Competition in the BTCFi market is intensifying, with longer competing for BTC pegged asset shares.

Recently, with the launch of the first phase of the Babylon mainnet and the introduction of various BTC-related products, the BTCFi sector has once again become the focus of market attention. This article will analyze the latest developments in BTC (re) staking and BTC-pegged assets.

BTC (Re) staking market landscape

Currently, the competition among BTC LST (liquid staking tokens) is becoming increasingly fierce. In the past 30 days, Lombard Finance has achieved rapid growth, with a deposit amount reaching 5.9k BTC, making it the platform with the highest current TVL. Lombard has gained a competitive advantage by collaborating with top restaking protocols to provide participants with richer sources of restaking yields and DeFi participation opportunities.

In the BTC LST field, ecological strategy has become a key factor influencing the competitive landscape. Compared to ETH LRT, BTC LST faces more complex considerations, including downstream DeFi application scenarios, the development stage of BTC L2, the combination of BTC pegged assets across various chains, and integration with re-staking platforms.

Different BTC LST providers have adopted different strategies:

• Lombard Finance focuses on the development of the ETH ecosystem, providing rich external rewards through collaboration with multiple protocols.
• Solv Protocol and Bedrock are actively working on multi-chain expansion, covering upstream deposit reception and downstream application development.
• Lorenzo Protocol and pStake Finance initially focused on building on the BNB chain.

These different ecological strategies not only affect the growth rate and market share of each platform but also influence the liquidity of BTC pegged assets and the adoption of DeFi within each ecosystem.

Pendle Ventures into BTCFi

Pendle recently integrated multiple BTC LSTs into its points market, including LBTC, eBTC, uniBTC, and SolvBTC.BBN. This initiative provides BTC LST holders with more opportunities to optimize their yield strategies. Except for eBTC, the other three LSTs are bound in collaboration with Corn. Corn is an emerging ETH L2 with unique veTokenomics and Hybrid Tokenized Bitcoin design.

Leverage on points is one of the key scenarios for interest-bearing asset strategies. Pendle's integration of BTC LST will drive a broader trend of application in the DeFi ecosystem. Currently, Gearbox Protocol has introduced LBTC into its points market, and Pichi Finance has also hinted at integrating BTC LST in the near future.

New Players in the BTC Re-staking Market

SatLayer has entered the competition in the BTC restaking market as a new player. Similar to Pell Network, SatLayer accepts BTC LST for restaking and uses it to provide security for other protocols. Currently, SatLayer supports various BTC LSTs, including WBTC, FBTC, pumpBTC, SolvBTC.BBN, uniBTC, and LBTC. As more restaking platforms emerge, the competition for liquidity in BTC and its variant assets will become increasingly fierce.

Market Changes of BTC Pegged Assets

Since Justin Sun's involvement in WBTC custody sparked controversy, competition in the wrapped BTC market has intensified. Major competing alternative assets include Binance's BTCB, Merlin's mBTC, The T Network's tBTC, Mantle's FBTC, and various BTC LST assets.

Coinbase has launched the wrapped asset cbBTC, supported by its custody, with a current supply of 2.7k. cbBTC has gained support from multiple mainstream DeFi protocols and plans to expand to more chains in the future.

Despite security concerns, WBTC still occupies over 60% of the wrapped BTC market. BitGo recently announced the deployment of WBTC on the Avalanche and BNB chains, and multi-chain expansion via LayerZero's cross-chain fungible token standard. However, the adoption rate of WBTC continues to decline, and some leading DeFi protocols have started to remove it from their collateral lists.

FBTC is actively promoting widespread adoption in the BTCFi space. Through the "Sparkle Campaign", FBTC has been adopted by multiple BTC (re) staking platforms, providing points incentives for early adopters.

Summary

The BTCFi market continues to grow, with BTC (re) staking and BTC anchored assets being two key sectors worth attention. In the BTC (re) staking field, there is an over-construction trend on the supply side, while the market volume on the demand side remains uncertain. Differentiated ecological strategies and unique downstream applications have become the key to competition. Regarding BTC anchored assets, various parties are actively developing their own solutions to gain acceptance from mainstream DeFi protocols and users, aiming to capture the market share lost by WBTC. However, trust remains a core issue in this field.