If you’ve been following DeFi lately, you’ve likely heard the term "Restaking." While it gained popularity on Ethereum, Lorenzo Protocol is bringing this high-level financial engineering to Bitcoin. But what does it actually mean for the average user, and how does it change the game?
Normally, when you stake an asset to secure a network, your funds are locked. You cannot sell them or use them in other apps until the "unbonding" period is over. Lorenzo solves this by introducing stBTC. When you deposit your Bitcoin into the Lorenzo ecosystem, it is restaked to provide security to other chains or protocols. In exchange, you receive stBTC, a liquid representation of your Bitcoin that maintains a 1:1 peg.
The genius of this system lies in Capital Efficiency. Imagine you have 1 BTC. Through Lorenzo, that 1 BTC is earning a yield (staking rewards) in the background. Simultaneously, you can take your stBTC and use it as collateral on a lending platform to borrow stablecoins, or provide it to a liquidity pool to earn trading fees. You are essentially making your money work in two or three places at once.
This process is managed through Lorenzo's Financial Abstraction Layer (FAL). This layer hides the technical complexity of blockchain interactions, making it as easy as a single click for the user. Lorenzo is effectively democratizing complex hedge-fund-level strategies, allowing anyone with a bit of Bitcoin to access the same financial tools that were once reserved for elite Wall Street traders.
