As a Bitcoin holder, you must have experienced this dilemma: you have coins, but when you need money urgently or see a good opportunity, you can only choose to sell a portion. That feeling of having 'missed the boat' is even worse than being stuck.
In traditional views, Bitcoin is seen as 'digital gold', and its core function is simply to 'hold it'. However, this represents a tremendous waste of its value. Any top-tier asset should be able to unlock its credit value—just like when you use a house as collateral for a loan, the asset continues to appreciate while you obtain liquidity in advance.
The Lorenzo Protocol is doing exactly this: it aims to awaken Bitcoin's potential as a top-tier collateral.
Why has it been difficult for Bitcoin to achieve this in the past? Because native BTC is 'not user-friendly' in the DeFi world. Wrapped assets like WBTC force you to trust centralized custodians.
The stBTC launched by Lorenzo provides a more elegant solution. It allows your Bitcoin to generate interest while maintaining security through a decentralized approach, making it a high-quality collateral that is also liquid.
The most ingenious design here lies in the concept of 'self-repaying loans'.
Let's do some math:
Traditional method: You collateralize BTC to borrow USDT, and you may have to pay 5%-10% interest per year. This amount is pure cost.
With Lorenzo: You convert BTC into interest-generating stBTC and then collateralize it. The stBTC itself earns staking rewards through underlying protocols (assuming an annualized 5%).
This means that your collateral is 'earning money' on its own, and this portion of the earnings can directly cover your loan interest.
Simply put: your Bitcoin is still yours, it is still appreciating, and you have almost zero cost cash flow. It's like using the rent from a rental property to pay off a mortgage; you have both the property and the cash flow.
For seasoned holders and institutions, there is also a key tax advantage: borrowing typically does not trigger a taxable event, while selling does. Obtaining liquidity through the Lorenzo system is a smarter asset allocation strategy.
What Lorenzo is doing is upgrading Bitcoin from 'gold that can only be hoarded' to 'financial raw materials that can be used'. When stBTC is widely accepted as core collateral for lending and stablecoin protocols, the trillion-dollar market cap of Bitcoin will release enormous credit expansion capacity.
Owning assets is the first step; having low-cost credit based on those assets is a higher stage of wealth management. The Lorenzo Protocol is issuing you a 'black gold credit card' for your Bitcoin.
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