BTCFi Ecosystem Asset Accumulation Strategy Analysis

With the evolution of the BTCFi narrative, the on-chain liquidity of Bitcoin assets has become the focus of major ecosystems and protocols. BTC is transitioning from a static value storage to an asset that can participate in more on-chain yield scenarios, enhancing its application potential in the DeFi ecosystem.

Coredao, BOB, and Corn are representative growth cases in the BTCFi field for the second half of the year: Core focuses on large-scale BTC LST assets; Corn collaborates with Pendle to launch points derivative gameplay to quickly capture the incremental market; BOB attracts liquidity through rich ecology and liquid staking services. Various ecosystems have greatly activated the liquidity of BTC assets through a series of actions centered around "yield generation."

1. Background

1.1 BTC asset flow path on chain

The flow direction of BTC and its anchored assets on the chain can be divided into three layers:

1. First Layer: Native BTC
2. Second layer:
   • Wrapped BTC issued based on centralized custody
   • Mapped assets running on BTC L2 and SideChain
   • Liquidity Staking BTC
3. Layer Three: BTC derivative assets in various downstream DeFi scenarios

Current Market Status of 1.2 BTC Assets

From the issuance situation of BTC-backed assets on the Ethereum, Arbitrum, and BNB networks, centralized custodial issuance of wrapped BTC still occupies over 75% of the market share, with WBTC and BTCB together accounting for more than 75% of the total circulation. LBTC and SolvBTC.BBN and other BTC LSTs have grown rapidly in recent months, becoming another emerging force.

The main application scenarios for BTC-pegged assets are concentrated in lending protocols. The largest downstream applications of WBTC and BTCB are in Aave v3 and Venus protocol, respectively, with TVL accounting for more than 20% of their total supply, reflecting the demand for relatively stable returns from large funds in the BTCFi sector.

The current total market volume of BTC LST is approximately 25.1K BTC, with the two major protocols, Lombard and Solv Protocol, accounting for over 70% of the market share. The absorption and issuance of BTC LST directly affect the flow and settlement of BTC assets across various chains.

Compared to the wrapped BTC issued under a centralized custody model, BTC LST has expanded richer application scenarios as an interest-bearing asset. In addition to lending protocols, the points trading market has become another important downstream application.

2. Asset Accumulation Strategy of the BTCFi Ecosystem

2.1 Core: Focus on incremental assets and token incentives to drive ecological growth through dual mechanisms.

Core is an L1 scaling solution powered by BTC, allowing users to earn passive income through non-custodial Bitcoin staking. Currently, the TVL has reached $591.5M, with a growth of 4757.9% in six months.

The growth of Core TVL is primarily driven by the following factors:

1. Focus on the incremental market of BTC-backed assets, absorbing the rapidly growing Solv derivative assets.
2. Build supporting native protocols and quickly integrate with the BTCFi project to establish a complete ecological application.
3. Utilize the airdrop and market performance of the native token $CORE to support the incentive structure.

Core strategies include:

• Deep integration and cooperation with Solv derivative assets
• Led by Colend and Pell Network in the construction of the BTCFi ecosystem
• The airdrop and market performance of the native token $CORE support the incentive structure.

2.2 Corn: Efficiently attracting BTC LST market liquidity through point-based derivative gameplay

Corn is a recently launched ETH L2 network that uses a hybrid tokenized Bitcoin (BTCN) as a gas fee and economic incentive tool. Currently, it has attracted $425.8M in funds through deposit activities, mainly concentrated in pools launched together with BTC LST on Pendle.

Main Growth Strategy:

• Partnering with Pendle to lead BTC LST point derivative gameplay
• TVL Bootstrap Campaign attracts initial liquidity

2.3 BOB: Secure bridging and strong ecosystem help gather assets

BOB is an innovative hybrid Layer 2 network that combines the advantages of Bitcoin and Ethereum. The current total TVL has reached $65.7M, with the asset composition mainly coming from WBTC.

Main Growth Strategy:

• Liquidity Staking Service and Ecological Integration
• Incentive Program BOB Fusion

3. Summary

Different networks have differentiated strategies in asset accumulation.

• Core attracts asset inflows through deep integration with Solv Protocol and a dual-staking mechanism.
• Corn successfully attracted BTC LST funds through the points derivative gameplay.
• BOB attracts assets through extensive BTCFi project integrations and one-click liquidity staking services.

The key to effectively achieving ecological fund accumulation is:

1. Unblock and incentivize large-scale incremental anchored assets
2. Forming composable yield strategies through diversified DeFi applications.
3. Provide multi-party incentive expectations

Currently, the TVL of BTC-backed assets on L2 and sidechains is around $1.6 billion, accounting for only 0.14% of BTC's total market cap. As BTC liquidity is released, there is still huge growth potential for asset accumulation scale and application scenarios.