1. Background of the cooperation and core events
On August 20, 2025, Bitlayer Labs, a pioneer of Bitcoin Layer 2 solutions based on BitVM technology, announced on the X platform that YBTC.B has been launched on Folks Finance. This integration is based on Folks Finance's previous announcement of its collaboration with Bitlayer Labs and Chainlink's cross-chain interoperability protocol (CCIP) to realize cross-chain lending functionality for YBTC.B on the Avalanche network.
2. Characteristics and functions of $YBTC.B
• Basic attributes: $YBTC.B is a token pegged 1:1 to Bitcoin, which can be minted by locking Bitcoin in Bitlayer's bridge. It can be used in DeFi protocols across multiple ecosystems such as Avalanche and Ethereum.
• Core advantages: With the help of BitVM technology and Chainlink's CCIP, $YBTC.B achieves cross-chain liquidity, minimizing trust risks through cryptographic proofs, allowing Bitcoin holders to obtain liquidity and participate in advanced yield strategies without selling their assets.
3. Introduction of relevant participants
• Bitlayer Labs: Invested by several institutions including Polychain Capital and Framework Ventures, it developed the first Bitcoin Layer 2 network based on BitVM. This technology supports Turing-complete Bitcoin contracts, utilizing optimistic verification to ensure security comparable to Bitcoin's Layer 1 while achieving real-time execution and DeFi interoperability.
• Folks Finance: A cross-chain DeFi platform that supports lending, staking, and trading across multiple networks such as Avalanche, Ethereum, and Polygon. Following this integration, users can deposit $YBTC.B to receive incentives, use it as collateral for loans, or participate in yield farming, unlocking over $1 trillion in Bitcoin liquidity for DeFi applications.
4. Market response and significance
• Market response: The announcement from Bitlayer Labs has garnered some attention, with 34 likes, 5 shares, 3 replies, and over 7600 views. Online reactions are positive, viewing this as a new piece of the puzzle for Bitcoin applications, marking a significant step in the Bitcoin DeFi space, which will drive innovation in Bitcoin's usability. Additionally, there is a similar integration through Momentum Finance on the Sui network, highlighting Bitlayer's role in bringing idle Bitcoin into efficient DeFi pools.
• Significance: This launch is a key development in the BTCFi (Bitcoin Finance) space, addressing the limitations of Bitcoin in the DeFi sector due to its non-programmability.
Compared to centralized Wrapped BTC, the YBTC.B based on BitVM bridging reduces risk and promotes the development of low-trust alternatives.
In the future, as Bitlayer continues to raise funds (recently securing $9 million in a Series A expansion), it may expand to more chains and protocols, or even integrate with mining pools or launch advanced yield strategies, prompting Bitcoin to become an active participant in the DeFi space, enhancing liquidity and innovation across ecosystems.
Currently, the total locked value in the YBTC.B treasury is approximately $350 - $360 million, with an initial annual yield of 1%.
