For most of its history, Bitcoin was prized in digital gold: an asset to be held rather than using. This passivity has left thousands of billions of dollars of BTC sitting inactive in portfolios, disconnected from yield strategies and composibility that define decentralized finance (Challenge).
The rise in power of liquid stretch tokens promises to change this, positioning Bitcoin not only as a reserve of value, but as a productive asset integrated into the ONCHAIN capital markets.
Liquid stimulation refers to the process of using their crypto offer to help secure a network and receive a liquid and negotiable token in return which represents their marked assets and can be used through DEFI while the original tokens continue to win ignition rewards.
Lombard Finance has become one of the eminent Bitcoin Liquid Staking projects. Its flagship product, LBTC, is a sustained yield token 1: 1 per BTC.
When the BTC is deposited in the Lombard protocol, the underlying parts are dotted, mainly via Babylon, a protocol allowing a stammered of Bitcoin auto-concurrent without confidence. Users receive the LBTC in return, which can be deployed on DEFI ecosystems while the original bitcoin gains shuttle rewards.
This double feature is essential. The holders can maintain an exposure to Bitcoin while using the LBTC in loans, borrowing and supply of liquidity between protocols such as Aave, Morpho, Pendle and Ether.Fi. Designed for interoperability, the LBTC moves on Ethereum, Base, BNB chain and other networks, preventing liquidity fragmentation and guaranteeing that bitcoin can participate in a multi-chaînes DEFI environment.
A market is potentially worth billions
By mobilizing the dormant liquidity of BTC, Lombard and other liquid clearing projects aim to provide the infrastructure for Bitcoin DEFI, channeling the vast market capitalization of the assets on the ONCHAIN capital markets.
This effort reflects the proper transformation of Ethereum through derivatives of liquid intention, but with the potential to unlock a pool of deeper value given the Bitcoin scale.
To contextualize the difference in scale, the liquid layoff of Ethereum, led by Steth de Lido, has a market capitalization of around 38 billion dollars. On the other hand, the entire Bitcoin LST sector is still emerging, with a total market capitalization of around 2.5 billion dollars. The LBTC of Lombard alone represents approximately $ 1.4 billion, or about 40% of the LST Bitcoin market.
Bard de Lombard
Drawing on this foundation, Lombard announced this week the creation of the Liquid Bitcoin Foundation and its native $ Bard token, as well as a community sale of $ 6.75 million.
The Foundation will act as an independent steward of the protocol, funding research, subsidies and education, while establishing governance executives to preserve neutrality. $ Bard will serve as a usefulness and governance token of the ecosystem, giving holders the possibility of setting up to secure the main Lombard infrastructure, vote on proposals and access new products.
Jacob Phillips, co-founder of Lombard, described community sale as “an invitation to more than 260,000 LBTC holders and others in Bitcoin ecosystem to help shape the future of Bitcoin Onchain.” Erick Zhang, founder of Buidlpad who will welcome the sale, added that Lombard is “a pioneer unlocking the full Bitcoin potential as a digital organ and a base for the new generation capital markets”.
