BTCFi: The New Staking-Alternative for Bitcoin with Matt Ye of Lorenzo Protocol

Transcript

let's maybe switch gears here and talk about BTC um you this is this is a an emerging space of defi that yeah uh is kind of separate from the rest of defi what's the biggest challenges in terms of getting liquidity in btcf but also bridging btcf with the rest of D let's say in ethereum DVM space and and all the other uh L1 blockchains do do you think that you know the the future is one where we have sort of two defi ecosystems that are are you know not easily bridged or will all this liquidity sort of like merge together to form like one big uh defi ecosystem um I think in the fundamental

uh situation here is that it's not going to be like fragmented so the interesting thing to see is like most of these Bitcoin l2c today are are are already evm so people just don't tend to like reboot whale Wheels uh for like uh for for execution layer so I mean there are good and bads I mean like I don't think evm eventually should be like everywhere and dominating everywhere as well but also so far it has the huge Network effect and also it's the easier way for you to acquire uh developers and also users as well it just it is what it is so so far and also like for the interoperability it's like very simple as well it's like just an EPM chain connecting to bitcoin L2 is nothing

different from connecting to ethereum l1's uh like evm l1s or any evm l2s it's like essentially the same thing so uh I don't think liquidity is going to be like fully separated and also I think the ecosystem will be like interacting with each other pretty frequently this is one thing but also getting ethereum liquidity and also getting Bitcoin liquidity is a very is a very different story right and also that's why like staking ethereum is actually cuz like bit ethereum is like too liquid and you sometimes want to just lock them up so that they don't they don't lose value like they don't like deflate in their value so while um for uh for Bitcoin it's actually different so a lot of most of the Bitcoins are actually staying

idle and a Bitcoin holder is having a lot of concerns like if I participate would I lose my Bitcoin savings for my life and also even if I convert it into some smart standards of BTC a lot of them are firsttime defi users like what does this application even means to me why should I even use them what can I do with them so a lot of them actually don't have a very clear idea on how this thing should be rolling out so um so it just takes time like I said it just takes time so and also it takes a lot of kind of joint efforts so first you need to prove your project is legit and also your functionality is legit you are backed by reasonable people and reasonable Brands and also the methodology makes sense the

technology makes sense of and also here is the uh what are the yield you can you can expect and here are all of the amazing things things that you can do in this ecosystem we need to have like every single like dots to be connected before we can have like a big enough to be convincing enough for L the Bitcoin holders to actually participate into it and uh that takes time so basically yeah yeah and you mentioned before the show we're we're getting set up you you mentioned challenges in redistributing BTC liquidity yeah can you expand on that a little bit and like what what is the issue here yeah so I think like before like BTC staking right so so all of the Bitcoin assets has a distribution on all of the different chains let's say

most of them majority of them like remains on the Bitcoin network uh and U like some of them are in ethereum some of them are in BSC some of them are in Arbitron and y y yada in know like different ecosystems there and uh with BTC staking actually a lot of these BTC liquidities will be pulled from different chains and different ecosystem and being like locked up and sted into the BBL on ecosystem so potentially you could see there are going to be TBL loss in all of the ecosystem just in this one the first step but in the second step is after staking has happened on boblong chain liquid staking tokens will be minted and it will be distributed into different Chan ecosystems so if all of

like these ecosystem they're doing things right they're embracing like Bitcoin liquidity like tokens then they should expecting they should be expecting a huge TVO gain because a lot of liquidity from the Native B Co L1 are actually being unlocked and released into all of these ecosystem but if some of the chains they're like moving slow and they're not embracing like the changes then chance is they could even lose liquidity after redistribution so I mean all of these L1 and l2s are on this battle on acquiring like BTC liquidities and directing them into their ecosystem so that's the thing actually there okay so essentially the problem here is that you're saying is once Babylon goes live wrapped BTC will go

back um will will come out of ethereum uh salana um binance chain to Babylon yeah and that will pull liquidity from all these other ecosystems I mean I suppose a lot of that liquidity is probably locked up in leverage positions right I mean people if people have BTC over on on ethereum for example it's probably not just sitting there it's probably in an a uh in an a pool or something like that and there's probably other assets bored yeah against it um how how quickly do you think this will happen for this unraveling um because like you know personally I I have BTC over on ethereum but like it would probably take me a

long time for me to like liquidate those positions get that BTC out moveing move it over into into Babylon yeah so um I think like a lot of things are are are haven't been finalized yet for example how much he owed like Bob could provide so let's say presumably like if won could provide like a 50% yod on a BTC I mean I think like majority of the BDC is going to disappear on all of the different ecosystem and all be going to B one right this is like one thing and uh if it's not so high like the Mobil the power of mobilization will probably be be somewhat lower so um and it takes like more time to withdraw from that I mean there are BTC like rep BTC btcb investment opportunities across all

different ecosystems uh but it's really like the opportunity costing here right so how much yeld did that your transactions or your uh Financial activities is going to provide you on this different ecosystem and how high and also versus like how low risk boblong could be uh providing you with BTC staking so once the yeld has been out and once the security has been proven uh like the risk-free kind of Y on bablon will become like a pretty obvious options at least I mean a lot of the not so uh not so high yield on ethereum or say the other ecosystem while facing real challenges there uh for like the BTC on the BTC business basically um so but how soon it it

depends right so how fast you can liquidate like your positions how fast you can endake from your stakings and also how fast you can actually like converting is actually easy pretty fast you just like Bridge it over or you could just like say convert it in exchanges uh or or let's say you could just like withdraw it from whatever the rap BDC standard provider so it shouldn't take that long uh it should be like between like a few minutes to a few days it shouldn't be taking that long but eventually yeah I think eventually it's it's it's just going to like like since the opportunity is there and the liquidations like liquidity is just be going to be pulled from different

ecosystem and being put into the Bon chain like BBL on like yeah I think I think in long term that makes sense um absolutely [Music] [Music]