Unlocking Trillion-level Liquidity of Bitcoin: Reconstructing the New Paradigm of BTCFi

Bitcoin, as the largest and highest quality "funding pool" in the crypto world, has potential value that has yet to be fully tapped. With the continuous development of the ecosystem, BTC is gradually shifting from a mere store of value to a more active financial tool.

Recently, the largest on-chain lending protocol in the Bitcoin ecosystem completed an important round of financing. This marks that the potential of BTC as a liquidity asset and niche asset is being further unleashed, driving the emergence of richer on-chain structured yield scenarios. If it can effectively activate dormant BTC and build an efficient and secure liquidity network, it will open up new DeFi application spaces for this trillion-dollar asset.

Bitcoin Liquidity Release Industry Practices

Although Bitcoin's market capitalization and price growth outperform Ethereum, its on-chain ecosystem development speed is still lagging behind. It is estimated that if 10% of BTC liquidity can be released, it would create a market of approximately 180 billion dollars. If a similar TVL ratio to Ethereum is achieved, it could potentially release up to 300 billion dollars in liquidity. This enormous potential is expected to drive explosive growth in the BTCFi ecosystem, possibly even surpassing existing EVM networks and becoming the largest on-chain financial ecosystem.

As the largest lending protocol in the Bitcoin ecosystem, a certain lending platform has seen its TVL surpass $2 billion, with the stablecoin it launched locking up over $500 million in a short period. This platform offers BTC holders a secure and efficient liquidity solution, using a fixed 8% borrowing rate, with Bitcoin collateralized by professional institutions, while providing a stablecoin with unlimited supply. This model not only meets the needs of large holders but also focuses on attracting retail investors, aiming to build a healthier and more inclusive ecosystem.

The Value of Bitcoin Stablecoins

In the stablecoin space, the Collateralized Debt Position (CDP) model remains mainstream. This is essentially an expansion of stablecoin usage based on lending scenarios, creating additional liquidity trading pools for dormant assets. The ecosystem of a certain platform includes several core business segments, such as yield-bearing stablecoins backed by Bitcoin collateral, lending protocols, hybrid lending platforms, and decentralized lending protocols supporting BTC staking.

This model not only addresses the stablecoin issues that the Bitcoin ecosystem has long faced, but also achieves multi-chain compatibility through cross-chain technology, allowing users to seamlessly operate stablecoins across different DeFi ecosystems. This innovation effectively activates BTC that has long been idle, providing an efficient asset utilization framework for the Bitcoin network, enabling more BTC holders to safely participate in on-chain liquidity activities.

Future Outlook

As Bitcoin assets are gradually activated, BTCFi is expected to become a new DeFi asset direction with a scale of hundreds of billions of dollars, becoming key to building a prosperous on-chain ecosystem. By building diversified financial products and DeFi scenarios centered around BTC, it will redefine Bitcoin's role in the global DeFi space.

The deep integration of BTC in the DeFi space may reach a critical turning point, which is worth the market's continued attention. This trend will not only change the application scenarios of Bitcoin but may also have a profound impact on the entire crypto-financial ecosystem.