of BTC LST into its points market. Due to the correlations between some LSTs, this integration provides holders with more opportunities for optimized yield strategies. In addition, multiple BTC LSTs have reached cooperation with another L2 project, which may introduce new nested leverage opportunities for the BTCFi system, while also bringing in new systemic risks.

New Entrants in the BTC Staking Market

A new platform has joined the competition in the BTC staking market, competing with existing platforms. Both accept BTC LST for staking and use it to provide security for other protocols. As more homogeneous staking platforms emerge, the competition for liquidity of BTC and its variant assets will become increasingly fierce.

Changes in the BTC Wrapped Token Market

The competition in the wrapped BTC market is intensifying, with multiple alternative assets vying for market share. A large exchange has launched a new wrapped asset, which has gained support from various DeFi protocols and plans to expand to more chains in the future. Despite security concerns, WBTC still holds over 60% of the wrapped BTC market share, but its adoption rate continues to decline.

Another multi-party managed wrapped BTC asset is actively promoting widespread adoption in the BTCFi space and has been accepted by several BTC (re) staking platforms.

Summary

BTCFi continues to grow, BTC (re) staking and BTC anchored assets are two key sectors. There is a trend of excessive supply-side construction in the BTC (re) staking field, with differentiated ecological strategies and unique downstream gameplay becoming the key to competition. The competition in the BTC anchored assets market is fierce, with all parties striving to be accepted by mainstream DeFi protocols and users to capture the market share lost by WBTC.