A New Paradigm in the Bitcoin Lending Ecosystem: Unleashing Trillions of Liquidity

Bitcoin, as the largest and most high-quality liquidity pool in the crypto world, is gradually having its potential tapped. With the emergence of new projects, BTC is transitioning from a mere digital value storage to a more active financial instrument.

The BTCFi ecosystem is booming, and BTC is not only serving as a liquid asset, but also gradually extending to richer on-chain structured income scenarios. If we can effectively revitalize the dormant BTC and build an efficient and safe liquidity network, it will open up a new DeFi application space for this trillion-dollar asset.

According to the data, as of January 9, 2025, the total value of locked positions on the Ethereum chain exceeded $64 billion, an increase of nearly 180% from January 2023. In contrast, although BTC's market cap and price growth are better than ETH's, the expansion rate of the Bitcoin ecosystem still lags behind that of Ethereum. It is worth noting that if BTC liquidity is released by 10%, it will create a market of about $180 billion. If a TVL ratio similar to that of ETH (about 16%) is reached, it is more likely to release about $300 billion in liquidity.

! Penetrating the Bitcoin Lending Business: A New Paradigm Reconstruction of Trillions of Liquidity

This potential is enough to promote the explosive growth of the BTCFi ecosystem, and is even expected to surpass the pan-EVM network and become the largest on-chain financial ecosystem. In this context, there is huge room for the development of the Bitcoin liquidity platform. At present, a lending protocol has become one of the largest platforms in the BTC ecosystem, and its Bitcoin stablecoin has exceeded $500 million in lock-up volume just one week after its launch, creating a record for the fastest growth of TVL in DeFi history.

For BTC holders, how to improve liquidity while ensuring asset security is a common need. On-chain lending protocols based on Bitcoin perfectly meet this demand, providing users with services such as fixed-rate lending and professional custody, allowing BTC holders to gain more sufficient liquidity to participate in other projects within the ecosystem.

From a stablecoin perspective, on-chain decentralized stablecoins are still dominated by collateralized debt positions (CDPs). CDP is essentially a stablecoin usage extension built based on lending scenarios, creating additional liquidity trading pools for dormant assets. Some platforms have built entire ecosystems that include Bitcoin-collateralized yield-based stablecoins, lending protocols, hybrid lending platforms, and more.

This model not only solves the long-standing problem of stablecoins in the Bitcoin ecosystem, but also achieves multi-chain compatibility through cross-chain technology, enabling users to seamlessly operate stablecoins in multiple DeFi ecosystems, and indirectly bringing the liquidity of the Bitcoin ecosystem to other chains.

With the gradual "awakening" of Bitcoin assets, BTCFi is expected to become a new DeFi asset with a volume of hundreds of billions of dollars, and become the key to building a prosperous ecosystem on the chain. In the future, the diversified financial products and DeFi scenarios built with BTC as the core will redefine the role of BTC in the DeFi field of the whole network. Whether the deep integration of BTC in the DeFi field can reach a key turning point is worth the market's continued attention.

! Penetrating the Bitcoin Lending Business Experience: A New Paradigm Reconstruction of Trillions of Liquidity