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

As Bitcoin's position in the financial market continues to strengthen, BTCFi( Bitcoin finance) is rapidly becoming the forefront of cryptocurrency innovation. BTCFi encompasses various financial services based on Bitcoin, including lending, staking, trading, and derivatives. This article delves into several key tracks of BTCFi, including stablecoins, lending services( Lending), staking services( Staking), restaking services( Restaking), and the combination of centralized and decentralized finance( CeDeFi).

BTCFi Track Overview

BTCFi is like a mobile Bitcoin bank, consisting of a series of financial activities centered around Bitcoin. According to data, the BTCFi market size reached approximately $10 billion in 2023, and it is expected to reach $1.2 trillion by 2030. Over the past decade, the BTCFi market has shown significant growth potential, attracting more and more institutional participation, such as Grayscale, BlackRock, and JPMorgan. The participation of institutional investors has not only brought a large influx of funds, increasing market liquidity and stability, but also enhanced market maturity and regulation.

BTCFi Track Segmentation

1. Stablecoin stablecoin track

Stablecoins are a type of cryptocurrency designed to maintain a stable value, typically pegged to fiat currencies or other valuable assets. Stablecoins achieve price stability through backing by reserve assets or algorithmically adjusting supply, and they are widely used in scenarios such as trading, payments, and cross-border transfers.

Classified by the degree of centralization, it can be divided into centralized stablecoins such as USDT, USDC( and decentralized stablecoins such as DAI, FRAX). Classified by collateral type, it can be divided into fiat/physical collateral, crypto asset collateral, and under-collateralized.

In the BTC ecosystem, notable stablecoin projects include:

• Bitsmiley Protocol: The first native stablecoin project in the BTC ecosystem, allowing users to mint the stablecoin bitUSD by over-collateralizing native BTC on the BTC network.
• Bamk.fi(NUSD): Issuing synthetic US dollar NUSD on Bitcoin L1, circulating on BRC 20-5 byte and Runes protocol.
• Yala Labs: Through its self-built modular infrastructure, its stablecoin $YU can 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 ( CDP ) model.

( 2. Lending track

Bitcoin Lending ) is a financial service that allows individuals to obtain loans by using Bitcoin as collateral or earn interest by lending Bitcoin. Borrowers deposit Bitcoin into the lending platform, which provides loans based on the value of Bitcoin; borrowers pay interest, and lenders earn returns.

The main projects in BTC Lending 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 NFT, Runes, BRC-20, and ARC-20 assets as collateral to obtain $bitUSD.

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) 3. Staking Track

Staking ( is usually recognized for its characteristics of security and stable yield. Staking occurs at the network level and is fully used to protect the network.

Babylon is an important BTC staking protocol, its core component is a POS public chain compatible with Cosmos IBC, which allows for 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 chains.

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( 4. Restaking Track

Restaking is the process of using liquid staking token assets to stake with validators on other networks and blockchains to earn additional rewards, while still contributing to the security and decentralization of the new network.

Main projects include:

• Chakra: An innovative modular settlement infrastructure that uses 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.
• Lorenzo protocol: A BTC liquidity financial layer based on Babylon.

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) 5. Decentralized Custody

With BitGO, the entity behind wBTC, announcing the relinquishment of control over wBTC, discussions about the security of WBTC have emerged in the market. In addition to WBTC, there are other projects such as tBTC, FBTC, and dlcBTC that offer decentralized custody solutions.

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) 6. CeDeFi

CeDeFi is a financial service that combines the features of centralized finance ### CeFi ( and decentralized finance ) DeFi ###. Main projects include:

• Solv Protocol: A unified Bitcoin liquidity matrix designed to consolidate the trillion-dollar liquidity of Bitcoin through SolvBTC.
• Bouncebit: BTC Restaking chain, fully compatible with EVM, featuring CeDeFi product design.
• Lorenzo protocol: A BTC liquidity financial layer based on Babylon.

( 7. DEX AMM Swap

The development of DEX in the Bitcoin ecosystem is relatively lagging, with major projects including:

• Bitflow: Focused on sustainable BTC yields, utilizing PSBT, atomic swaps, AMM, and Layer-2 solutions such as Stacks for trading BTC, stablecoins, and more.
• Dotswap: BTC native AMM DEX, supporting assets including Runes, BRC 20, ARC 20, and the latest CAT 20.
• Unisat AMM Swap: Focused on Ordinals and brc-20 wallet applications, leveraging an order book to facilitate transactions in the inscription market.

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Comparison of Different Asset Classes

In terms of security, yield, and ecological richness, BTCFi has its own advantages and disadvantages compared to ETHFi and SolFi:

• Security: The BTC ecosystem places a high emphasis on "security", but excessive accumulation of risks from FI protocols may lead to systemic risks.
• Yield: BTCFi, as an emerging field, has higher yield expectations.
• Ecological richness: The BTCFi ecosystem is currently in a period of explosive growth, with a rapid increase in the number of projects and protocols.

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Conclusion

BTCFi is becoming an innovative engine in the field of cryptocurrency finance, driving the Bitcoin network towards higher levels of financial applications and global participation. With technological advancements and market expansion, BTCFi is expected to become a bridge connecting traditional finance and the cryptocurrency world, providing global users with richer, safer, and more efficient financial services.