Latest Developments in the BTC Ecosystem: Stake Competition and the Battle of Wrapped Assets

With the launch of the first phase of the Babylon mainnet and the Pendle going live with BTC LST, the market's attention on BTCFi continues to rise. This article will focus on the latest developments in BTC (re) staking and BTC pegged assets.

BTC (Re) new trends in the staking field

Ecological strategy has become a key competitive factor.

Unlike ETH LRT, BTC LST faces more complex ecological layout considerations, including downstream DeFi applications, BTC L2 development, and integration with BTC-pegged assets across various chains. Currently, different BTC LST providers have adopted various strategies:

• Lombard Finance focuses on the ETH ecosystem, collaborating with Symbiotic, Karak Network, and others to provide rich external rewards for stakers. At the same time, it actively promotes leveraged gameplay of $LBTC on ETH.

• Solv Protocol and Bedrock DeFi adopt a multi-chain expansion strategy, while developing upstream deposit reception and downstream application construction. Solv also consolidates its position as a "decentralized Bitcoin reserve" by requiring users to deposit SolvBTC to participate in Babylon.

• Lorenzo Protocol and pStake Finance initially focused on building the BNB chain, supporting $BTCB deposits and minting corresponding LSTs. Lorenzo also built a yield market based on BTCFi, adopting a structure that separates liquid principal tokens and yield accumulation tokens.

These different strategies will affect the liquidity of BTC-pegged assets and DeFi adoption in various ecosystems, potentially triggering cross-chain TVL competition.

Pendle leads the BTC LST points market

Pendle has integrated four BTC LST( $LBTC, $eBTC, $uniBTC, and $SolvBTC. BBN) into its points market. Among them, the actual adoption rate of $LBTC is higher than the surface value, as 37% of $eBTC is backed by $LBTC. Pendle's integration provides more yield optimization opportunities for BTC LST holders.

Except for $eBTC, the other three LSTs collaborate with the emerging ETH L2 platform Corn. Corn's unique veTokenomics and hybrid Bitcoin tokenization design add a new layer of leverage to BTCFi, but also introduce new systemic risks.

SatLayer joins BTC for staking competition

SatLayer, as a new entrant, competes with Pell Network. Both accept BTC LST for re-staking and provide security for other protocols. Pell has accumulated $270 million in TVL and has integrated major BTC derivatives from 13 networks. SatLayer, on the other hand, is deployed on Ethereum and supports various BTC LST.

As the number of restaking platforms increases, the competition for liquidity of BTC and its variant assets will intensify. This provides participants with additional arbitrage opportunities, but also indicates that the infrastructure on the supply side of the restaking sector may be excessive.

Changes in the BTC Wrapped Asset Market Landscape

New and old players compete fiercely

After the WBTC custody turmoil, competition in the wrapped BTC market has intensified. The main competing alternative assets include:

• Binance's $BTCB( supply is 65.3k)
• The supply of Merlin's $mBTC( is 22.3k)
• The supply of $tBTC( in the tBTC Network is 3.6k).
• Mantle's $FBTC( supply is 3k)
• Various BTC LST assets

Coinbase launched cbBTC

Coinbase's newly launched $cbBTC has been deployed on the Base and Ethereum networks, with a supply of 2.7k. Several DeFi protocols have expressed support, and PumpBTC and Solv have also quickly announced partnerships with Base, showcasing the potential of $cbBTC in BTCFi.

WBTC multi-chain expansion

Despite security concerns, WBTC still holds over 60% of the wrapped BTC market. BitGo recently announced the deployment of WBTC to Avalanche and BNB chains, adopting LayerZero's fully chain-interoperable token standard in an attempt to consolidate its position through multi-chain expansion.

However, as leading DeFi protocols like Aave begin to remove WBTC from their collateral lists, the adoption rate of WBTC continues to decline. This trend may affect the attitudes of more DeFi protocols towards WBTC.

FBTC actively expanding

$FBTC, managed jointly by Mantle, Antalpha, and Cobo, has been deployed on Ethereum, Mantle, and BNB Chain. Through the "Sparkle Campaign", FBTC is actively promoting widespread adoption in the BTCFi space. Multiple BTC (re) staking platforms have accepted $FBTC and are offering point incentives for early users.

Currently, various wrapped BTC assets are competing to be accepted by mainstream DeFi protocols and users, in hopes of becoming the next "WBTC". In the future, new players such as TON's $tgBTC and Stacks' $sBTC will also join the competition.

Summary

BTCFi continues to grow, BTC (re) staking and BTC pegged assets are two key areas worth paying attention to.

In the BTC (re) staking sector, there is a trend of excessive construction on the supply side, while the market size on the demand side remains unclear. Differentiated ecological strategies and unique downstream applications have become key to competition. At the same time, the mutual nesting of BTC anchor assets has introduced new systemic risks, and various protocols also face the possibility of being over-mined.

For BTC-backed assets, trust remains a core issue. Exchanges, L2s, and BTC LSTs are all developing their own assets through different solutions in a bid to gain an advantage amid the loss of market share for WBTC.