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Bitcoin is the original cryptocurrency and dominates the market as the largest cryptocurrency by market capitalization.
But as a pioneer, it also suffers from limitations that have been resolved by the cryptocurrencies that followed in its wake. These limitations – Bitcoin’s slow consensus mechanism, limited data storage capacity, and lack of compatibility with smart contracts – mean that much of Bitcoin’s liquidity is cut off from thriving decentralized finance (Challenge) space.
That’s what Lorenzo Protocol aims to solve this problem with its new Bitcoin cash recovery protocol.
Liquid re-staking builds on the existing liquid staking model, which allows investors to participate in staking on proof-of-stake blockchains, while retaining their personal liquidity.
Lorenzo Protocol Liquid Retaking allows users to stake the stBTC derivative token that represents their staked asset across multiple blockchains, thereby earning additional yield from their staked Bitcoin.
“We are a platform to help stakeholders lend BTC liquidity to projects that need it to grow, and then provide the yield for those projects,” said Matt Ye, founder of Lorenzo Protocol. Decrypt. He added that by tokenizing BTC liquidity lending and borrowing, it effectively creates BTC bonds.
“First, we match BTC holders to all projects to get BTC yield,” Ye said. “Second, we do tokenization for staking.”
“On top of that, we’re building on top of StakingFi or YieldFi application layers,” he added. The platform uses the Lorenzo Appchainan EVM compatible Bitcoin Layer 2 network which is secured by BabylonChain’s Bitcoin shared security. “This L2 is responsible for issuing and settling these staking tokens, and then also building the DeFi ecosystem on top of these token standards,” Ye explained.
The platform’s testnet will be launched “very soon”, Ye said Decrypt, allowing users to test Lorenzo Protocol’s staking portal. “Basically, you can invest through us up to Babylon, and at the same time, we’re going to issue stBTC on our own L2s, and you can connect them to the other L2 or L1 ecosystem with our bridge,” he said. -he explains.
“Eastern BTC capital can meet Western projects.”
As the Bitcoin DeFi ecosystem evolves, Ye predicted “huge demand for Bitcoin liquidity,” for purposes such as L2s, BTC yield products, and staking portfolio management. “Each L2 is a source of BTC yield; trading desks, trading strategies are others,” he said. “Given the expansion of BTC, demand in every sector will increase.”
“We tokenize everything, every staking opportunity, and we become like a market,” he said, adding that Lorenzo Protocol aims to help bridge the gap between BTC holders and staking opportunities in projects from the English-speaking world and Asia. At the moment, he says, there is “no basis of trust, there are language barriers, it is impossible for them to work together.” With the Lorenzo Protocol in the middle, he said, “Eastern BTC capital can respond to Western projects.”
Lorenzo also functions as a BTC bond trading protocol. “You can lend your money to anyone in the world, but without a bond or money market, your assets are very illiquid,” Ye said. A BTC bond market, he said, allows holders to “retain your liquidity and security for the financial stability of your asset investment.”
Its ecosystem could expand to encompass a wide range of products, Ye said, including yield trading products, lending protocols, Bitcoin structured yield products, insurance products and over-collateralized products backed by BTC. stable coins which use Lorenzo Protocol’s stBTC derivative token as collateral.
Ultimately, Lorenzo Protocol has big ambitions, Ye said. “I hope that eventually BlackRock, Franklin Templeton, Brevan Howard, Two Sigma, Citadel, Fidelity, they will all be able to borrow BTC capital on our platform,” he said, adding that “We want to become very institutional”. We are supposed to be THE BTC bond exchange market worldwide.
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