LORENZO PROTOCOL acts as a digital intermediary, facilitating connections between two key players:
Staker: This is an individual who stakes their BTC (Bitcoin) in the Lorenzo ecosystem. By staking BTC, they contribute to the overall liquidity of the pool.
Babylon: Babylon represents the DeFi platform that is hungry for additional BTC liquidity. It seeks to effectively utilize the staked BTC within its ecosystem.
Lorenzo ensures that stakers find suitable projects while helping projects access the Bitcoin liquidity they need.
When Babylon staked BTC, Lorenzo started the transformation process:
Staked BTC: Babylon locked a certain amount of BTC as collateral.
Liquid Restaking BTC Token (BLRT): Lorenzo converted the staked BTC into BLRT, a flexible form of BTC that can be used in the DeFi ecosystem. This token maintains the value of BTC while allowing seamless interaction with other DeFi assets.
BLRTs, now infused with liquidity, flow into the broader DeFi ecosystem. This ensures that yield farming, lending, and other DeFi applications gain access to this enhanced liquidity so that BLRTs can be traded, utilized, and become versatile assets.
