@0xMaiaa @BeWaterOfficial

TL; DR

• In terms of issuance and application of BTC-pegged assets, centralized wrapped BTC continues to be the dominant force in the market, accounting for over 75% of total assets. Meanwhile, BTC LSTs such as LBTC and SolvBTC.BBN have seen a notable increase in recent months, coinciding with the launch of Babylon. These LSTs have become a significant player in the BTC-pegged asset market, with the total market size of BTC LSTs now reaching 25.6K BTC. Driven by the demand for yield on underlying assets, the BTC liquid staking and points derivative markets are beginning to emerge as new growth areas within the BTCFi sector.
• @Coredao_Org is a BTC-driven L1 that offers users stable returns through its non-custodial staking solution and dual staking mechanism. Its TVL has grown by 4757.9% in six months, reaching $581M. Core's growth strategy encompasses the following key elements: (1) Introducing substantial and growing BTC derivative assets to enhance liquidity, (2) Launching complementary native protocols and the quick integration of key BTCFi projects, and (3) Implementing an incentive structure supported by $CORE airdrops and market performance, further boosting engagement and asset inflow.
• @build_on_bob is a hybrid L2 combining BTC and ETH. Its one-click liquid staking service has attracted significant assets, making it a key entry point for BTC liquid staking. The current TVL of BOB is $64.5 million, the majority of which was contributed by $WBTC. The growth of BOB can be attributed to the following factors: (1) robust ecosystem partnerships that have expanded its application reach and market influence, (2) its bridging architecture that addresses liquidity fragmentation, and (3) capital inflows from institutions that have further driven ecosystem growth.
• @use_corn is a rising ETH L2 with a current TVL of $394.4M, laying the groundwork for its mainnet launch. Corn's growth has been driven by innovations in BTC LST yield derivatives, with $263M in assets locked across five pools launched in partnership with the Pendle protocol, representing 18% of the total BTC LST market.

During the wave of BTCFi narrative development in this market cycle, BTC and its derivatives have become central to ecosystem liquidity competition. The introduction of BTC scaling solutions and the rise of BTC LSTs are transforming BTC from a static store of value into an asset that can be used in more on-chain yield-generating scenarios, enhancing its potential for applications across the entire DeFi ecosystem.

Notable growth cases in BTCFi for the second half of the year include @Coredao_Org, @build_on_bob and @use_corn: Core is focused on leveraging large-scale BTC LST in the growth phase; Corn has worked with Pendle to quickly capture the incremental market with points derivative innovations; and BOB has attracted liquidity by offering a diverse ecosystem and on-click liquid staking services. These yield-driven strategies across ecosystems have significantly activated BTC asset liquidity.

1 Context

1.1 On-Chain Flow of BTC-Pegged Assets

The on-chain flow of BTC and its pegged assets can be structured into three layers:

• First layer: Native BTC
• Second layer: (1) Centralized custodial wrapped BTC (2) Mapped assets running on L2 and sidechains (3) Liquid staking BTC