The Core Foundation on Thursday unveiled LstBTC, an ERC-20 liquid staking token pegged 1:1 with Bitcoin (BTC), aiming to solve a longstanding dilemma for Bitcoin holders: the choice between earning staking rewards and maintaining liquidity.
This allows BTC holders to earn daily rewards in CORE tokens while keeping their Bitcoin liquid for use in decentralized finance (DeFi) applications at the same time.
Speaking with Decrypt, Rich Rines—an initial contributor to Core DAO—said that Bitcoin makes up half the crypto market cap yet represents a tiny fraction of DeFi activity. This is in part because there hasn't been a sufficiently promising asset in terms of yield, security, and Bitcoin alignment, he said.
LstBTC can be that asset, according to Rines.
Core Chain Launches Dual Staking Model to Boost Bitcoin Yields
The Core Foundation, promoting a Bitcoin-powered blockchain, on Thursday announced the introduction of a dual staking model for the Core blockchain. It builds upon Core's existing non-custodial Bitcoin staking system, which was launched earlier this year. The dual staking model allows Bitcoin holders to earn higher yields by staking both Bitcoin and CORE tokens, according to a press release shared with Decrypt. While users can continue to stake only Bitcoin for a base "risk-free rate," those who...
LstBTC addresses a key challenge in the crypto space by eliminating the trade-off between staking and liquidity. Traditionally, staking Bitcoin often required locking up assets, making them unavailable for other uses. LstBTC preserves Bitcoin's value while offering staking benefits.
“LstBTC will enable those stakers to take the next step in their BTCfi journey, transitioning from mere yield-bearer to full-on Bitcoin user,” Rines said. “Given the upside, LstBTC may quickly become the dominant BTC DeFi asset.”
Rines said he believes that LSTs are the missing ingredient in Bitcoin DeFi, and the introduction of LSTBTC will help kickstart Core's ecosystem. With LSTBTC, the Core ecosystem is expected to attract new builders, launching their own LSTs on Core.
Notably, LstBTC’s operation involves a multi-sig setup on the Bitcoin network, meaning it’s managed by multiple entities, and undergoes security audits, according to Core. While this approach is used in various established protocols, it does introduce additional parties into the process compared to holding Bitcoin directly.
Why ETF Issuer 21Shares Is Launching a New Wrapped Bitcoin on Ethereum
ETF issuer 21Shares’ parent company on Tuesday announced the launch of its own “wrapped” Bitcoin token on the Ethereum blockchain. 21.co said that its latest product—dubbed 21BTC—aimed to “usher in the next phase of decentralized finance (DeFi) and to help enable DeFi’s broader adoption.” You may have heard of “wrapped Bitcoin” and wrapped tokens—how do they work? Natively put your idle BTC to work on Ethereum. 21BTC on Ethereum gives you: • BTC that's native to Ethereum• No Lock-And-Mint tec...
The introduction of LstBTC comes at a time of growing interest in Bitcoin-based financial products.
Asked about this trend, Rines said, “It's become clear that Bitcoin is the sun around which the rest of the industry revolves. For chains and projects that have otherwise been rather Bitcoin-agnostic, we're already seeing many return to Bitcoin as a focal point.”
This is not the first project to explore liquid staking for Bitcoin. Last year, Stroom Network launched a similar concept on Bitcoin's Lightning Network. Stroom raised $3.5 million in seed funding to develop a protocol that allows users to simultaneously use their Bitcoin capital on both the Lightning Network and Ethereum.
