Bitcoin Liquidity Finance

Bitcoin Liquidity Finance comprises 1) restaking a user’s BTC liquidity to projects that need it in exchange for future yield, and 2) the secondary market for tokenized Bitcoin restaking. Babylon has introduced the concept of Bitcoin Shared Security, where users can stake Bitcoin liquidity to any Proof-of-Stake (PoS) system integrated in Babylon; in doing so, users lock up their Bitcoin liquidity to Babylon and contribute their staked Bitcoins’ Total Value Locked (TVL) to the PoS chains and delegated validators. The result is that stakers earn yield as their reward for securing the PoS chains. Suppose by the end of the restaking period, no slashing event has occurred. In that case, stakers can retrieve all of their staked Bitcoins and all accrued rewards, so Bitcoin restaking essentially could be deemed a category comprising many Bitcoin financial vehicles.

Lorenzo

Lorenzo is the layer on which Bitcoin financial vehicles are issued and settled. Using it,projects can create a Bitcoin Liquid Restaking Plan (BLRP) to obtain Bitcoin liquidity. With each BLRP, the creator clearly explains how the staked Bitcoin liquidity will be used, the rules for issuing Bitcoin restaking tokens, and how stakers will be rewarded. When users stake Bitcoin liquidity to a BLRP, the creator of the BLRP can utilize the liquidity of the staked Bitcoins while the staker will later be rewarded with yield. When a restaking transaction is effective, Lorenzo will tokenize it into Bitcoin restaking tokens (further discussed below in Tokenization of Bitcoin Restaking). Developers can build DeFi projects on Lorenzo to utilize those Bitcoin restaking tokens and create a diversified DeFi ecosystem for Bitcoin liquidity derivatives.