The Core Foundation on Thursday unveiled LstBTC, a liquid ERC-20 staking token pegged 1:1 to Bitcoin (BTC), aimed at solving a long-standing dilemma for Bitcoin holders: the choice between earning staking rewards and maintain liquidity.
This allows BTC holders to earn daily CORE token rewards while keeping their Bitcoin liquid for use in decentralized finance (DeFi) applications at the same time.
Talk with DecryptRich Rines, an early Core DAO contributor, said Bitcoin makes up half of the cryptocurrency market cap but is a tiny fraction of DeFi activity. Part of the reason is that there hasn’t been an asset that’s promising enough in terms of yield, security, and alignment with Bitcoin, he said.
LstBTC may be that asset, according to Rines.
LstBTC addresses a major challenge in the cryptocurrency space by eliminating the tradeoff between staking and liquidity. Traditionally, staking Bitcoin often required locking up assets, making them unavailable for other uses. LstBTC preserves the value of Bitcoin while providing staking benefits.
“LstBTC will enable these stakers to take the next step in their BTCfi journey, moving from yield holders to full-fledged Bitcoin users,” Rines said. “Given its upside potential, LstBTC could quickly become the dominant BTC DeFi asset.”
Rines said he believes LSTs are the missing ingredient in Bitcoin DeFi, and that the introduction of LSTBTC will help jumpstart the Core ecosystem. With LSTBTC, the Core ecosystem is expected to attract new builders, launching their own LSTs on Core.
Notably, LstBTC’s operation involves a multi-sig setup on the Bitcoin network, meaning it’s managed by multiple entities and undergoes security audits, according to Core. While this approach is used in various established protocols, it introduces additional parties into the process. in relation to detention Bitcoin directly.
The introduction of LstBTC comes at a time of growing interest in Bitcoin-based financial products.
Asked about this trend, Rines said: “It’s become clear that Bitcoin is the sun around which the rest of the industry revolves. For chains and projects that have been rather Bitcoin agnostic up until now, we’re already seeing a lot of people coming back to Bitcoin as a focal point.”
This isn’t the first project to explore liquid staking for Bitcoin. Last year, Stroom Network launched a similar project Concept on Bitcoin Lightning NetworkStroom has raised $3.5 million in seed funding to develop a protocol that allows users to simultaneously use their Bitcoin capital on the Lightning Network and Ethereum.
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