Summary:
LstBTC launched by Core Foundation, pegged 1:1 with Bitcoin (BTC)
Enables earning staking rewards while maintaining liquidity
Introduces a dual staking model for enhanced Bitcoin yields
Addresses the challenge of staking vs. liquidity
Multi-sig setup for security and management of LstBTC
The Core Foundation has officially launched LstBTC, an ERC-20 liquid staking token pegged 1:1 with Bitcoin (BTC). This innovative solution addresses a significant dilemma for Bitcoin holders: the choice between earning staking rewards and maintaining liquidity.
What is LstBTC?
LstBTC allows BTC holders to earn daily rewards in CORE tokens while keeping their Bitcoin liquid for use in decentralized finance (DeFi) applications. As Rich Rines, an initial contributor to Core DAO, points out, Bitcoin constitutes half of the crypto market cap but represents a small fraction of DeFi activity. LstBTC aims to bridge this gap by providing a promising asset in terms of yield, security, and Bitcoin alignment.
Dual Staking Model
In conjunction with LstBTC, the Core Foundation has also introduced a dual staking model for the Core blockchain, enhancing Bitcoin yields by allowing users to stake both Bitcoin and CORE tokens. This model continues to offer a base "risk-free rate" for those who choose to stake only Bitcoin.
Addressing Key Challenges
LstBTC tackles the common challenge in the crypto space of sacrificing liquidity for staking benefits. Traditionally, staking Bitcoin required locking up assets, rendering them unavailable for other uses. With LstBTC, Bitcoin's value is preserved while simultaneously offering staking advantages. Rines asserts that LstBTC will empower stakers to transition from mere yield-bearers to active Bitcoin users, potentially establishing it as the dominant BTC DeFi asset.
Security and Management
LstBTC operates on a multi-sig setup on the Bitcoin network, managed by multiple entities and subject to security audits. While this method is standard in many established protocols, it introduces additional parties into the process compared to directly holding Bitcoin.
Growing Interest in Bitcoin Financial Products
The launch of LstBTC coincides with a rising interest in Bitcoin-based financial products. Rines highlights that Bitcoin has become the center of the crypto industry, with chains and projects returning to it as a focal point. Notably, this is not the first attempt at liquid staking for Bitcoin, as projects like Stroom Network have previously explored similar concepts.
Stay tuned as the world watches how LstBTC will shape the future of Bitcoin and DeFi!
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