The Lorenzo Protocol is a next-generation decentralized finance (DeFi) platform launched in 2025 on the BNB Smart Chain. It defines itself as the first layer of finance for Bitcoin liquidity, aiming to transform Bitcoin into a productive and composable financial asset.
Functioning and Key Innovations
Liquid Staking of Bitcoin (stBTC): The protocol allows users to "stake" their Bitcoins via the native Babylon mechanism to secure other networks while receiving stBTC. This liquid token can be used in the DeFi ecosystem for loans or trading without losing exposure to BTC.
Principal/Interest Separation: Lorenzo introduces yield tokens called YAT (Yield Accrual Tokens). This innovation allows the separation of the initial capital (stBTC) from the generated interests (YAT), thus providing institutional-type asset management on the blockchain.
CeDeFi Architecture: The project combines decentralized infrastructure with trusted custodians to overcome the technical limitations of Bitcoin while ensuring the security of funds.
Ecosystem and Tokenomics (2025)
BANK Token: This is the native token of the protocol, used for governance and staking. By the end of 2025, it was listed on major platforms like Binance (under the "Seed Tag") and HTX.
Growth: In March 2025, the protocol surpassed 600 million dollars in total value locked (TVL).
Derivative Products: Besides stBTC, the protocol launched products like USD1 Plus, a stable yield fund combining real-world assets (RWA) and DeFi strategies.
Outlook for 2025-2026
The project plans to expand into real-world assets (private credit, real estate) and strengthen its cross-chain liquidity solutions for Bitcoin. While promising, it remains subject to the classic risks of DeFi (smart contract security) and the volatility of the cryptocurrency market. $BNB
