There is a piece of data that many people may not have noticed: Lorenzo's stBTC and enzoBTC account for 50% of all BTC assets on Wormhole after bridging to Sui. This means that currently, half of the Bitcoin across chains via Wormhole is Lorenzo's product. This market share is quite impressive in the cross-chain BTC field.
Why can Lorenzo achieve this share on Sui? First, we need to look at the uniqueness of the Sui chain. Sui is a new public chain developed by Mysten Labs, using the Move language, which is completely different from Ethereum's Solidity. In terms of technical architecture, Sui has strong concurrent processing capabilities and can theoretically support larger-scale DeFi applications.
But the Sui ecosystem is still in its early stages, with a total TVL just over 1 billion USD, which is far behind the hundreds of billions of Ethereum. This is both a challenge and an opportunity for Lorenzo. The challenge is that the user base of Sui is small and DeFi protocols are immature. The opportunity is that there are few competitors, and those who enter early can take a dominant position.
Lorenzo's timing for layout on Sui is very precise. stBTC will be launched on Sui by the end of 2024, just when Sui's DeFi ecosystem is starting. Lorenzo is among the first batch of Bitcoin liquidity projects to enter, and they are not just simply bridging the tokens but deeply integrating with the two largest DeFi protocols on Sui, NAVI and Cetus.
NAVI is the largest lending protocol on Sui, with its TVL accounting for a significant portion of Sui's total TVL. Lorenzo's stBTC can be used as collateral on NAVI to borrow stablecoins or other assets, and the collateralization rate is relatively high because stBTC is backed by real BTC, making the risk comparatively manageable.
Cetus is the leading DEX on Sui, and Lorenzo has opened a liquidity pool for stBTC on Cetus, providing market-making services. Currently, this pool's 24-hour trading volume can reach 498,000 USD, with over 33,000 participating wallets, which is considered very active data within the Sui ecosystem.
However, Lorenzo's 50% market share is not only due to their early entry or successful integration but also because they solved a pain point: the usage scenario of BTC on Sui. Most wrapped BTC is just a bridging tool; you bridge BTC over and then what? It might just sit in a wallet or be simply swapped, lacking deeper engagement.
Lorenzo's stBTC is different; it is a yield-bearing token. Holding stBTC earns Babylon's staking rewards, which accumulate automatically without requiring any action from the user. Additionally, stBTC can be used on NAVI for secondary yields, providing liquidity to earn fees, effectively allowing the principal to earn money in multiple places simultaneously.
This improvement in capital efficiency is something other wrapped BTC cannot achieve. For example, WBTC; if you wrap BTC into WBTC and bridge it to Sui, it becomes an ordinary ERC20 token that does not generate yields on its own. To make money, you have to find protocols on your own and create strategies, which have a high barrier to entry.
Another advantage for Lorenzo is the assurance of security. They use Wormhole, one of the most mature cross-chain bridges in the industry, and Lorenzo has also integrated Chainlink's reserve proof system. Each enzoBTC has a corresponding BTC on-chain that can be verified, and this transparency reassures users.
Although Wormhole was hacked once in 2022, they significantly upgraded their security architecture afterwards. Now there are 19 guardian nodes distributed across different institutions, including well-known teams like Jump Trading and Chainlink. Each cross-chain transaction requires over 2/3 of the guardians' signatures to execute, making this security model much stronger than single-node bridges.
Lorenzo chose Wormhole over other bridges, possibly because of Wormhole's support for non-EVM chains. Sui uses the Move virtual machine, which is not EVM compatible, so many Ethereum ecosystem bridges cannot connect. Wormhole has specifically adapted to connect chains like Sui, Aptos, and Solana.
From the data perspective, Lorenzo now has over 32,000 wallets holding stBTC on Sui. Although this user number is not particularly large, considering the user base of the Sui ecosystem itself, this penetration rate is already quite good. Moreover, these 32,000 users are not just buying and holding; they are actively using, trading, and providing liquidity.
Lorenzo has also made a smart move on Sui by collaborating with NAVI, which is not just a simple protocol connection. NAVI has specifically prepared 2 million USD in liquidity support and incentives for enzoBTC, indicating NAVI's recognition of Lorenzo's security mechanism and willingness to invest real money to support it.
NAVI particularly emphasized several advantages of Lorenzo in its announcement. First is the complete audit. Second is Chainlink's real-time reserve proof. Third is that enzoBTC is not staked on Babylon but has a completely independent BTC reserve. These points address the trust issues that users are most concerned about.
The background of Lorenzo's 50% market share on Sui is that the demand for BTC in the Sui ecosystem is growing. Many DeFi protocols need BTC as collateral or liquidity, but native BTC cannot be used directly on Sui; it must be bridged. Lorenzo provides a safe and reliable solution for this.
Additionally, Lorenzo's product design takes into account the characteristics of the Sui chain. Sui's transaction speed is very fast, and gas fees are low, making it suitable for high-frequency DeFi operations. Lorenzo's stBTC can quickly switch between NAVI and Cetus, allowing users to dynamically adjust strategies based on yield rates. This flexibility is something other chains cannot achieve.
However, Lorenzo also faces challenges on Sui. First, competitors will follow. Although Lorenzo currently holds 50% market share, if other BTC liquidity projects enter Sui, this share may be diluted. Lorenzo needs to continue innovating to maintain its lead.
Secondly, there's the uncertainty of the Sui ecosystem itself. Although Sui's technology is advanced, whether it can truly grow and attract enough users and funds is still uncertain. If the development of the Sui ecosystem does not meet expectations, Lorenzo's layout on Sui might be in vain.
Thirdly, there is the risk of cross-chain bridges. Although Wormhole is relatively safe now, many bridges have been hacked in the past, leaving users with psychological shadows regarding cross-chain transactions. Lorenzo needs to continuously strengthen security measures to reassure users about bridging BTC to Sui.
From a strategic perspective, Lorenzo has captured 50% market share on Sui, not just for this blockchain but to test a model for how to quickly establish a BTC liquidity network on an emerging public chain. If successful on Sui, this model can be replicated on other new chains like Aptos, Movement, and Berachain.
Lorenzo currently supports over 20 chains, but there may only be 5 to 10 that are truly scalable. Sui is one of the new chains they are focusing on. If they can achieve a leading position on Sui, when the Sui ecosystem explodes, Lorenzo will reap the largest dividends.
Overall, Lorenzo's 50% market share of Wormhole BTC on Sui is not accidental; it is the result of early layout, deep integration, product innovation, and security guarantees. However, how long this advantage can be maintained depends on Lorenzo's subsequent execution and the development of the Sui ecosystem.
