To be honest, experienced players who have gone through the last round of bull and bear market transitions often feel a chill down their spine when they hear the words 'interest earning' and 'wealth management.' We have all been scared by those projects that promise fixed returns of 20%, 50%, or even higher. In this circle, anything that cannot clearly explain the source of returns is likely to end up targeting your principal.
So, when I first flipped through the white paper of the Lorenzo Protocol, I was like a detective checking for identity, fixated on the same question: Where exactly is this money coming from?
If Lorenzo were merely exchanging the Bitcoin deposited by everyone or solely relying on issuing its own tokens to subsidize profits, I would absolutely turn around and leave. That kind of game of stepping on the left foot and the right foot to reach the sky is only good for one play.
But after deeply studying its mechanism (especially the Babylon protocol it relies on), I breathed a sigh of relief. Lorenzo's profit logic is surprisingly 'honest', even a bit 'boring.'
This money is neither printed out of thin air nor is it provided by those behind to those in front. Its essence is a 'security service fee.'
You see, there are hundreds and thousands of blockchains on the market that use the PoS (Proof of Stake) mechanism. These chains have a fatal weakness: their security depends on the value of the staked assets. If the price drops, or if the network just started with little money, the cost to attack them is very low. They feel very insecure and desperately need a giant like Bitcoin, worth hundreds of billions of dollars, to 'hold the fort.'
What Lorenzo does is act as an intermediary. It leases the idle Bitcoin computing power weight you have to those chains lacking security.
These chains are willing to pay real tokens as rewards to obtain Bitcoin-level protection. It's like ancient caravans (PoS chains) hiring fully armed escorts (Bitcoin holders) to safeguard them from robbers.
So, every penny you earn on Lorenzo is essentially 'labor income.' Your Bitcoin is not just lying there idly; it is actually working, providing consensus security validation for other networks.
The most attractive aspect of this profit model lies in its authenticity and sustainability. As long as other blockchains still need security, this business can continue indefinitely. It may not make you instantly rich like those Ponzi schemes, but it can provide you with something that is the most luxurious in the crypto world— the solid feeling of being able to sleep well.
This is also a sign of Web3 maturing. We are finally no longer obsessed with that kind of illusory air bubble, but are starting to exchange real resources (security) for real profits.
For an asset like Bitcoin that doesn't have inflation rewards (except for mining), the 'work income' based on real demand that Lorenzo provides may be its most robust appreciation path over the next decade. After all, money earned cleanly feels better to spend, right?
