crypto大山

In today's article, I want to shift the focus away from us retail investors for a moment and take you to see what those project teams battling in the Bitcoin Layer 2 arena are most anxious about right now.
If you have recently followed the Bitcoin ecosystem, you would have noticed a peculiar phenomenon of 'infrastructure oversupply'. Overnight, hundreds of Layer 2 solutions based on BitVM, EVM compatibility, and sidechain technology have emerged. Everyone's white papers are beautifully written, with high TPS and low Gas. But when you actually cross-chain to take a look, you will find that many blockchains are simply 'ghost towns'—the roads are wide, but there are no cars, and even less money.

In today's article, we will not discuss returns, nor future visions, but rather a most serious, yet unavoidable topic—security.
As a veteran who has been through the ups and downs of the crypto market for many years, I fully understand the psychological preparation needed for the action of 'sending out Bitcoin.' In the world of Bitcoin, the private key is everything. When you decide to participate in DeFi, you are essentially relinquishing control. In the past few years, there have been countless tragedies caused by cross-chain bridge hacks, project teams running away, and contract vulnerabilities.
So, when we examine the Lorenzo Protocol, if we only focus on how much APY it can bring, we are essentially making a joke of our own principal. The reason I am willing to spend time delving into it is that I find it has constructed a very rigorous defense system in terms of 'how to protect the principal.'

In today's article, I want to discuss a seemingly counterintuitive viewpoint: in the crypto world, sometimes the risk of doing 'nothing' is actually greater than 'fiddling around'.
As a staunch believer in Bitcoin, our mantra for the past decade has been just two words: HODL. This strategy is absolutely king during bear markets, helping us withstand countless crashes. However, when the market begins to recover, due to the soaring inflation rates and opportunity costs in the DeFi world, simply locking Bitcoin in a cold wallet is, in a sense, experiencing 'asset shrinkage'. This is why I've been paying attention to the Lorenzo Protocol recently, as it offers a third way to break the contradiction between 'holding dead' and 'messing around'.

In today's article, I want to discuss a slightly deeper topic about 'certainty.'
In this circle, we are used to fluctuations. Bitcoin rises by 5% today and falls by 10% tomorrow, and everyone finds it quite normal; DeFi mining yields 20% today and drop to 2% tomorrow, and people are also accustomed to it. But have you ever thought about why those traditional large institutions, holding hundreds of billions of dollars, are hesitant to enter the market on a large scale? Aside from compliance issues, the biggest obstacle is actually that they can't make 'financial predictions.'
For a publicly traded company or a pension fund, compared to 'possibly earning 50%', they prefer 'certainly earning 5%.'

In today's article, I want to discuss a topic that truly touches the core of DeFi power. If you still regard $BANK merely as a 'governance token for voting,' or simply as a 'dividend certificate' waiting to be repurchased and destroyed, then you may be underestimating the spectacular event that will unfold in the future Bitcoin ecosystem — the 'liquidity war.'
As we review the history of DeFi, you will find an interesting phenomenon: the most valuable protocols are often not those with the highest yields, but those that possess the 'distribution rights.' The reason why Curve was able to trigger the famous 'Curve War,' causing major stablecoin projects to fight fiercely, is that it held the baton of liquidity. Whoever holds the governance rights of Curve can guide huge amounts of funds to their own pools.

After being in the DeFi circle for a long time, everyone has an unspoken understanding: if you don't know where the profits come from, you might just be the source of those profits. So, whenever a new Bitcoin yield project emerges, I first look not at how cool its website is or how fast its TVL is increasing, but I fixate on one question: Is this money earned through skill, or is it printed out of thin air?
In today's article, I want to peel back the layers of the Lorenzo Protocol and discuss its most hardcore and also most exciting part — the logical closed loop of real yield.

If in the previous few articles we talked about how Lorenzo 'deposits' Bitcoin to earn interest, today I want to shift the perspective and discuss what the certificate—stBTC—can actually do in the outside world after being deposited. This is very crucial, because in my view, the ultimate standard for measuring the success of a liquidity protocol is not how many coins it locks, but how many people are using the certificates it issues and how many places they can be used.
In this industry, we often hear the term 'DeFi Lego'. The fun of Ethereum lies in the fact that stETH can be used as collateral on Aave, and the borrowed money can be used to provide liquidity on Uniswap, with the generated certificates being able to be used in other places as well. This 'composability' of assets is the source of the wealth effect in DeFi. What the Bitcoin ecosystem has been lacking for a long time is precisely this kind of 'base asset' that can be pieced together like Lego blocks.

In this circle for a long time, you will find that many big opportunities actually have traces to follow. Recently, when I was researching the Lorenzo Protocol, I always had a strong sense of déjà vu—this feeling was like going back to the eve of the Ethereum DeFi Summer in 2020, or when the concept of 're-staking' was first proposed by EigenLayer in 2023.
Why do I say this? Let's rewind the timeline and see what Ethereum has gone through. The early ETH was very similar to the current BTC; people held it, waiting for appreciation and paying a little Gas fee, with basically no other use.

Having been in this industry for a long time, you will find that most people view projects from only two perspectives: either 'how much can we rake in?' or 'how many times can the coin price increase?'. This mindset is understandable, as we all exist in an extremely restless market. However, if we extend the timeline, those who truly survive through bull and bear markets are often the protocols that have solved the core asset allocation problem.
Today, I want to step out of the simple 'yield' thinking and talk about the vision of the Lorenzo Protocol that is often mentioned but rarely explained in depth - to be the 'BlackRock of the Bitcoin ecosystem'.

If we talked about 'awakening dormant assets' and 'advancing future earnings' in the first two discussions, today I want to change perspective and discuss the most troublesome issue right now, and how the Lorenzo Protocol addresses it. This issue is— the fragmentation of Bitcoin liquidity.
As an old hand in this industry, my current feeling is: there are simply too many Bitcoin Layer 2 solutions. It's like when there was only one bank, and suddenly hundreds of small banks popped up, each with its own rules and issuing their own 'certificates.' The result is that your Bitcoin assets on Chain A are not recognized on Chain B, or the cost to transfer is terrifyingly high, and the security varies greatly. The once unified Bitcoin liquidity has been shattered.

Today, I want to delve deeper into the Lorenzo Protocol and its eye-catching 'separation of principal and interest' mechanism. Many friends may think this is just a gimmick, isn't it just splitting the token into two?
But if you understand a little about 'zero-coupon bonds' in traditional finance or Pendle in DeFi, you will realize that Lorenzo's move is actually introducing real time value to the Bitcoin ecosystem.
This is how I understand the matter: in the traditional staking logic, the returns are linear and monotonous. If you deposit 1 BTC with an annualized return of 5%, you have to patiently wait a year to get that 0.05 BTC. During this process, even if Bitcoin experiences wild fluctuations or you urgently need money, your expected returns are usually locked, and even the liquidity of your principal is restricted.

In this circle, many people often judge a project by its surface: whether the website is flashy, how many wallets it supports. But if you are a true technical geek or institutional investor, what you notice first when looking at the Lorenzo Protocol is definitely not these superficial aspects, but its underlying form — it is not a set of smart contracts parasitic on a certain chain; it is itself a high-performance application chain built on the Cosmos SDK.
How important is this matter? We need to start with the headache-inducing characteristics of Bitcoin.
You know, Bitcoin's mainnet is a very 'stubborn' system, using the UTXO model, which is completely different from Ethereum's account model. To map the staking status on Bitcoin (via Babylon) in real-time to the DeFi world involves extremely complex data synchronization and state management.

If we are to examine a DeFi protocol's moat with a professional eye, we should never just look at how beautiful its UI is or how enticing its APY is, but rather at what real hard problems it solves at the underlying architecture. In the Bitcoin ecosystem, the hardest nut to crack is undoubtedly the language barrier between Bitcoin's native UTXO model and the modern DeFi smart contract model.
This is a very fundamental technical contradiction. Bitcoin's original design intention was to create a minimalistic peer-to-peer cash system, and its UTXO (Unspent Transaction Output) model is like a series of locked safes—secure but rigid, lacking Turing completeness. In contrast, Ethereum and the subsequent DeFi world adopt an account model, which is like a sophisticated bank account that can be programmed and can nest complex logic. For a long time, these two have been like they exist in two parallel universes, and what is termed 'cross-chain' often merely involves forcibly transporting through extremely centralized multi-signature wallets, posing high risks and low efficiency.

Today, the topic is slightly more 'brain-burning', but also more interesting. If you are the kind of player who likes to ponder how to squeeze the yield to the extreme using financial tools, you will definitely be amazed by this design in the Lorenzo Protocol.
People often say 'time is money', but in the crypto world, this is usually just an empty phrase. Because for most of the time, time for us is just 'torture'—enduring the bear market, waiting for the unlock. But in Lorenzo's world, time really becomes a commodity that can be sliced, priced, and even shorted.

Today, let's not talk about those emotional market movements, but discuss some hardcore logic that truly concerns the industry's structure. If you have engaged in cross-chain arbitrage or deeply participated in DeFi as a professional player, you must hate one term—'liquidity fragmentation.'
Honestly, the current Bitcoin ecosystem is a bit like the Warring States period. Various Layer 2 public chains are emerging one after another, and each chain wants to issue its own 'wrapped Bitcoin.' The result is that the BTC in your hand is called mBTC on this chain, solvBTC on that chain, and has another name in another place. Although these tokens are all backed by Bitcoin, they are not interoperable, which not only prevents sharing of liquidity but also leads to significant slippage losses.

To be honest, experienced players who have gone through the last round of bull and bear market transitions often feel a chill down their spine when they hear the words 'interest earning' and 'wealth management.' We have all been scared by those projects that promise fixed returns of 20%, 50%, or even higher. In this circle, anything that cannot clearly explain the source of returns is likely to end up targeting your principal.
So, when I first flipped through the white paper of the Lorenzo Protocol, I was like a detective checking for identity, fixated on the same question: Where exactly is this money coming from?

To be honest, for a long time, my understanding of 'holding Bitcoin' was very narrow. At that time, I thought that being a qualified Bitcoin believer meant just buying in, then transferring to a cold wallet, writing down the mnemonic phrase and hiding it, after which I could uninstall the app. I even looked down on those who were messing around on-chain, thinking they were risking their principal and straying from the original intention of decentralization.
But the longer I stay in this circle, the more I realize that this 'miser' strategy, while stable, carries a deep sense of powerlessness.

Today, let's open up our perspectives and discuss some slightly grand but very interesting topics.
Have you ever thought about a question: the reason why the US dollar can become a global hard currency is not just because of America's military strength or economic prowess? In fact, there is a consensus in the financial community that the true cornerstone of dollar hegemony is the US Treasury bonds.
This may sound a bit dull, but the logic is quite simple: institutions and countries around the world hold US dollars not only because they can buy things, but also because they can exchange dollars for US Treasury bonds at any time, obtaining an extremely stable and almost risk-free 'interest.' This interest is the 'anchor' of global finance, also known as the risk-free rate.

Today, let's delve a bit deeper into the topic. Even if you don't come from a finance background, this logic is worth pondering, as it directly relates to why institutions and smart money are keeping an eye on Lorenzo.
In the traditional financial world, especially in the bond market worth hundreds of trillions of dollars, there is a very mature and classic strategy called 'Stripping.' This was a trick developed on Wall Street in the 1980s. Simply put, it involves splitting a U.S. Treasury bond into two parts for sale: one part is the 'principal', and the other part is the 'interest.'