Competition in the BTCFi space intensifies, reshaping the market landscape for BTC staking and anchored assets.

Recently, the BTCFi sector has seen a series of significant developments. The first phase of the Babylon mainnet has launched, Pendle has begun supporting BTC LST, and various new BTC wrapped assets have been introduced, reigniting market interest in BTCFi. This article will summarize the latest dynamics of BTC (re) staking and BTC pegged assets.

BTC (Re) staking market competition heating up

After quickly reaching the 1000 BTC cap in the first phase of the Babylon mainnet, competition between BTC LSTs has intensified. In the past 30 days, Lombard Finance has surged to the top of the TVL leaderboard with a deposit amount of 5.9k BTC, surpassing the long-standing leader Solv Protocol. Lombard's success is primarily attributed to its strategic partnership with the top restaking protocol Symbiotic, providing users with richer ETH ecosystem restaking yields and DeFi participation opportunities.

In the current stage, the ecological strategy choices are crucial for the growth rate and early market share of BTC LST providers. The strategies of the main participants are as follows:

1. Lombard Finance focuses on the development of the ETH ecosystem, providing additional rewards through partnerships with Symbiotic and Karak Network, and actively promoting the leveraged application of LBTC on ETH.

2. Solv Protocol and Bedrock adopt a multi-chain expansion strategy while developing upstream deposit reception and downstream application construction.

3. Lorenzo Protocol and pStake Finance initially focused on BNB chain development, supporting BTCB deposits and minting their respective LSTs.

4. Pendle is actively entering the BTCFi space and has integrated multiple BTC LSTs into its yield market, providing users with more yield optimization strategies.

5. SatLayer, as a newcomer, is rapidly expanding its BTC re-staking business and is directly competing with Pell Network.

Changes in the Market Landscape of BTC-Backed Assets

After the WBTC custody dispute, competition in the BTC wrapped asset market has intensified. Major competitors include Binance's BTCB, Merlin's mBTC, Threshold Network's tBTC, and Mantle's FBTC, among others. The latest updates include:

1. Coinbase launched cbBTC, which has been deployed on the Base and Ethereum networks, receiving support from multiple DeFi protocols.

2. Despite facing security concerns, WBTC still occupies over 60% of the wrapped BTC market. BitGo announced that it will deploy WBTC to Avalanche and BNB chains, attempting to consolidate its market position through multi-chain expansion.

3. FBTC actively promotes the widespread adoption in the BTCFi field and has been accepted by multiple BTC (re)staking platforms.

4. New participants such as TON's tgBTC and Stacks' sBTC will also join the competition.

Industry Outlook

BTCFi continues to grow, with BTC (re) staking and BTC pegged assets becoming key sectors. The BTC (re) staking field shows a trend of excessive supply-side construction, with differentiated ecological strategies and unique downstream applications becoming the key to competition. The competition in the BTC pegged asset market is intensifying, with all parties actively striving for DeFi protocol integration and user acceptance to fill the potential market gap left by WBTC.

However, the systemic risks brought about by asset nesting and excessive mining may lead to issues such as lower-than-expected returns, which are worth noting. For BTC-backed assets, establishing trust remains a core challenge. The future market landscape will depend on whether participants can make breakthroughs in safety, liquidity, and application ecosystems.