BTC Decentralized Finance Development Status: How Far Have We Come?

The widespread adoption of BTC-Fi may make BTC not only a store of value tool, but also the foundational asset of the Decentralized Finance ecosystem. This article is from an article written by Aquarius Capital, compiled, translated and written by PANews. (Background: Babylon has been online for a month with average performance. Can the BTCFi narrative stand up?) Host: Aquarius Guests: Clayton Menzel, Babylon Business Development Manager Lester Chui, P2P.org Institutional Cooperation Manager Makoto, Pell Network Co-founder Jing Xiong, Solv Protocol Chief Business Officer Quick Summary BTC-Fi (Bitcoin Staking Finance) is redefining the role of BTC, giving this traditional 'store of value' asset new uses. By offering income generation and Decentralized Finance functions, BTC-Fi attempts to expand the application of BTC, despite facing challenges in technology and user adoption. As the pioneer of Cryptocurrency, BTC has unique appeal to both retail and institutional investors due to its brand effect and unparalleled Decentralization characteristics. This emerging field is expected to disrupt the landscape of Decentralized Finance and open up new value propositions for BTC. One of the key innovations driving the development of BTC-Fi is Babylon, which is committed to allowing users to stake native BTC directly on the BTC network for the first time. As a platform focused on 'stake, security, and Liquidity', Babylon aims to leverage the security of the BTC network to support diverse applications through partnerships with Liquiditystake Derivatives (LSD) issuance merchants and Decentralized Finance developers. Its non-custodial stake model ensures that BTC remains in the user's Wallet, reducing custodial risk, while balancing the trade-off between security and Money Laundering. Institutional investors' interest in BTC-Fi is also gradually rising. Verification Nodes and infrastructure service providers such as P2P.org believe that BTC-Fi is a potential area for institutional investment, but current barriers include regulatory uncertainty and unverified security. Leveraging its experience supporting over 40 Proof of Stake chains, P2P.org is collaborating with projects like Babylon to provide standardized solutions for institutions. Meanwhile, custodians play a crucial role in driving institutional adoption, and Solv Protocol and Babylon are working with custodians such as Ledger and Fireblocks to create a secure and accessible path for BTC stake. While BTC-Fi has gained initial follow among retail users, institutional adoption is still relatively slow. Many BTC holders are accustomed to storing assets in cold Wallets rather than participating in stake. The BTC-Fi platform needs to establish trust with these users by clearly conveying its security and low-risk income potential. Similar to the early evolution of Decentralized Finance on Ethereum, the adoption of BTC-Fi may take several years to mature. However, the strong foundation of retail users could be the starting point for attracting institutions, as they are more inclined to try new technologies, injecting momentum into the entire ecosystem. The rise of BTC-Fi also comes with some important challenges. The high cost of Money Laundering on the BTC network is a major obstacle, but security is always the top priority for developers. Babylon plans to explore scalable solutions that maintain high security while reducing costs. In addition, projects like Babylon and Pell Network are expanding the use cases of BTC, not limited to income generation. They aim to build more complex financial markets, including lending and Decentralized trading, while providing additional income sources for BTC holders through restake. These efforts may ultimately redefine the positioning of BTC in the encryption field. Developer involvement is considered crucial to the success of BTC-Fi, as they can drive innovation and expand the application of BTC in other ecosystems. Meanwhile, compared to the Decentralized Finance ecosystems of Ethereum and Solana, BTC-Fi's main advantage lies in the global brand effect and trust of BTC. If BTC can successfully integrate secure and scalable Decentralized Finance solutions, its enormous Market Cap could make BTC-Fi a heavyweight player in this field. Looking ahead, the development path of BTC-Fi is full of potential. Babylon is working with multiple custodian and Wallet partners to establish a secure stake solution and plans to achieve significant growth in the next 12 months. Meanwhile, projects like Pell and Solv Protocol are expanding their base of retail users, laying the foundation for further attracting institutional investors. While the rise of BTC-Fi may be gradual, with improved infrastructure and more user participation, its prospects as a mainstream financial product are widely optimistic. Introduction Hazel: Hello everyone, welcome to the third episode of the Aquarius Podcast. I am your host Hazel from Aquarius. Aquarius is a research-driven venture capital and liquidity fund company, managing over $600 million in assets, focusing on providing targeted Liquidity management solutions for projects, covering short-term and long-term needs, including stake and restake. Today we will explore one of the most exciting and rapidly evolving areas in the encryption field: BTCFi, also known as BTCstake finance. BTC has always been seen as a store of value tool, and BTCFi is changing this role, allowing coin holders to generate income and actively participate in Decentralized Finance. I am delighted to invite several outstanding guests who represent the top projects in the BTCFi field. These platforms are driving innovation from stake infrastructure to restake services. We will discuss their unique approaches, the challenges they face, and their vision for the role of BTC in Decentralized Finance. Guest Project Introduction Hazel: First, let's better understand how each platform positions itself in BTCFi and achieves differentiation in this ecosystem. Clayton: I think it is helpful to distinguish Babylon from Decentralized Finance activities that may be conducted on our layer. Babylon is essentially a protocol for stake, security, and Liquidity. For the first time, BTC holders can stake BTC directly on the BTC network. As a protocol, Babylon offers the security of this stake to other networks that want to leverage the security of the BTC network. Our Liquidity part is achieved through our partners, whether LSD (Liquidity stake Derivatives) issuance merchants or other projects looking to develop Decentralized Finance products on our stake layer. Ultimately...