Hello everyone, I am Xingchen, and today I want to talk to you about a project I have been following closely recently, Lorenzo Protocol, and the value capture logic behind it.

Recently, the Bitcoin ecosystem's popularity has been evident to all, with various L2 projects emerging one after another, leaving many people dazzled. But amidst all this noise, I believe the path Lorenzo is taking is particularly worth discussing.

To put it simply, what is Lorenzo doing? It is re-staking the liquidity of Bitcoin.

I know it sounds a bit complicated. In simple terms, the Bitcoin you have idly sitting around could previously only wait to appreciate in value or be used as collateral for loans. Now, through Lorenzo, you can stake your BTC and receive a derivative asset certificate called stBTC in return. This process is secured by the star project Babylon, ensuring maximum reliability.

Here comes the key point: the stBTC you receive is not a dead certificate; it is alive. You can continue to participate in various DeFi activities in the Lorenzo ecosystem, and even more Bitcoin L2s in the future, such as providing liquidity, lending, etc., allowing your Bitcoin assets to generate profits on their own.

This solves a huge pain point in the Bitcoin ecosystem: hundreds of billions of dollars in Bitcoin assets are mostly dormant. What Lorenzo aims to do is to wake this sleeping giant.

Lorenzo's ambitions go beyond this. Its ultimate goal is to become a Lego factory for Bitcoin L2, which is its proposed L2-as-a-Service. In the future, other project parties that want to launch their own Bitcoin L2 will not have to start from scratch; they can directly use the modular tools provided by Lorenzo to build easily.

This is the part that excites me the most. What it creates is not a single chain but a platform for creating chains. It’s like during the gold rush, the most profitable ones were not the individual prospectors, but those who sold shovels and jeans. What Lorenzo wants to be is that shovel seller.

Alright, after all this groundwork, we finally come to today's protagonist, BANK.

BANK is the governance and utility token of the Lorenzo ecosystem. Many might think that it’s just a protocol token, how much imagination can it have? But if you understand the layout of Lorenzo that I mentioned above, you will realize that the value of BANK is deeply bound to the prosperity of the entire Lorenzo ecosystem.

It can be understood this way: the Lorenzo ecosystem is a fertile land that is being cultivated, and BANK is the capture device for all future value in this land.

The larger the scale of stBTC in the ecosystem, the more Bitcoin assets are activated.

The more L2s built on Lorenzo's technology, the larger the application scenarios and user base of the entire ecosystem.

The more frequent the transactions on these L2s, the more protocol revenue generated.

And all this growth will ultimately be empowered to BANK through some mechanism, such as protocol revenue dividends, governance voting rights, core fuel for applications within the ecosystem, etc. Every expansion and every success of the Lorenzo ecosystem injects new fuel into the BANK engine.

Therefore, to assess the value of BANK, one must not only look at it in isolation but also at the growth potential of the entire Lorenzo ecosystem. It is not an isolated token; it is the concentrated equity of the entire Bitcoin re-staking and L2 service platform.

Of course, any new thing comes with risks and uncertainties. Lorenzo's mainnet has not yet gone live, and the ecosystem is still in a very early stage. But it is precisely because it is early that it is full of imaginative space. In my view, focusing on BANK is more like investing in the future possibilities of a Bitcoin financial ecosystem.

I am Xingchen, continuously sharing my observations and thoughts on Web3 with you.

Disclaimer: The content of this article is based solely on personal observation and thought and does not constitute any investment advice. The risks in the crypto market are extremely high. Please conduct thorough research before making any decisions and take responsibility for your own investment actions.@Lorenzo Protocol #LorenzoProtocol $BANK