On November 13, Lorenzo's BANK token opened for spot trading on Binance, which should have been a great occasion—after all, Binance is the largest exchange in the world, and getting listed on Binance is like receiving a ticket for traffic entry. So what happened? The TVL not only didn't rise but instead fell, sliding from $737 million in early November to $606 million in early December, evaporating a full 18%. What exactly is going on?
I spent a few days digging into the data and observing the dynamics, and found that things are not that simple. On the surface, it looks like the TVL has dropped, but in reality, Lorenzo is undergoing a 'strategic transformation'—from pursuing scale to pursuing quality, from extensive growth to refined operations. Is this transition painful? Definitely painful. But is it necessary? I think it is very necessary.
Binance Launch: A Traffic Feast or a Double-Edged Sword?
First, let's talk about the Binance launch. On November 13 at 2 PM UTC, the trading pairs BANK/USDT, BANK/USDC, and BANK/TRY opened simultaneously. Lorenzo's official Twitter account announced it immediately, and the community exploded with various celebratory posts. However, Binance labeled BANK with a Seed Tag - a high-risk label that acts like a warning on a product package saying 'toxic and harmful'. Although it can be traded, many conservative investors will steer clear upon seeing this label.
After being listed on Binance, it indeed brought traffic, but the question is how much of this traffic is 'real money'? From the TVL data, there was no significant influx of capital after November 13; instead, there was a single-day drop of 4.6% on November 21. What does this indicate? It indicates that what Binance brought was more 'trading traffic' rather than 'staking traffic' - people are here to trade coins, not to lock BTC for yields.
This actually exposes a real problem: the user profile in the crypto world is highly fragmented. Exchange users prefer quick trades, in today and out tomorrow, chasing gains and cutting losses; while Lorenzo's core users are 'Bitcoin hoarders', seeking long-term stable returns and asset security. Although Binance's launch increased Lorenzo's brand exposure, the proportion of users who can truly convert into protocol users may not be high.
CertiK Audit Score of 91.36: A Double Standard of Security
On November 6, Lorenzo released CertiK's audit report, with a Skynet score of 91.36 AA level, covering the protocol itself and enzoBTC. What does a score of 91 mean? In CertiK's scoring system, it's considered above average, not top-notch but not bad either. The question is, do users really care about this score?
I observed the reactions on social media and found a serious polarization. Technical users who see the audit report will carefully study code vulnerabilities, security suggestions, and fixes, feeling that Lorenzo has put effort into safety. But ordinary users' reactions are: 'Audit? So what? Luna was also audited back then, and did it not go to zero in the end?'
This is the harsh reality of the crypto world - audit reports can only prove 'security at the code level', but cannot guard against risks 'outside the code', such as economic model collapse, team departure, and hacker social engineering attacks. Lorenzo has proven its technical rigor through audits, but this is not enough to eliminate all user concerns.
More critically, after the audit report was released, Lorenzo's TVL did not grow due to 'increased security'. On November 5, TVL dropped by 4.2%, just a day before the audit was announced. This indicates that the market's pricing logic for 'security' may be different from what we imagine - users care more about 'whether they can make money' and 'whether it runs fast enough', rather than 'whether the code has vulnerabilities'.
Chainlink PoR Integration: The Real Value of Transparency
On November 9, Lorenzo integrated Chainlink's Proof of Reserve (PoR), a function used to verify in real-time whether the BTC reserves behind enzoBTC are sufficient. It sounds impressive, but what about the actual effect?
The core logic of Chainlink PoR is: to prove through on-chain data that 'if you say you have 100 BTC, you really have 100 BTC', rather than some projects that just talk without real proof or use fake data to fool people. This is indeed very important for enzoBTC, as users lock in their real BTC, and the enzoBTC they exchange must be 1:1 adequately collateralized, without any 'fractional reserve' tricks.
But the problem is, PoR can only prove the reserve situation at 'a certain point in time', and cannot guarantee 'sufficient reserves forever in the future'. If Lorenzo suddenly transfers BTC to another place, or if it is hacked, PoR can only prove afterward that 'the reserve was insufficient', but cannot provide early warnings or prevent it. Therefore, PoR is more like a 'post-fact accountability mechanism' rather than a 'real-time security guarantee'.
From the market response, after the PoR integration in the following days (November 10-12), TVL basically remained flat without significant growth. This indicates that users' reactions to the 'increase in transparency' were relatively cold. The possible reason is that most users are unaware of what PoR is and do not care about the technical details behind it; they only care about 'how high the yield is' and 'when they can withdraw'.
TVL plummeted by 18%: The truth is more complex than you think.
Now let's talk about the most critical question - why did TVL drop by 18%? Many people's first reaction is: the project is failing, and users are fleeing. But the reality is far more complex.
First, at the beginning of November, TVL reached a historical high of $737 million, and this number may have 'inflated'. How so? The TVL in the crypto world is often affected by 'token prices' - suppose you locked 1,000 of a certain token worth $1 million at that time, and if the token price rises tenfold, the TVL automatically becomes $10 million, while the locked quantity remains unchanged. Lorenzo's TVL soared in early November, likely related to Bitcoin price fluctuations and speculative expectations before the BANK token was launched.
Secondly, on November 21, there was a single-day drop of 4.6%, with TVL falling from $606 million to $559 million. What happened that day? I checked on-chain data and news, and found no significant 'black swan events' - no hacks, no vulnerabilities, no team exit. The most likely explanation is that some large holders or institutions withdrew funds. The TVL in the BTCFi track is inherently unstable, with many 'scientists' and arbitrageurs frequently moving funds based on yield rate changes, going wherever the APY is high, with no loyalty at all.
Looking at November 26, TVL surged 11.8% in a single day, rising from $559 million to $626 million. What happened that day? I found a key piece of information - Lorenzo advanced the Wormhole integration during this period, bridging enzoBTC and stBTC to Sui and BNB Chain, and occupied 50% of the Wormhole BTC bridging liquidity. This move likely attracted a wave of new users, especially players from the Sui ecosystem, leading to a short-term rebound in TVL.
However, this rebound did not last, and by early December, TVL fell back to $606 million. Why? I believe the core reason is: Lorenzo is undergoing a 'user structure adjustment'. The early growth of TVL relied heavily on 'yield farmers' and 'short-term arbitrageurs', who go wherever there are subsidies and care little for the long-term value of the protocol. Now Lorenzo is gradually reducing blind subsidies and shifting towards 'institutional-grade products' and 'structured yield strategies', which will inevitably lose some speculative investors seeking high APY, but it will bring in a more stable and higher-quality user base.
CeDeFAI: AI-Driven Asset Management Revolution or Just Hype?
In November, Lorenzo launched the CeDeFAI platform, claiming to optimize on-chain asset management using AI. This sounds cool, but what is the actual effect?
The core of CeDeFAI is the Financial Abstraction Layer (FAL), which uses AI algorithms to monitor the yield rates, risk parameters, and liquidity depth of multiple DeFi protocols in real-time, and then automatically allocates funds to the optimal strategy combinations. For example: Suppose today Aave's USDC lending rate is 5%, Compound is 6%, and Curve's stablecoin pool is 7%. FAL will automatically allocate your funds to these three protocols according to risk weights, maximizing returns while controlling risk exposure.
Sounds perfect, right? But the problem is: what is the decision logic of the AI? Where is the data sourced from? Has the algorithm been backtested? Lorenzo has not publicly explained these details. More critically, AI's performance in traditional finance is also quite mediocre - most quantitative funds fail to outperform the market in the long term because the market is driven by human emotions and games, not something that simple mathematical models can fully predict.
From the feedback on social media, the discussion about CeDeFAI is not very high. Most users still care more about 'how high the yield is' rather than 'how AI optimizes it'. This indicates that Lorenzo may have deviated from the product narrative - ordinary users do not need complex technical explanations; they only need simple and direct answers: 'How much can I earn by putting money in?'
But in the long run, CeDeFAI could be an important differentiation advantage for Lorenzo. Traditional DeFi yield aggregators are passively following the market, going wherever the yield is high. If CeDeFAI can truly achieve 'actively predicting market trends, adjusting positions in advance, and dynamically hedging risks', then it is not just an 'aggregator' but an 'intelligent asset management platform'. If this capability can be validated, it could fully attract institutional funds - because what institutions value most is 'risk-adjusted returns' and 'strategy transparency'.
Wormhole Integration: A New Weapon in the Multi-Chain War
In November, Lorenzo completed the Wormhole integration, bridging enzoBTC and stBTC to Sui and BNB Chain, and occupied 50% of the Wormhole BTC bridging liquidity. This figure is quite impressive - Wormhole is currently one of the leading projects in the cross-chain bridge field, and Lorenzo's ability to capture half of the BTC liquidity share shows that it has indeed put in significant effort in multi-chain layout.
Even more impressive is that Lorenzo has become the first Bitcoin liquidity layer fully integrated with MoveVM on Sui. stBTC is the first interest-bearing BTC token on Sui. What does this mean? It means Lorenzo has seized the 'BTC DeFi entry point' in the Sui ecosystem. It is worth noting that Sui is one of the hottest new public chains in 2025, with excellent security and performance of the Move language, and the ecosystem is still in its early stages, where competition is nowhere near as fierce as Ethereum. If Lorenzo can establish a foothold in Sui, there is a lot of potential for the future.
However, the multi-chain layout also has its risks. Lorenzo currently supports over 20 chains, each of which needs maintenance, updates, and security risk monitoring. If any chain or bridging protocol has problems, the impact will be significant. Moreover, cross-chain bridges themselves are key targets for hackers - Ronin bridge was hacked for $600 million, Poly Network was hacked for $610 million, Wormhole was hacked for $320 million, and these cases are still fresh in memory. Although Lorenzo has used top solutions like Chainlink, LayerZero, and Wormhole, it cannot be said to be absolutely safe.
From the TVL data, there was indeed an 11.8% single-day surge on November 26 after the Wormhole integration, but it then fell back. This indicates that 'multi-chain expansion' can bring short-term traffic, but does not necessarily retain users. The key still lies in whether Lorenzo can provide 'unique value' on these new chains - if it's just a matter of simply bridging tokens, why wouldn't users just use the native BTC wrapping solution directly?
Institutional Transformation: Lorenzo's Gamble
From a series of actions in November and December, Lorenzo is undergoing an 'institutional transformation' - shifting from a 'high APY cash-grab tactic' aimed at retail investors to 'professional asset management services' aimed at institutions.
There are three pieces of evidence: First, the CertiK audit and the Chainlink PoR integration are both indicators of 'compliance' and 'transparency' that institutions value the most. Second, the CeDeFAI platform emphasizes 'structured yield strategies' and 'risk management', rather than simple and crude 'liquidity mining'. Third, the narrative from Lorenzo on social media has begun to emphasize 'institutional-grade DeFi', rather than just 'high yields'.
Is this transformation direction correct? I believe it is correct in the long run. The crypto world is undergoing a paradigm shift from 'retail-driven to institutional entry', with increasing regulations, higher compliance requirements, and a more mature market. Projects that only attract retail investors through high APY will eventually be eliminated. Only protocols that can provide 'professional asset management services' will have the chance to stand out in the next bull market cycle.
However, in the short term, this transformation will be painful. The drop in TVL is the most direct cost - because retail investors have fled, and institutions have not yet arrived. Lorenzo is currently in a 'window period', having lost speculative investors seeking high returns, without yet receiving large-scale capital injections from institutions. Whether it can endure this phase depends on Lorenzo's execution and the market environment.
Lorenzo's TVL dropped from 737 million to 606 million. On the surface, this seems like bad news, but I don't think it's necessarily a bad thing. The crypto world is not short of 'false prosperity' - TVL built up by subsidies, trading volume generated by bots, and market capitalization inflated by false advertising. These bubbles will eventually burst.
Lorenzo's current strategy is 'removing the bubble, keeping the real money', using audits, PoR, AI, and multi-chain integrations as hard power to filter out users who truly recognize the value of the protocol. This process will definitely lose some people, but those who remain will be more loyal and stable.
Of course, Lorenzo has many issues that need to be addressed: the AI algorithm of CeDeFAI needs to prove its actual effectiveness, multi-chain security requires continuous monitoring, user education needs to be strengthened, and institutional capital introduction needs to be accelerated. But at least it has a clear direction and knows where it is headed. This is much more reliable than those blindly chasing trends without core competitiveness.
So my judgment is: the drop in Lorenzo's TVL is a 'growing pain' of the 'strategic transformation period', rather than a signal of 'protocol decline'. The next few months are crucial; if Lorenzo can withstand the pressure and complete the transformation, it may see a real explosion in 2026. If the transformation fails and institutions don't buy in, then it will be truly dangerous.
