In the Ethereum and multi-chain DeFi ecosystem, wBTC has been the most mainstream form of 'wrapped Bitcoin';
After the rise of the BTCFi narrative, 'staking-type BTC carriers' like stBTC launched by Lorenzo Protocol have also begun to attract attention.
This article attempts to structurally analyze wBTC and stBTC from three dimensions: custody model, revenue structure, and verifiability.
This will help you understand what scenarios they are suitable for. The following content is only a mechanism analysis and does not constitute any investment advice.
1. Custody and Trust Assumptions: Single Custody vs Multiple Participation
wBTC: centralized custody + minting
Users transfer BTC into a custodial address managed by institutions like BitGo;
The custodian mints an equivalent amount of wBTC on chains like Ethereum, redeeming through a reverse path;
Security depends on the risk control, compliance, and multi-signature management of the custodial institution.
Advantages:
Long operating time, many integration scenarios, many DeFi protocols have already defaulted to support wBTC;
Users are relatively familiar with the operational process.
Points to note:
Custodianship is relatively centralized, assuming 'high trust in a single institution';
Users need to assess the regulatory environment, asset isolation, and audit transparency of custodians.
stBTC: Staking Agent + on-chain certificate
Taking Lorenzo Protocol as an example:
Users transfer BTC into a multi-signature / MPC wallet managed by the Staking Agent;
The Staking Agent entrusts BTC to the underlying staking protocol (such as Babylon, etc.) to generate on-chain income;
Lorenzo mints stBTC on-chain based on staking proof as a 'principal certificate,' and income is recorded and allocated through independent tokens.
Characteristics:
Multiple institutions can participate as Staking Agents, making the custodial structure relatively decentralized, and the protocol layer can govern and replace based on performance;
What users see is a combination of 'on-chain contracts + on-chain staking proof,' rather than just a statement from the custodian.
2. Income and capital efficiency: Static mapping vs. native income
wBTC: mainly provides 'availability'
wBTC itself does not generate native income;
If users want to increase their income, they need to further invest wBTC into lending, LP, derivatives, and other strategies;
Therefore, it is more like a bridge to 'move BTC into the DeFi world.'
stBTC: Design of splitting principal and income
In the stBTC model, BTC usually participates in the underlying staking:
stBTC represents your 'staked principal';
The income part is recorded through independent tokens or ledgers, allocated according to the rules from the underlying staking protocol;
In this way, the same BTC can earn underlying staking income and participate in second-layer DeFi scenarios through stBTC.
The potential advantages of this design:
Under the premise of controllable risks, improve the capital efficiency of BTC positions;
Make BTC no longer just 'static collateral,' but an asset carrier with 'cash flow attributes.'
At the same time, it is also important to see the risk points:
Security relies not only on the custodian but also on the technology and economic model of the underlying staking protocol (such as Babylon, etc.);
Interactions between different chains and protocols will increase the overall system complexity, requiring users and institutions to make judgments based on their own risk preferences.
3. Transparency and reserve proof: Report vs. on-chain verifiability
In the context where regulatory and institutional funds are increasingly focused on 'transparency',
How reserves are proven is gradually becoming a core dimension in packaging BTC products.
Traditional models (such as single custodianship) often rely on audit reports, custodian statements, and other means to disclose reserve conditions;
The new generation of BTC staking / re-staking solutions tends to:
Manage custodial addresses using specific scripts / tags on the Bitcoin mainnet;
Using Merkle Trees or specialized PoR modules on second-layer protocols,
allowing users toverify whether assets and liabilities match with scripts.
The goal of schemes like stBTC is to minimize the part of 'only trusting what the custodian says,'
A bit more 'space to verify on-chain yourself.'
But in practice, users still need to pay attention to:
The frequency and coverage of reserve proof;
Whether there is third-party auditing or security firms involved in the review;
In extreme situations, whether there is a clear plan for redemption and liquidation processes.
4. Simple summary of applicable scenarios (not a recommendation)
Mechanically, the two can be understood roughly as follows:
wBTC is closer to 'a mature public highway'
Long history, extensive ecological integration, suitable for scenarios that require large-scale interaction with existing DeFi protocols;
The downside is that it requires trust in custodians and does not generate native income.
stBTC is more like 'a new track with added income'
It adds staking income and on-chain proof mechanisms on top of custodianship;
More suitable for users and institutions willing to bear additional technical complexity and pursue capital efficiency;
Risk assessment needs to cover the custodial layer, staking layer, and the protocol itself.
Regardless of which option you choose, what really matters is:
Clarify who you are trusting: custodians, contracts, staking protocols, or a combination of multiple parties;
Clarify where the income comes from and where the risks lie;
Allocate assets according to your own risk tolerance, rather than just looking at short-term trends.
Risk warning and statement
The above content is based solely on personal research and understanding of public information and protocol architecture,
with the purpose of helping readers distinguish between different types of Bitcoin packaging / staking products from a mechanistic perspective.
The wBTC, stBTC, or other protocols mentioned in the text are cited only as technical and model case references,
and do not constitute any form of investment advice, income commitment, or risk guarantee.
Cryptocurrency assets are highly volatile and carry multiple risks such as smart contracts, custodianship, staking, and regulation,
Before making any decisions, please be sure to conduct your own research (DYOR) and participate cautiously based on your own circumstances.
I am a person who seeks the sword by carving the boat, an analyst who focuses only on the essence and does not chase noise.@Lorenzo Protocol #LorenzoProtocol $BANK
