#LorenzoProtocol @Lorenzo Protocol $BANK
The DeFi industry is always changing. From where it started, which is yield farming, it has already moved to advanced DeFi that involves advanced asset management. As DeFi has advanced, one of the initiatives that has always been at the forefront is working on a project called the Lorenzo Protocol. The primary purpose is to combine or integrate the security provided by Bitcoin and the yield production provided by DeFi.
Lorenzo is revolutionizing the way both retail and institutional investors think about digital assets by applying the concept of “Financial Abstraction” and liquid restaking.
Core Technology: Financial Abstraction Layer
The most important novelty within the Lorenzo Protocol is the Financial Abstraction Layer. It is a type of infrastructure-level technology which simplifies the handling of not only inter-chain yields but also other investment strategies.
1. Liquid Staking Architecture
Lorenzo is an offspring of Bitcoin Liquid Restaking. It utilizes the security infrastructure developed by the Babylon Network. Lorenzo is involved in the creation of stakes in native BTC on the security provided by Proof-of-Stake networks. Unlike staking, Lorenzo is involved in the minting of stBTC/YATs.
stBTC: Indicates the amount that is staked. This is collateralized in support of DeFi platforms.
YATs: Rights to the future yield generated by the stake.
2. Traded On
The protocol introduces OTFs, which are pretty much like traditional ETFs, but these are entirely on-chain. Lorenzo, through Simple and Composed Vaults, enables users to create tradable tokens out of complex strategies, which include algorithmic arbitrage, RWA yield, along with vol trading, through algorithmic strategies related to RWA (Real World Asset).
3. Modular Security and Custody
To ensure there is a safety net for institutions, Lorenzo implements a decentralized relayer network and collaborates with the best custodian services, including Ceffu and Cobo. This means that not only are the assets stored in smart contracts, but the Bitcoin is stored in secure facilities that are audited and highly secure.
The Network Ecosystem: Interoperability and Evolution
In
Instead, Lorenzo is far from a singular entity and rather is conceived to serve as “the yield layer of the entire blockchain economy.”
BNB Chain Integration: Despite its bitcoin-centric nature, Lorenzo uses BNB Chain because of the short transaction times and low fees it provides to lock OTF transactions and distribute the rewards.
The Appchain Concept: Lorenzo creates an appchain, which is specifically designed for stake actions and interactions between different chains, with the ability to transfer liquid tokens, such as stBTC and/or enzoBTC, to other EVM compliant chains.
Strategic Partnerships: Lorenzo benefits from the partnerships it makes with projects like World Liberty Financial and Babylon, allowing it to integrate stablecoins (USD1), following regulation and security concepts by the leader of the industry, into its system to form a liquidity hub.
Roadmap: The Path to 2025 and Beyond
Lorenzo Protocol's road map is entirely focused on the movement towards the transition from being just a specialized tool in the possession of the Bitcoin community to being the standard.
Phase 1: Foundation & Liquid Staking Completed/Ongoing
Successful deployment of stBTC and enzoBTC staking modules.
Integrations for Babylon services which provide native BTC rewards for restaking.
Carrying out security audits, with completion of these activities scheduled for mid-2025, and integrating with Certik Skynet.
Phase 2: Product Diversification (Current
The USD1+ OTF launch, a strategic fund that combines RWA return sources with DeFi strategies.
Introduction of enhancements to the BANK token functionality, incorporating governance and "veBANK" voting for the approval of strategies.
Optimization of the redemption process for staked assets to ensure liquidity in highly volatile markets with a ratio of 1:1.
Phase 3: Global Expansion & Cross–Chain Dominance 2025+ Cross–Chain Deployment: This is the extension of the use of Lorenzo's OTF solution to other large blockchains such as Ethereum L2 and Solana. Institutional Gateway: Development of industry–specific APIs to enable the flow of banking capital into the vault on the blockchain.
Advanced Governance: Transitioning towards a fully decentralized governance system, in which BANK token holders, manage the liquid portion of the protocol’s liquidity.
The Lorenzo Protocol is much more than a staking platform. It is the start of a whole new era in the world of programmable finance. By liquidating Bitcoin and leveraging it to produce returns, the company is building a foundation for the world of the future of managing wealth.
