The competition in the BTC derivation market is intensifying, and ecological layout has become key.

With the launch of the first phase of the Babylon mainnet and the successive introduction of various BTC derivation products, BTCFi has once again become the market focus. This article will explore the latest developments in BTC (re) staking and BTC anchored assets.

BTC (Re) staking market analysis

Currently, the competition for BTC LST is intense, with various parties vying for the staking entry of BTC and its derivation. In the past 30 days, a certain protocol has achieved rapid growth, reaching a peak TVL with a deposit amount of 5.9k BTC, surpassing the original leader. This protocol has gained a competitive advantage by collaborating with top re-staking platforms to offer participants richer re-staking returns and DeFi opportunities.

In the BTC LST field, ecological strategy has become a key factor in the competitive landscape. Unlike ETH LRT, BTC LST faces more complex considerations, including downstream application scenarios, BTC L2 development, combinations with BTC-backed assets, and integration with re-staking platforms. The strategic choices made at this stage will affect the growth rate and early market share.

Different BTC LST providers adopt different strategies:

• A certain protocol focuses on the development of the ETH ecosystem, providing rich external rewards through cooperation with multiple platforms and actively promoting the leveraged gameplay of its tokens on ETH.
• Other protocols achieve multi-chain expansion while developing upstream deposit reception and downstream applications.
• The protocol also focuses on the construction of the BNB chain in the initial stage, supporting the reception of BTCB deposits and the minting of corresponding LST.

These different ecological strategies will affect the liquidity of BTC-pegged assets and DeFi adoption in each ecology, triggering cross-chain TVL competition.

Pendle Enters BTCFi

A certain yield trading platform has integrated multiple BTC LSTs into its points market. The liquidity and TVL of each LST on the platform vary, and some LSTs have a higher actual adoption due to indirect benefits than what the surface numbers suggest.

Except for one LST, several others have reached cooperation with another L2 project. This L2 has a unique tokenomics and a hybrid BTC tokenization design, and may in the future accept trusted BTC LSTs for minting its gas token. This architecture adds a new leverage layer to the BTCFi system, but also introduces new risks.

The leverage of points is one of the key scenarios for interest-generating asset strategies. As a leader, a certain platform's integration of BTC LST will drive a broader application trend in the DeFi ecosystem. Other protocols have already introduced BTC LST into the points market or plan to integrate it.

New Entrants in the BTC Re-staking Market

New participants are entering the BTC re-staking space, forming competition with existing platforms. These platforms accept BTC LST re-staking and provide security for other protocols. As more homogeneous re-staking platforms emerge, competition for liquidity of BTC and its derivation assets will intensify, while also indicating a potential oversupply on the supply side of this sector.

BTC Wrapped Token Market Landscape

The competition in the wrapped BTC market is intensifying, with major alternative assets including BTC tokens on multiple chains. A large exchange recently launched a new wrapped BTC asset, which has gained support from several DeFi protocols and plans to expand to more chains.

Despite security concerns, a mainstream wrapped BTC still occupies over 60% of the market share. Its issuer announced a multi-chain deployment plan in an attempt to solidify its market position. However, as leading DeFi protocols begin to remove it from their collateral lists, its adoption rate continues to decline.

Another multi-party managed wrapped BTC has been deployed on multiple chains, actively promoting widespread adoption in the BTCFi space through incentive programs. Currently, various wrapped BTC assets are competing to be integrated by major DeFi protocols and accepted by users in a bid for market dominance.

Summary

In the trend of continuous growth of BTCFi, BTC (re) staking and BTC pegged assets are two key sectors. In the field of BTC (re) staking, there is a trend of excessive supply-side construction, and differentiated ecological strategies and unique downstream applications have become the keys to competition. Regarding BTC pegged assets, trust remains a core issue, and various parties are seeking market recognition through different solutions. This complex ecosystem has also brought new systemic risks and uncertainties in returns, requiring market participants to remain vigilant.