If in the previous few articles we talked about how Lorenzo 'deposits' Bitcoin to earn interest, today I want to shift the perspective and discuss what the certificate—stBTC—can actually do in the outside world after being deposited. This is very crucial, because in my view, the ultimate standard for measuring the success of a liquidity protocol is not how many coins it locks, but how many people are using the certificates it issues and how many places they can be used.
In this industry, we often hear the term 'DeFi Lego'. The fun of Ethereum lies in the fact that stETH can be used as collateral on Aave, and the borrowed money can be used to provide liquidity on Uniswap, with the generated certificates being able to be used in other places as well. This 'composability' of assets is the source of the wealth effect in DeFi. What the Bitcoin ecosystem has been lacking for a long time is precisely this kind of 'base asset' that can be pieced together like Lego blocks.
Although traditional WBTC has solved cross-chain issues, it is a 'dead asset' with no intrinsic yield. Once you collateralize it, aside from being able to borrow money, there are no additional benefits, and you even have to pay interest.
However, the stBTC created by Lorenzo Protocol gives me the most intuitive feeling that it attempts to turn Bitcoin into a 'self-powered battery.'
Imagine a scenario where you hold stBTC, which represents your staked principal in the Babylon ecosystem, continuously generating secure returns. Then, you take this stBTC to a lending protocol to collateralize and borrow USDT. In the traditional model, you would have to pay the borrowing interest out of your own pocket; but in Lorenzo's model, the returns generated from your collateral may very well cover your borrowing interest, and even leave a surplus.
This transforms 'debt consumption' into 'pain-free consumption,' and may even lead to 'profit-making consumption.'
This attribute has made stBTC a coveted asset in the eyes of DeFi protocols. I have recently observed that Lorenzo is rapidly expanding its network, from Ethereum Layer 2 to Cosmos application chains, with various DEXs (decentralized exchanges) and lending platforms integrating stBTC. This is not just simple business cooperation but a consensus based on mutual benefit — DeFi protocols need high-quality, yield-generating collateral to attract TVL, and stBTC provides Bitcoin-level security along with yield-generating properties.
What does this mean for us users? It means that the Bitcoin in your hands no longer needs to frequently cross chains and exchange to mine on some new chain. Lorenzo's stBTC is like a universal 'universal plug'; no matter whether you go to Scroll, Bitlayer, or BNB Chain, as long as that ecosystem supports the Lorenzo standard, you can plug it in directly, immediately start powering that ecosystem, and at the same time earn multiple returns.
This experience of 'one minting, usable everywhere' is the ultimate solution to the fragmentation of Bitcoin liquidity.
I have also seen many similar projects working on LST (liquid staking tokens), but Lorenzo's cleverness lies in its strong emphasis on the compatibility of this standard (EVM compatible + Cosmos interoperability). It doesn't expect to confine all users to operate on its official website, but rather encourages users to take stBTC into the broader DeFi ocean.
One day, when you find that the mainstream lending protocols on the market list stBTC as the core collateral asset, and when you're playing with various complex on-chain derivatives where the underlying asset is always stBTC, you'll understand what Lorenzo has truly accomplished — it's not just about issuing a coin; it has turned Bitcoin into the most fluid 'blood' in the entire Web3 financial system.
So, don't just fixate on the staking interface on the official website; pay more attention to who Lorenzo is partnering with and which new DeFi scenarios stBTC is being integrated into. Those seemingly insignificant partnership announcements are actually adding new gameplay and value to this 'LEGO block.'
