Today, I want to discuss a potentially controversial topic about the 'transition of the old and new'.
In the wild era of Bitcoin DeFi, we must pay tribute to WBTC (Wrapped Bitcoin). As early as 2019, it broke down the wall between Bitcoin and Ethereum, allowing Bitcoin, which only slept on-chain, to taste the sweetness of DeFi for the first time. For a long time, WBTC was the industry standard, a belief, and the only bridge connecting two parallel universes.
However, the evolution of financial markets is brutal; it never speaks of sentiment, only efficiency. Standing on the threshold of 2025 and looking back, you will find that the WBTC model is becoming increasingly reminiscent of a product from the previous era.
Why do you say that? Because while WBTC solves the problem of 'cross-chain', it does not address the issue of 'capital efficiency'. When you exchange 1 BTC for 1 WBTC, even if you do nothing in DeFi, that 1 WBTC itself does not generate any output. It's like exchanging a gold bar in your hand for a custody receipt that originally belongs to the vault; this receipt itself does not earn interest.
And the stBTC launched by Lorenzo Protocol represents a completely new asset paradigm — an interest-bearing benchmark currency.
This is not just a technological upgrade, but a crushing of economic logic. Imagine if in the future you have two choices:
Hold WBTC, valued at 100% pegged to Bitcoin, but with no intrinsic yield.
Hold stBTC, valued at 100% pegged to Bitcoin, but with underlying staking yields from Babylon (assumed to be 4-5%).
Under the premise of equivalent security, rational capital will undoubtedly flow towards option B. Because in the financial world, holding non-interest-bearing assets is essentially losing money — what you lose is the portion that should belong to your 'risk-free return'.
This is the core logic behind my optimism that stBTC can gradually replace the ecological niche of WBTC: Gresham's law will fail here, and good money will drive out bad money.
The smartest thing Lorenzo did was that he did not merely position himself as a 'financial product', but rather as a 'currency standard'. He hopes that stBTC can penetrate into DEX trading pairs like WBTC did back in the day, infiltrate the collateral pools of lending protocols, and even become the issuance reserve for stablecoins.
When you see the liquidity of the stBTC/USDT trading pair on Uniswap even exceeding that of WBTC/USDT, and when you find that the utilization rate of collateralizing stBTC on Aave is far higher than that of WBTC, you will know that the process of this 'new king ascending the throne' has already begun.
Moreover, from a decentralized perspective, the long-criticized risk of 'centralized custody' (single point by BitGo) of WBTC has been well mitigated here by Lorenzo. Lorenzo relies on a decentralized verification network based on Babylon and multi-signature technology, which aligns better with the fundamentalist spirit of Web3.
We are experiencing a paradigm shift from 'asset transportation' to 'asset enhancement'. If WBTC is the 1.0 version of Bitcoin DeFi, solving the question of 'can it be used'; then Lorenzo's stBTC is the 2.0 version, addressing the questions of 'is it usable' and 'does it make money'.
In the future DeFi world, it is highly likely that there will no longer be a place for 'dead money'. Every penny must be 'productive capital', constantly working for you 24/7. And stBTC is the embodiment of this high-efficiency capital. So, don't cling to the tickets of the old era anymore; the new giant ship has already sounded its whistle.
