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Bitcoin It is the main cryptocurrency- and dominates the market as the largest crypto by market capitalization.
But as a trailer, it also suffers from the limitations dealt with by the cryptocurrencies that followed it. Those limitations—Bitcoin's slow consensus mechanism, limited data storage capacity, and lack of smart contract compatibility—mean that most Bitcoin liquidity is (disconnected) from the flourishing decentralized finance.DeFi) location.
The Lorenzo protocol aims to solve that with the new Bitcoin Liquidity Restoration Protocol.
Liquid Repository builds on the existing liquid storage model, allowing investors to stake on blockchains that do not prove they hold private liquidity.
The Lorenzo Protocol's Liquid Repository allows users to hold the stBTC base token that represents their stored assets across multiple blockchains, earning additional yield from the Bitcoin held.
“We are a platform that helps stakeholders lend BTC liquidity to projects that need to scale, and then deliver the products of these projects,” Lorenzo Protocol founder Matt Ye told Decrypt. He added that it effectively creates BTC bonds by simulating BTC liquidity loans and mortgages.
“We will first match BTC holdings with all projects for BTC production,” he said. “Two, we're going to do a simulation.”
“On top of that, we'll build StakingFi or YieldFi app layers on top of that,” he added. The platform uses the Lorenzo Appchain, an EVM-compatible Bitcoin Layer 2 network secured by BabylonChain's Bitcoin common security. “This L2 is responsible for the issuance and establishment of these staking tokens and then also building the DeFi ecosystem on top of these token levels,” he explained.
The platform's testnet will launch “very soon,” they told Decrypt, allowing users to test the Lorenzo protocol staking portal. “You can carry it to Babylon through us, and at the same time we will process stBTC with our own L2s, and you can connect them to the other L2 or L1 ecosystem with our bridge,” he explained.
“Eastern BTC Capital Can Meet Western Projects.”
As the Bitcoin DeFi ecosystem continues to evolve, L2s predicted “greater demand for Bitcoin” for purposes including BTC production and stock portfolio management. “Each L2 is a source of BTC production; trading desks, trading strategies are others,” he said.
“We put everything in place for every occasion, and we act as a marketplace,” said Lorenzo, adding that Protocol aims to help create diversity among BTC holders and opportunities for projects in the English-speaking world and Asia. Currently, he said, “There is no trust base, there are language barriers, it is impossible to work together.” At the center of Lorenzo's protocol, he said, “Eastern BTC capital can complement western projects.”
Lorenzo works as a BTC bond trading protocol. “You can lend your money to anyone in the world, but without a bond market or a money market, your assets are highly illiquid,” she said. The BTC bond market allows holders to “maintain the liquidity and security of your wealth investments so that you have financial stability.
The ecosystem could include a wide range of products, he said, including commodity exchange products, lending protocols, structured Bitcoin derivatives products, insurance products and BTC-backed leveraged products. A stable coin Those using the Lorenzo Protocol stBTC derivative token as a container.
Ultimately, Lorenzo's protocol has broad ambitions, Ye said. “My hope is that eventually BlackRock, Franklin Templeton, Brevan Howard, Two Sigma, Citadel, Fidelity – all of them can lend BTC capital on our platform,” he said. We must be the world's largest BTC bond exchange market.
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