BTCFi Ecosystem Asset Accumulation Strategy Analysis

Recently, with the evolution of the BTCFi concept, the on-chain liquidity of Bitcoin assets has become the focus of attention for major ecosystems and protocols. BTC is transitioning from a static store of value to an asset that can participate in more on-chain yield scenarios, enhancing its application potential in the DeFi ecosystem.

Core, BOB, and Corn are representative growth cases in the BTCFi field for the second half of the year: Core focuses on large-scale BTC LST assets; Corn collaborates with Pendle to launch a point derivative play to quickly capture the incremental market; BOB attracts liquidity through a rich ecosystem and liquid staking services. The series of actions around "yield generation" in various ecosystems has greatly activated the liquidity of BTC assets. In the future, as BTC liquidity is gradually released, there is still huge growth potential for the on-chain accumulation of assets in the BTCFi ecosystem.

1. Background

1.1 BTC asset flow path on the blockchain

The flow direction of BTC and its anchored assets on the blockchain can be divided into three layers:

• Layer 1: Native BTC
• Layer Two: ( Wrapped BTC issued based on centralized custody ) running on BTC L2 and SideChain mapped assets ( Liquidity Staking BTC
• Layer 3: Various BTC derivative assets in downstream DeFi scenarios

![BeWater Research: What did BTCFi do right behind the ecological growth in response to "interest"?])https://img-cdn.gateio.im/webp-social/moments-85f62136432f10980e76346bf910d15f.webp(

) Current market status of 1.2 BTC assets

From the issuance situation of BTC-pegged assets on the Ethereum, Arbitrum, and BNB networks, centralized custodial issuance of wrapped BTC still occupies the vast majority of market share, with WBTC and BTCB accounting for over 75% of the total circulation of BTC-pegged assets. In addition, LBTC and SolvBTC.BBN and other BTC LSTs have seen rapid growth in recent months, becoming another emerging force in the BTC-pegged asset market.

As the most recognized and largest market capitalization asset, BTC's main application scenarios as a pegged token are concentrated in lending protocols. In terms of the largest volumes, WBTC and BTCB, their largest downstream applications are in Aave v3 and the Venus protocol, respectively, with TVL accounting for more than 20% of their total supply, reflecting the demand for relatively stable returns on BTCFi from large funds.

![BeWater Research: Responding to "interest" - What did BTCFi do right behind the ecological growth?]###https://img-cdn.gateio.im/webp-social/moments-a716d84973606e03343617f7a4200488.webp(

The current total market supply of BTC LST is approximately 25.1K BTC, with the two major protocols Lombard and Solv Protocol accounting for over 70% of the market share. The absorption and issuance of BTC LST directly impact the liquidity and settlement of BTC assets across various chains. Among them, Solv's influence on the TVL of each chain is particularly significant, bringing in a net inflow of $309.7M and $177.8M to Core and Scroll respectively, significantly enhancing the asset scale of these two chains.

![BeWater Research: What did BTCFi do right behind the ecological growth after hearing about "interest"?])https://img-cdn.gateio.im/webp-social/moments-21c9d9ab5096e27e445a6f36080e22b5.webp(

Compared to the centralized custody model for issuing wrapped BTC, BTC LST has expanded richer application scenarios as an income-generating asset. In addition to lending protocols, the points trading market has become another important downstream application for BTC LST. Avalon and Pendle are the protocols with the most accumulated funds for BTC LST in the "lending" and "points derivative market" sectors, achieving win-win growth alongside the development of the BTCFi and BTC staking narratives.

![BeWater Research: Responding to "Interest" - What Went Right Behind the Growth of the BTCFi Ecosystem?])https://img-cdn.gateio.im/webp-social/moments-61b26689e6d418f02053b88a94f634f4.webp(

2. Asset Accumulation Strategy of the BTCFi Ecosystem

) 2.1 Core: Focus on dual-driven ecological growth of incremental assets and token incentives

Core is an L1 scaling solution powered by BTC, allowing users to earn passive income through non-custodial Bitcoin staking without the need to transfer or wrap BTC. Since its launch in April 2024, over 7,500 BTC have been staked on Core. In July 2024, Core introduced a dual staking mechanism for BTC and CORE. Currently, Core's TVL has reached $591.5M, growing 4757.9% over six months, making it the 16th ranked blockchain by TVL.

The growth of Core TVL is mainly driven by the following factors:

1. Focus on the incremental market of BTC-backed assets to enhance ecological liquidity and absorb the rapidly growing Solv derivative assets.
2. Build supporting native protocols such as Colend and quickly integrate with projects like Pell Network to establish a complete ecosystem of applications.
3. Utilize the airdrop of the native token $CORE and market performance to support the incentive structure, forming a multi-dimensional ecological synergy.

The main growth strategies include:

• Deep integration and collaboration with Solv derivative assets
• Led by Colend and Pell Network in the construction of the BTCFi ecosystem
• An incentive structure supported by the airdrop and market performance of the native token $CORE.

2.2 Corn: The points derivative gameplay effectively attracts BTC LST market liquidity.

Corn is a recently launched ETH L2 network that uses a hybrid tokenized version of Bitcoin (BTCN) as a gas fee and economic incentive tool. Currently, Corn has not yet launched its mainnet, but it has effectively absorbed $425.8M in funds through a deposit activity launched in conjunction with multiple parties, significantly surpassing BTC scaling layers that are already online, such as Merlin and BSquared.

Corn's main growth strategies include:

• Leading BTC LST point derivatives gameplay in collaboration with Pendle
• TVL BootStrap Campaign

![BeWater Research: Responding to "Interest" - What Did BTCFi Ecosystem Growth Get Right?]###https://img-cdn.gateio.im/webp-social/moments-466f956fe5644dbe555357a318321c3c.webp(

) 2.3 BOB: Secure bridging and strong ecosystem support asset consolidation

BOB is an innovative hybrid Layer 2 network that combines the advantages of Bitcoin and Ethereum. The current total TVL of BOB has reached $65.7M, with the asset composition mainly coming from $WBTC.

BOB's main growth strategy includes:

• Liquidity Staking Services and Ecological Integration
• Incentive Program BOB Fusion

3. Summary

By observing the emerging forces of BTC ecology represented by Core, BOB, and Corn, we can see the differentiated strategies of different networks in asset deposition. The key to effectively achieving ecological fund deposition lies in connecting and incentivizing large-scale incremental anchored assets, and forming combinable yield strategies through diversified DeFi applications to provide multi-party incentive expectations. The synergy will promote the activity and liquidity of BTC anchored assets across various chains.

Currently, the TVL of BTC-pegged assets in L2 and sidechain expansion networks is approximately $1.6 billion, accounting for only 0.14% of BTC's total market value. As BTC liquidity is gradually released in the future, there is still huge growth potential for the accumulation of BTC assets across various chains and the application scenarios of the BTCFi ecosystem.

![BeWater Research: What did BTCFi ecosystem growth do right in response to "interest"?]###https://img-cdn.gateio.im/webp-social/moments-fd8e2aea05317936ca4c1ce28a96c7b7.webp(