Currently, the Bitcoin Layer2 (L2) track has become a red ocean, with dozens of projects competing to become the main network for hosting Bitcoin ecological applications. However, in this fierce battle over 'Lightning Network', 'sidechains', and 'Rollup' technology paths, I have a different observation: the ultimate winner may not be any single L2 application chain, but rather the 'arms dealer' providing critical infrastructure for all L2s. And @LorenzoProtocol is a strong contender for this role. The reasons are as follows:
First, avoid a head-on war of 'winner takes all' and cut into the essential segments of the value chain. Regardless of which L2 technology ultimately prevails, they all face two unavoidable common needs: 1) sufficient initial security to gain user trust; 2) ample initial liquidity to kickstart the ecosystem. Lorenzo chose not to enter the competition by creating its own L2 but opted to provide 'security as a service' and 'liquidity as a service' for all L2s. This allows it to avoid direct clashes with numerous L2s and instead serve them, making the demand more certain and universal.
Second, capture the value spillover of Bitcoin itself, rather than replace it. Many L2 narratives are about “going beyond Bitcoin, making it faster and cheaper.” This carries a more or less “replacement” tone. The narrative of Lorenzo is to “enhance and empower” Bitcoin. It does not attempt to change the core of Bitcoin, but helps the value of Bitcoin (security value, capital value) spill over into a broader space. This positioning of “complementary rather than competitive” is more likely to gain recognition and support from the Bitcoin fundamentalist community (one of the most important groups in the ecosystem), reducing community resistance.
Third, build network effects and bi-directional stickiness. Lorenzo's network effects are reflected in two aspects: on one hand, the more Bitcoin holders deposit assets for re-staking, the larger the security pool they provide, and the stronger the attraction to L2 projects; on the other hand, the more L2 projects access and use its services, the more diverse and stable the sources of income for re-stakers become, which in turn attracts more Bitcoin holders to join. This bi-directional, positive feedback flywheel effect, once initiated, will build a strong moat.
Fourth, $BANK could become a “thermometer” for measuring the vitality of the Bitcoin DeFi ecosystem. If Lorenzo successfully becomes a key middleware, then its protocol revenue will be deeply tied to the activity level of the entire Bitcoin L2 ecosystem. The value of $BANK will no longer depend solely on the development of its own protocol, but will reflect the prosperity of the entire L2 ecosystem it supports. This gives $BANK the potential to become the “Bitcoin ecosystem growth index,” with a valuation logic that has more imaginative space.
Conclusion: In the early stages where the technical path has not yet been concluded, investing in businesses that “sell shovels and water to gold diggers” is often a strategy with a better risk-reward ratio. The Lorenzo Protocol targets the most certain pain points in the development of Bitcoin L2 — the cold start of security and liquidity. It may not become the most dazzling star on the stage, but it is very likely to become one of the most important cornerstones supporting the entire stage. In the early stages of ecological explosion, the value of cornerstones is often underestimated.
@Lorenzo Protocol #LorenzoProtocol $BANK
