Exploring the New Potential of BTCFi | How Core's Dual Staking Mechanism Impacts the BTC Ecosystem
TechFlow Selected TechFlow Selected
Exploring the New Potential of BTCFi | How Core's Dual Staking Mechanism Impacts the BTC Ecosystem
As BTC prices continue to reach new highs and the Bitcoin ecosystem's technology steadily improves, BTCFi is poised for a surge in growth over the next six months.
Navigating Web3 tides with focused insightsHost: Joe Zhou, Deputy Chief Editor of Foresight News
Guests: Chanel, Core Contributor at Core DAO; Alvin Hung, Founder of Crypto Wersearch (Daily Coin Research); Alice Du, Product Director at Cactus; Jademont, Founder of WaterDrip Capital; Ningning, Independent Researcher; Catherine, Ecosystem Partnership Lead at Solv Protocol
Host: Could each of the six guests briefly introduce yourselves?
Chanel: I'm Chanel, primarily responsible for ecosystem growth in the Chinese-speaking and Asia-Pacific regions for Core. Recently, with the mainnet upgrade of Core, I'm excited to be here to share our perspectives on BTCFi.
Alvin Hung: I'm Alvin Hung from Daily Coin Research. We run a website offering project analysis across various crypto sectors, and we've also launched a Telegram community.
Alice Du: I'm Alice from Cactus. As a compliance-focused custodian service targeting institutional users, Cactus was among the first wallet providers to support Core’s dual staking, delivering secure and convenient BTC staking experiences to users right away.
Jademont: Hello everyone, I'm Jademont, founding partner at WaterDrip Capital. There have been many recent developments in the BTC ecosystem, and I look forward to sharing more during this discussion.
Catherine: I'm Catherine, a partner at Solv Protocol, mainly handling ecosystem growth. Solv is a multi-chain Bitcoin staking platform that has partnered with over a dozen blockchain networks and built Bitcoin liquidity pools—including a restaking pool with Babylon. We also have product-level collaborations with Core.
Host: What are your latest thoughts on the BTCFi market?
Chanel: Currently, BTC holders are seeking more on-chain yield opportunities—many Bitcoin projects have emerged under this premise. The non-custodial Bitcoin staking launched by Core in April achieved strong results. Our goal is to enable all participants to stake Bitcoin with minimal risk and earn yield. Through discussions with institutions, partners, and communities, we’ve seen growing expectations for more yield-generating opportunities within the Bitcoin market. We’ve upgraded two products: first, non-custodial Bitcoin restaking—after staking BTC, users can further restake into Core, increasing their yield potential and overall APY. Second, we’re about to launch LSTBTC, allowing users to restake their staked Bitcoin into other protocol layers for additional earning opportunities.
Alvin Hung: While much of the market attention this cycle has focused on memes, we’ve been researching the Bitcoin ecosystem since early this year. Merlin sparked the first wave of activity in the Bitcoin ecosystem, giving rise to new assets like inscriptions, runes, and NFTs. Later, Babylon ignited interest in BTC restaking—we published several summary articles on Babylon. Among the top 30 blockchains by TVL, seven are BTC-related ecosystems. Although Bitcoin isn’t currently the hottest ecosystem, it carries significant weight. Both large BTC holders and institutions remain active participants.
If you haven’t held Bitcoin this year, you’ve likely missed out. Bitcoin is clearly the best-performing major asset in this market. Governments and large corporations alike are adopting strategies to accumulate Bitcoin—partly influenced by MicroStrategy. As Bitcoin’s price continues to reach new highs, interest in BTCFi will naturally rebound. Sui and Aptos may be standout public chains recently, making solid progress in DeFi. Sui focuses more on lending and derivatives, while Aptos is beginning to see BTCFi projects emerge. Users and capital from these Move-based ecosystems are expected to transition into the upcoming Movement network. For retail investors, BTCFi isn't the top priority—many prefer chasing short-term yield protocols. But mid-to-long-term investors and existing BTC holders are actively exploring on-chain yield opportunities. Even players from the EVM ecosystem are now integrating various BTCFi protocols.
Jademont: Recently, we’ve discussed BTCFi with Western institutions. First, the BTCFi sector differs from Ethereum’s DeFi due to different participant profiles. Over the past year, Bitcoin’s price rose roughly threefold, but MicroStrategy’s stock surged 14x. MicroStrategy evolved from simply hoarding Bitcoin to announcing plans for BTCFi—leveraging its stored BTC in DeFi-like applications. If more players of this caliber enter, BTCFi will differ fundamentally from previous smart contract or Ethereum-based ecosystems. Galaxy, for example, has expanded operations to Hong Kong and is heavily investing in BTCFi, managing substantial BTC assets and aiming to offer value-added services within the BTC ecosystem.
Second, let me touch on the necessity of BTCFi development. Have you considered the biggest crisis in crypto once Bitcoin rises? Or rather, what’s Bitcoin’s greatest risk today? This risk is increasingly overlooked, especially on Chinese Twitter. The issue is that the Bitcoin network is becoming less secure. Bitcoin’s security relies on miners. We know there's a theoretical 51% attack risk—if you control 51% of the network’s hash power, you could manipulate specific transactions. Note: controlling 51% hash power doesn’t mean owning all 21 million Bitcoins. Roughly $15 billion worth of mining hardware secures the network. When Bitcoin’s market cap was lower—say under $1 trillion—a single transaction rarely exceeded $10 billion. At $30k BTC, the network’s value was around $60–70 billion, but attacking it required over $100 billion in mining equipment—making such an attack economically irrational. Hence, Bitcoin was relatively secure. But now, with Bitcoin near $90k—and potentially rising to $100k, $200k, or even $300k—the value of mining hardware hasn’t increased proportionally. It remains around $100 billion. So, spending $100 billion to attack a network now worth $180–200 billion becomes more feasible, increasing systemic risk. How do we make Bitcoin safer? Simply put: increase miner income. More on-chain yield and activity incentivize deploying more mining hardware, raising costs and reducing attack feasibility.
Many ask if BTC L2s and BTCFi are just copying Ethereum. Within the Bitcoin community, Ethereum’s protocols aren’t highly regarded. The drive to build the BTC ecosystem stems from a desire to protect Bitcoin itself. BTCFi isn’t optional—it’s essential. With more large players entering and higher security demands, BTCFi’s future is exceptionally bright.
Ningning: I’m Ningning, currently an independent researcher. Previously, I worked on investment research and token listings at TRON. I’m now involved in a BTC L2 staking project backed by Western capital. What convinced me was the backing of a U.S.-listed mining company—likely because they recognize Bitcoin needs applications generating fee revenue to sustain the network. The Bitcoin halving occurred over half a year ago, and the next one looms. If Bitcoin’s value doesn’t continue increasing to offset rising miner costs—which grow exponentially—we face a problem. If hash power growth fails to keep pace with network value, hash rate growth slows, triggering market panic. However, we still have a 4- to 8-year window before this becomes critical.
That said, current market attention is completely absorbed by memes and Bitcoin’s price surge. Not only the Bitcoin and Ethereum ecosystems, but even previously hot prediction markets, are now sluggish.
Some argue BTC L2s aren’t viable, and the market is indeed in a relative trough or bottleneck. But I view this as a long-cycle phenomenon. Despite low current interest, I see many partners and developers actively building BTC L2 infrastructure. For instance, Babylon’s data growth remains strong—though limited in scale and market impact due to current conditions.
This industry thrives on cycles and rotation. By the time the cycle turns, this foundational infrastructure may be far more mature, leading to explosive growth.
Host: How did LSTs (Liquid Staking Tokens) evolve on Ethereum, and how might their path differ in the BTCFi space?
Chanel: The appeal lies in maintaining liquidity after staking, then using that liquidity to earn additional yield—that’s the magic of DeFi. Core’s upcoming focus is launching an LSTBTC product to preserve on-chain liquidity for more users.
Alvin: Before restaking emerged on Ethereum, EigenLayer already had $15 billion in value, mostly from liquid staking—one of the earliest protocols to pioneer it. LST innovation is fascinating. Some DeFi projects in this cycle use LSTs as collateral for lending and derivatives. Similar applications may arise in BTCFi, boosting utilization and circulation of staked or restaked assets. This is something BTCFi protocols must consider. In the future, deeper integration between DeFi and AI agents may emerge, offering opportunities across all ecosystems—an evolution I’m eager to see.
Jademont: We see a real opportunity in the Bitcoin ecosystem. Today, multiple BTC assets participate in staking or restaking protocols—a trend unseen in the last bull run or two years ago. Back then, only WBTC existed. Now, we count at least five or six—TBTC, FBTC, solvBTC, and even BTC on Lightning Network, often overlooked. With Bitcoin nearing $100k, most EVM chains are underperforming due to insufficient new capital inflows and too many competing options. Retail capital is limited—PvP dynamics push projects to a few hundred million at best, rarely beyond. Overall, the altcoin market stands at over $1 trillion. To lift the entire market, you need hundreds of billions—or trillions—in fresh capital. Retail alone can’t move the needle.
Traditional institutional capital now has many choices: buy ETFs directly, purchase Bitcoin spot, or invest in crypto-related stocks. Many U.S. crypto概念股 significantly outperform mainstream altcoins. Yet, altcoins have a new opportunity: wrapping native BTC into EVM-compatible BTC, then using it in DeFi for staking, lending, LP provision, or even selling to buy altcoins. This creates a vital on-ramp—people unable to buy altcoins directly can instead buy Bitcoin first, then swap into altcoins. If wrapped BTC scales to tens of thousands of BTC, it could significantly boost the altcoin market, channeling capital effectively.
Host: After launching SolvBTC.CORE, what are your visions for Core chain’s further development?
Catherine: For Solv, we’re recipients of wrapped Bitcoin assets, so we consider accepting assets beyond wrapped BTC. The competitive landscape is interesting—cBTC began issuing a month after negative news surfaced, pursuing a multi-chain deployment strategy. Decentralized alternatives like TBTC have also gained traction, challenging WBTC’s former dominance. We’re also seeing exchanges planning their own wrapped BTC offerings.
But we face the same challenge as centralized exchanges issuing wrapped BTC: no truly profitable business model. On-chain, it’s a public good—unmonetizable.
When discussing with cBTC, we hoped for support, but internally they lack resources—they provide the service freely, generate no revenue, and earn only 1% lending interest, making it barely worthwhile. Thus, these wrapped assets heavily depend on DeFi-savvy protocols. For example, being accepted by Solv transforms an asset from 1–2 use cases into one with 20+ applications and yield generation. Beyond solvBTC, we now offer four LSTs for user selection. LSTs themselves are highly composable assets.
Jademont: Wrapped BTC isn’t necessarily unprofitable—just not yet. Once scale increases, profitability follows. Let me highlight a new trend: Ethena, which blends CeFi and DeFi. More BTCFi projects are adopting Ethena’s model—wrapping BTC via custody, then deploying it in yield-generating strategies while ensuring principal safety. This can be profitable. It’s a platform mindset: acquire wrapped BTC, offer wealth management or value-added services. For example, generate 10% yield, distribute 8% to users, retain 2% as profit.
Host: After the Fusion upgrade, Core introduced Bitcoin + CORE dual staking. Cactus, as a Core institutional partner, what prospects do you see in dual staking?
Alice Du: Fusion is today’s major highlight, introducing new use cases. We immediately integrated with institutional custodians supporting dual staking. We view Core’s dual staking as a powerful innovation. Core natively supports non-custodial BTC staking via Bitcoin’s time-lock mechanism—users enjoy yield without compromising asset security. Additional staking yields extra rewards.
BTC dual staking attracts more projects to the Core ecosystem. As native staking progresses, CORE’s price stabilizes, creating a virtuous cycle where every participant benefits long-term. When institutional users seek high returns through staking, they need secure tools and channels. As a professional custodian, Cactus meets the highest industry standards in private key custody and usage—providing address verification, whitelist checks, approval workflows, and hardware signing—to prevent blind signing and asset loss, enabling safe participation in yield generation.
Host: For BTC holders, security is paramount. What risks should investors watch for when participating in BTCFi projects?
Ningning: Since Bitcoin cannot natively deploy smart contracts or support mutability, transferring BTC from the main chain to L2s or other chains involves complex mechanisms. Solutions include centralized custodial wallets, enterprise-grade multisig wallets, MPC, various cross-chain bridges, and bridgeless approaches. Although WBTC, the dominant player, faced a trust crisis, it clarified the issues and remains adopted by Aave. From an industry perspective, many dislike monopolies—there’s strong demand for a more decentralized, chain-secured wrapped BTC asset.
For institutions or whales, native custodial solutions are preferred. Emerging options like Babylon, EOTS, and Bitlayer’s BTVM cross-chain custody show promise, but require time to mature technically and gain broader understanding.
Chanel: Technical development today involves rigorous audits—far more careful than a year or two ago when vulnerabilities were common. Still, for large BTC holders seeking yield via cross-chain, not everyone accepts or can bear bridge risks. Even experienced on-chain users can’t assume zero risk. Let me elaborate on Core’s non-custodial staking.
Non-custodial means assets never leave the user’s wallet. Using time locks, users decide their lock-up duration, then contribute BTC to Core’s validator nodes in exchange for token rewards—creating yield potential. This model has won broad recognition from institutional partners. Additionally, code transparency and open-source practices are critical considerations for both developers and users.
Alvin: On-chain applications inherently carry risk. Once you move Bitcoin off exchanges to perform more actions on-chain, those actions introduce additional risks. Users must stay vigilant against phishing sites and common hacking tactics. Wallet theft via fake websites remains extremely common.
Jademont: For the BTC network itself, BTCFi brings only benefits, no risks. But for users, BTCFi does involve risk. Current BTCFi falls into two categories: one operating on the Bitcoin network, the other relying on third-party custody. Projects on the Bitcoin network—I know of two types. One is Babylon, led by Stanford professors, still not live but claiming to lock BTC on-chain in a decentralized way. The other uses smart-contract-like mechanisms to lock BTC directly on Bitcoin—DRClink. These projects carry smart contract risk, but given they’ve operated since 2021—over three years—without incident, they appear robust.
The second category uses custody models, which I further divide into two: custody by large centralized institutions, and multisig. Centralization doesn’t automatically mean insecure—if an institution has strong reputation or high cost of misbehavior, it can still be trusted. For smaller volumes, centralized custody works fine. But at scale, multisig is preferable. Multisig is an excellent solution, though design matters. If all three keys are controlled by one party, it’s unsafe. But now we have decentralized multisig solutions—e.g., a project using dynamic committees with dozens of private keys. Such systems are sufficiently decentralized to be considered secure.
Host: How will BTCFi evolve next?
Ningning: Two main trends in BTCFi: First, restaking to provide economic security for BTC L2s, oracles, and bridges, earning native staking rewards. EigenLayer proved this model, and it will replay in the Bitcoin ecosystem. Second, earning yield via Bitcoin lending. Unlike Ethereum, Bitcoin lacks native yield—ETH offers ~3% APY via staking, a capability Bitcoin lacks.
Chanel: Our dual staking aims to let users stake rewards into Core’s validators atop non-custodial BTC staking, fostering positive economic development. Beyond launching LSTBTC, we aim to attract more AVSs (Actively Validated Services) to Core, enabling broader on-chain applications via wrapped Bitcoin. Core targets not just retail, but institutions and miners—aligning with the broader Bitcoin community. The community is complex and diverse. Bitcoin’s value lies in bridging traditional and digital finance. Our strategy treats Bitcoin, traditional finance, and digital finance as an integrated whole.
Alice Du: Cactus is highly optimistic about BTCFi. Over recent years, we’ve observed BTCFi first emerging on centralized wealth platforms, followed by wrapped BTC entering DeFi protocols—this trend has intensified this year. The onset of explosive BTCFi growth will see a surge of financial activities built on Bitcoin’s base layer. We believe technological maturity will enable Bitcoin to enter more scenarios natively, serving as a foundational asset to build a more robust blockchain financial system.
BTCFi’s growth depends on large holders, institutions, mining pools, and hash power platforms—all core customer segments for Cactus. Their demand is strong—especially miners, who, post-halving, seek yield-generating methods without sacrificing BTC control. That’s why Cactus is actively expanding partnerships with communities like Core and Babylon, and promptly supported Core’s dual staking. Miners and large holders prioritize security—through our plugin wallet, staking can be performed via block explorers. We implement address validation, whitelist checks, audit mechanisms, and hardware signing to prevent blind signing and asset loss.
Alvin: The hardest part isn’t just building a good project—it’s gaining market attention. BTCFi’s ecosystem includes many institutions focused on yield, while retail interests differ. During Bitcoin’s first surge this year, new asset issuance models emerged—inscriptions, runes, BTC NFTs—fun cyclical phenomena, more engaging than simply staking via wallets for yield.
New assets will emerge in BTCFi beyond passive deposits. Future innovations may integrate BTCFi with AI, spawning novel applications and expanding use cases.
Jademont: I believe BTCFi is nearing its breakout moment, for several reasons. First, this bull market is driven by BTC and memes. Memes are PvP arenas with limited capital—despite massive gains, most projects cap out at a few hundred million, reflecting severe liquidity constraints. BTC, however, has deep liquidity. When people hold high-priced BTC and want to trade other assets, BTCFi offers the shortest path.
We’ve discussed this with foreign institutions: this cycle’s regulatory clarity and legitimacy allow previously “illicit” Bitcoin to re-enter circulation via wallets. Once users download BTC wallets, they encounter ecosystem features—perhaps Lightning for payments—making BTCFi well-positioned to absorb this traffic. Second, key BTC ecosystem projects are maturing technologically. For example, Lightning Network’s Taproot went live in July, with minor bugs now largely resolved. RGB’s off-chain computation and client-side validated smart contracts are also highly advanced. I expect leading BTCFi projects—including Babylon—to launch within the next quarter, or at most within six months. Recently, ICP’s BTC L2 also launched. These projects secured massive funding—tens of millions minimum. With ample capital and imminent token launches, momentum will build. I’m highly optimistic about BTCFi’s trajectory in the coming quarter.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Foresight News
