Lorenzo currently supports more than 20 chains. Many people might think this is just a numbers game, the more chains, the better. But if you carefully consider what they are doing on each chain, you will find that this layout is methodical, not just haphazard.
First, let's look at the main battlefield. BNB Chain is the chain that Lorenzo values the most. The BANK token is deployed there, and the main liquidity pools are there. The integration with leading protocols like PancakeSwap and Venus Protocol is also there. Why choose BNB Chain? Because this chain has a large user base, low transaction costs, and the resources of the Binance ecosystem can be directly channeled.
Lorenzo's efforts on BNB Chain involve more than just issuing a token. Their collaboration with Venus Protocol is deeply integrated, allowing enzoBTC to be used as collateral on Venus to borrow stablecoins or other assets. Venus has a TVL of $1.5 billion, making it the largest lending protocol on BNB Chain. Accessing this liquidity pool is a significant advantage for Lorenzo.
Then there's Ethereum. Although Lorenzo's TVL on Ethereum is only $21 and seems to have almost no activity, this does not mean they have given up on Ethereum. In fact, Ethereum is their technical foundation, as many core contracts are deployed on the Ethereum mainnet, including Chainlink's reserve proof system.
The value of Ethereum lies not in how much TVL it has, but in its security and degree of decentralization. Lorenzo places key asset reserves and verification logic on Ethereum because of the reliability of this chain. Other chains may be faster and cheaper, but in terms of security, Ethereum is still the most trustworthy.
Arbitrum and other Layer 2 solutions are Lorenzo's expansion frontiers. The transaction fees on these chains are much lower than those on Ethereum, and their speeds are also faster, making them suitable for high-frequency DeFi operations. Lorenzo has deployed enzoBTC and stBTC on these chains, allowing users to participate in yield strategies at a lower cost.
Sui is a very interesting choice. This chain is a new public chain developed by Mysten Labs. Its technical architecture is completely different from Ethereum, using the Move language. It has strong concurrent processing capabilities. Lorenzo's early layout on Sui is clearly a bet on the future of the Sui ecosystem.
Although Sui's current DeFi ecosystem is not yet mature, it is growing rapidly. Protocols like NAVI Protocol and Cetus have rapidly increasing TVLs. If Lorenzo's stBTC can achieve native minting on Sui, it can capitalize on this wave of growth immediately, and the Sui Foundation offers substantial support for early projects, which may include additional incentives.
Hemi Network and Berachain are new chains that will only emerge in 2024 to 2025. Lorenzo's quick support indicates that their strategy is to seize the early ecosystem positions of new chains. Once these chains mature, Lorenzo will be an established player with a first-mover advantage.
The design of Berachain is very special. It uses a PoL liquidity proof mechanism, where validators obtain block rights not by staking tokens but by providing liquidity. This mechanism is naturally suitable for DeFi protocols. If Lorenzo's enzoBTC can provide liquidity on Berachain, it can not only earn transaction fees but also participate in network consensus and receive validation rewards.
Hemi Network is a Bitcoin Layer 2 designed specifically for the Bitcoin ecosystem. Lorenzo, as a Bitcoin liquidity protocol, finds it natural to position itself on Hemi. Additionally, Hemi's development team has a strong background and has raised significant funding, giving it considerable potential for ecosystem development.
However, so many chains also bring management challenges. Each chain has different security standards, different risks for cross-chain bridges, and different user experiences. Lorenzo needs to invest a lot of operational costs to maintain consistent product quality across so many chains.
The cross-chain solutions they are currently using are mainly LayerZero and Wormhole, which are the most mature cross-chain bridges available. The advantage of LayerZero is its lightweight nature, as it does not require deploying heavy relay networks on each chain. Wormhole's advantage is its support for a wide range of chains, including non-EVM chains like Solana.
However, cross-chain bridges have been attacked too many times in history. The Ronin Bridge was hacked for $600 million, the Poly Network was hacked for $600 million, and Wormhole has also been hacked for $300 million. Although these funds were later recovered, these cases indicate that cross-chain is one of the riskiest links in DeFi.
Lorenzo's security measures in this area include multi-signature verification, meaning cross-chain transactions require signatures from multiple independent validators to execute. There is also limit management; any single cross-chain amount exceeding a certain limit will trigger manual review. These measures reduce risks but cannot completely eliminate them.
From a strategic perspective, Lorenzo's multi-chain layout is actually a risk hedging strategy. If it relies solely on one chain, any issues with that chain could jeopardize the entire protocol. By diversifying across over 20 chains, even if one chain encounters problems, the others can still operate normally.
Another strategic intent is user acquisition. Different chains have different user demographics. Users of Solana may not use Ethereum, and users of Sui may not use BNB Chain. The more chains Lorenzo supports, the broader the user reach.
However, there is a contradiction here. After users are dispersed, the liquidity on a single chain will be thin. Thin liquidity means high slippage and high transaction costs, leading to a poor user experience. Lorenzo's current approach is to concentrate the main liquidity on a few main chains, with other chains as supplements.
Specifically, BNB Chain, Ethereum, and Arbitrum combined may account for over 95% of Lorenzo's total TVL, while the other dozens of chains together may account for only about 5%. This distribution is reasonable, as you cannot invest the same resources in every chain.
Lorenzo's integration with protocols on each chain is also selective. On BNB Chain, he focuses on connecting with Venus and PancakeSwap. On Arbitrum, he may connect with GMX and Camelot. On Sui, he connects with NAVI and Cetus. He collaborates with the largest local protocols on each chain to maximize exposure.
This localization strategy is correct, as the DeFi ecosystems of each chain are different, and user habits also vary. You cannot use a one-size-fits-all approach; products and strategies must be customized for each chain.
From a technical perspective, supporting so many chains places high demands on the development team. The virtual machines for each chain may differ. Ethereum uses EVM, Solana uses SVM, and Sui uses MoveVM. The smart contract languages also vary; developers must know Solidity, Rust, and Move.
Lorenzo's technical team likely uses a modular architecture, where the core logic is unified, and then adapts to the characteristics of different chains. This can reduce redundant development, but the adaptation layer itself is also a risk point, as each adaptation may introduce new bugs.
Furthermore, multi-chain deployment puts significant pressure on security audits. Contracts on each chain need to be audited separately, as even the same logic may compile into different bytecode on different virtual machines, which may have different vulnerabilities.
Lorenzo's audits are primarily conducted by CertiK, with a score of 91.36 likely representing a comprehensive rating. However, specific auditing details for each chain and contract are not available in public information, which is a transparency issue.
From the user's perspective, the advantage of multi-chain support is flexibility. If the gas fees on one chain suddenly spike, users can switch to another chain to continue their operations. If one chain becomes congested, users can choose a less crowded chain.
However, the downside is a high learning cost. New users may feel overwhelmed by the presence of over 20 chains and may not know which one to choose. Although Lorenzo's interface is simplified, the inherent complexity still exists, presenting a challenge for user education.
Lorenzo may continue to expand the supported chains in the future, as new public chains are constantly emerging. Each new chain could be an opportunity, but unlimited expansion is not realistic, as operational costs will continue to rise and users' attention is limited.
A smarter approach is hierarchical management, dividing chains into core, expansion, and experimental layers. The core layer consists of chains like BNB Chain and Ethereum, where the most resources are invested. The expansion layer includes chains like Arbitrum and Sui, which have potential but are still growing. The experimental layer consists of various new chains that are initially deployed to secure a position, with increased investment once they mature.
This strategy allows Lorenzo to maintain flexibility without overly diluting resources. It can also dynamically adjust based on market feedback; for chains with rapid user growth, more resources can be allocated, and for chains that are underperforming, resources can be gradually withdrawn.
From a competitive landscape perspective, Lorenzo's multi-chain strategy has a first-mover advantage because most Bitcoin liquidity projects only support a few main chains. Lorenzo has already expanded to over 20 chains, creating a perception among users that Lorenzo is the most comprehensive Bitcoin DeFi solution.
However, first-mover advantage is not permanent. Other projects will follow suit and may even delve deeper. Lorenzo is currently focused on breadth, but in the future, it may need to optimize deeply on certain key chains to form a true moat @Lorenzo Protocol $BANK
