What other projects are worth paying attention to in the second half of the BTC ecosystem?

“The extremely high TVL can no longer excite users, but instead makes people discouraged. I look forward to seeing more innovations in BTC’s native technology or new ways of issuing assets.”

“Thinking back to the days at the end of last year when my group members stayed up late to play inscriptions and rush for IDO, it was still quite lively and interesting.”

Since the inscription craze began last year, BTC has become one of the engines of this round of bull market. BTC has entered the Web3 multi-chain ecosystem through scenarios such as BTC L2 and BTCFi, and has even become the main component asset of some Ethereum L2 and protocols, which has revitalized the long-standing BTC assets worth hundreds of billions of dollars.

Compared with the extreme nesting dolls and inward-looking ETH, BTC holders have lower requirements for expected returns and new users are more enthusiastic about participating, so BTC has become a rare new traffic in the on-chain ecosystem.

In addition, innovative assets of the Bitcoin mainnet, such as inscriptions and runes, have a huge community base due to the characteristics of fair launch, becoming another option for secondary market users besides VC coins.

However, the BTC ecosystem has entered a period of silence since April 2024. According to GeniiData’s data dashboard, Ordinals’ trading volume in May 2024 was only half of that in April.

Even though the market is quiet, many BTC-related projects are still being built. As of August 12, there are more than 300 BTC ecosystem projects listed on @RootDataLabs. We hope that the BTC ecosystem will be revitalized in the second half of the year:

1. BTC L2 : Allow BTC and BTC innovative assets to have more application scenarios under the premise of security, and open up more gameplay;

2. BTC Staking/Restaking : We hope to see more technological innovations, so that BTC can take advantage of its large scale and low cost with a market value of hundreds of billions, and empower scenarios that require secure staking/restaking.

3. BTCFi : Based on the broad consensus and brand awareness of BTC, it will better connect CeFi and DeFi, provide DeFi users with stable and substantial returns, and bring open, transparent and permissionless freedom to CeFi users.

So before the new round of BTC ecosystem boom comes, which projects are worth paying attention to? Let me share my attention list with you.

BTC expansion and innovation in the chain ecosystem

Previously, @weihaoming mentioned that the BTC ecosystem can be roughly divided into two groups: native technology group and user-oriented group . The native technology group mainly explores the potential of Bitcoin's unique UTXO and scripting language and attempts to develop projects; the user-oriented group uses existing conditions to quickly develop new products based on market user needs.

The difference between the two groups is particularly obvious in the role of the chain. Even though BTC L2 has been popular before, there are still BTC L2s that have raised millions of dollars in financing and are dormant. The BTC L2s that started last year are also continuing to build.

For example, @BSquaredNetwork has two main products: one is B² Rollup, a Bitcoin rollup based on Proof of Commitment; the other is B² Hub, the DA layer of the Bitcoin ecosystem. The project has received investments from HashKey Capital, OKX Ventures, IDG and other funds.

B² Network recently launched the Buzz Farming activity, where users can stake BTC to obtain B² tokens and potential airdrops of related LST projects. According to the official website data, its current staked amount is $159.95M.

Buzz Farming has currently launched 6 strategies. One strategy is to obtain Babylon's income through Bedrock, and another strategy is to obtain @UniRouterBTC's U points and $APT through staking.

I came into contact with the B² team at the end of last year, and we have communicated and cooperated with each other many times. I look forward to B² Network bringing more innovative gameplay and mechanisms to release the energy that has been accumulated for a long time!

The "native technology" BTC expansion solution that I have recently paid attention to is @fractal_bitcoin produced by the UniSat team. After the Fractal test network was officially launched yesterday, $PIZZA also rose by about 20% yesterday.

In addition, @NervosNetwork from the same faction is also preparing ecological projects.

BTC Liquidity Staking and Re-Staking Opportunities

BTC liquidity pledge/re-pledge @babylonlabs_io is undoubtedly the protagonist of the next BTC ecological recovery. Its latest round of financing is valued at 800 million US dollars, with a financing amount of 70 million US dollars, led by Paradigm. Previously, Binance Labs also participated in the investment.

OKX Wallet’s Discover page has opened a Babylon section. Friends who want to explore the Babylon ecosystem can directly access it through @okxweb3, which is safe and convenient.

There are several projects that pledge BTC liquidity, including @Lombard_Finance, @LorenzoProtocol, @Bedrock_DeFi, and @SolvProtocol. The first three have received investment support from Babylon/Babylon co-founder, and are currently mainly centered around Babylon:

1. Lombard : After users stake their BTC to Lombard, they will then stake it to Babylon to earn returns, and at the same time, BTC will be minted into LBTC at a 1:1 ratio. The first phase of LBTC will be issued on Ethereum and can be used in DeFi applications. You can now join the waitlist on the official website.

2. Lorenzo : After users stake BTC to Lorenzo's multi-signature wallet, they will receive stBTC. This part of BTC will also be staked to Babylon. In addition, Lorenzo also combines the gameplay of separating principal and interest, issuing the income accumulation token YAT and the staking proof token SPT. Currently, Lorenzo has opened pre-launch staking and staking agent beta mainnet.

3. Bedrock : This project was initially centered around the Eigenlayer ecosystem, but has recently started to participate in the Babylon ecosystem, aiming to support Ethereum’s wBTC staking on Babylon. Users can get UniBTC after staking wBTC. Now the relevant staking is open.

4. Solv : This project has been under construction since 2021 and received investment from Binance Labs in 2022. Since Solv took advantage of the BTC boom in April this year, its TVL has increased significantly. Currently, SolvBTC has reached 900 million US dollars and supports 7 chains including ETH, BNB, Mantle, Merlin, etc. We look forward to Slov's success!

Exploration and innovation of applications and infrastructure

Almost every chain has its own DeFi three-piece set, and other ecological applications are changing very quickly. Applications around BTC, such as @unisat_wallet, @MagicEden, @uxuycom, etc., are very familiar to everyone, so I won’t go into details here.

I recently communicated with the @BefiLabs team and learned that as a trading terminal for BRC20, Runes and Ordinals, they are also continuously optimizing and upgrading their products and establishing connections with partners in various ecosystems, hoping to provide BTC layer 1 asset trading users with a smoother trading experience.

Regarding infrastructure, I pay more attention to @nubit_org, which aims to build a scalable Bitcoin native DA. The project announced a seed round of financing of US$8 million in June this year, led by Polychain, and some active overseas funds also participated.

Based on the projects related to the BTC ecosystem that I have sorted out before, I found that most of them are related to staking. In my opinion, the pure TVL gameplay has weakened its appeal to users after the launch of Manta, Merlin, Blast and other tokens. The extremely high TVL can no longer arouse the excitement of users, but instead makes people stay away.

In contrast, we still hope that there will be more innovations in BTC native technology, or new ways of issuing assets.

Thinking back to the days at the end of last year when my group members stayed up late to play inscriptions and rush for IDO, it was quite lively and interesting.