@Lorenzo Protocol The supported blockchain networks have exceeded 20. This number is considered quite aggressive in the entire BTCfi track, as most projects choose to focus on one or two main chains and then gradually expand. However, Lorenzo has adopted a broad net strategy from the very beginning. The logic behind this is quite clear: Bitcoin, as the largest crypto asset, has liquidity demands that are comprehensive and a single chain cannot meet all scenarios.
From a technical architecture perspective, Lorenzo built the application chain based on the Cosmos SDK. This choice is quite interesting because the IBC cross-chain protocol of the Cosmos ecosystem has high security and decentralization. At the same time, Cosmos's modular design allows Lorenzo to customize functions as needed without being constrained by the underlying chain's limitations.
The deployment strategy of enzoBTC on different chains is differentiated. On the Ethereum mainnet, enzoBTC primarily exists as the canonical version, ensuring compatibility with other Ethereum DeFi protocols. On the BNB Chain, Lorenzo focuses on yield products like USD1+ OTF, as the user base on the BNB Chain has a greater demand for stablecoin yields. On the Sui chain, stBTC is the first product, betting on the future potential of the Move language ecosystem.
The choice of cross-chain infrastructure is also crucial. Lorenzo has adopted a multi-bridge strategy, including Wormhole, LayerZero, and Chainlink CCIP. Each of these bridges has its own characteristics. Wormhole is an established cross-chain bridge with rich experience in asset transfers between Solana and Ethereum. LayerZero focuses on lightweight messaging, enabling interoperability of full-chain applications. Chainlink CCIP's advantage lies in security, as Chainlink's oracle network has been validated by the market over a long period.
The benefit of a multi-bridge strategy is that it disperses single point of failure risks but also increases the complexity of the system. Each bridge requires independent security audits and ongoing monitoring. The Lorenzo team has invested considerable resources in this area, including collaborating with professional security firms for regular audits and establishing a real-time risk monitoring system.
The layout on the Sui chain is a relatively unique case in Lorenzo's multi-chain strategy. Sui, as an emerging high-performance public chain, has its DeFi ecosystem still in the early stages of construction. Lorenzo chose to enter at this time, to some extent, to co-build the ecosystem. stBTC can participate in the NAVI Protocol's lending market on Sui and can also provide liquidity on the Cetus DEX, which are some of the leading DeFi protocols in the Sui ecosystem.
NAVI is a native lending protocol on Sui. Its design draws on the mechanisms of Aave and Compound but has made many optimizations in performance. Utilizing Sui's parallel execution capabilities allows for lower transaction delays and higher throughput. stBTC, as a high-quality collateral, typically enjoys favorable lending rates on NAVI, making it a good choice for users looking to leverage their positions.
Cetus is one of the main DEXs on Sui, adopting a concentrated liquidity AMM model similar to Uniswap V3. The primary use of stBTC on Cetus is to provide liquidity to earn trading fees. Since stBTC itself is a yield-bearing LST, liquidity providers can enjoy dual rewards: both staking rewards and trading fee sharing.
On the BNB Chain, Lorenzo has deep cooperation with PancakeSwap and Venus Protocol. PancakeSwap is the largest DEX on the BNB Chain, and the liquidity pool for the enzoBTC/BNB trading pair provides users with a convenient exchange channel. Venus is a lending protocol where enzoBTC can be used as collateral to borrow stablecoins like USDT or BUSD.
An interesting phenomenon brought about by the multi-chain layout is that the yield rates on different chains will vary. Both providing liquidity for enzoBTC on Chain A may have an APY of 8%, while on Chain B it could be 12%. This creates opportunities for arbitrageurs, but for ordinary users, the gas fees and time costs of cross-chain operations may offset some of the yield differences. The Lorenzo team is also aware of this issue and is developing a one-click yield optimization feature to help users automatically find the best capital allocation plan.
The integration of emerging chains like Berachain, Movement, and X Layer reflects Lorenzo's grasp of market trends. These chains either have technical innovations, such as Berachain's liquidity proof mechanism, or have strong community support, like Movement's Move language ecosystem. Lorenzo's early layout allows for rapid market share capture once these chains' DeFi ecosystems take off.
Chainlink's Proof of Reserve (PoR) mechanism plays a crucial role in Lorenzo's multi-chain layout, as both enzoBTC and stBTC are wrapped assets. What users care about most is whether the underlying assets actually exist. Chainlink's PoR can verify in real-time whether the number of Bitcoins held by the custodial institution matches the number of enzoBTC circulating on the chain, providing users with additional security assurance.
From the perspective of liquidity management, Lorenzo needs to maintain a certain depth of funds across different chains; otherwise, it will affect the user experience. For example, if a user wants to redeem enzoBTC but there is insufficient liquidity on the target chain, they will have to wait for the capital allocation of the cross-chain bridge. This process may take a few minutes or even longer. Lorenzo alleviates this problem by reserving liquidity pools on the main chain.
$BANK The cross-chain circulation of tokens is also a technical challenge. Lorenzo needs to ensure that the total amount of BANK on different chains remains constant while users can freely transfer between chains. The realization of this function relies on the reliability of cross-chain message protocols. Any problem in one link may lead to an imbalance in the supply of tokens.
The long-term value of the multi-chain strategy lies in the freedom it provides Bitcoin holders to choose. You can allocate enzoBTC or stBTC based on your judgment of different chain ecosystems, rather than being locked into a single chain. This flexibility is especially important in a rapidly changing market environment.
From a competitive landscape perspective, Lorenzo's multi-chain layout is a differentiated advantage. Many BTCfi projects either focus on the Ethereum ecosystem or delve deep into Bitcoin Layer 2. Projects like Lorenzo that cover more than 20 chains are rare. The risk of this strategy lies in resource dispersion, but the reward is the potential to reach a broader user base.
#LorenzoProtocol The positioning in the multi-chain universe is to become the hub of BTC liquidity. No matter which chain users need Bitcoin assets on, they can obtain them through Lorenzo's products. If this vision can be realized, Lorenzo's position in the entire BTCfi ecosystem will be very solid.
