To be honest, recently, Azu himself has been startled by the "de-pegging". During several market crashes, certain stablecoins and LSTs dropped directly to 0.95 or even 0.9 in the secondary market. Some protocols claim a 1:1 redemption, but in reality, the chains either have long queues or simply shut down withdrawals. It's no wonder that more and more people are asking me this question: Lorenzo's stBTC and enzoBTC product lines, if one day the market goes out of control, can they truly uphold the red line of "each token is backed by 1 BTC"?
First, let's be clear: in Lorenzo's design, "1:1 redeemable BTC" is not a marketing slogan, but the core principle around which the entire BTC product architecture revolves. stBTC is defined as a "principal certificate" for Bitcoin liquidity staking. You stake BTC through the Babylon / Lorenzo pathway, and after confirmation, the system mints stBTC at a 1:1 ratio, representing your right to reclaim that BTC in the future; enzoBTC is the official wrapped BTC standard, which does not generate income itself but serves as "Bitcoin cash" across 20+ chains, also claiming to be exchangeable for native BTC on a 1:1 basis. What about the earnings? They are all split into separate yield tokens YAT and strategic products, deliberately distancing themselves from the two "principal shells" of stBTC / enzoBTC.
Here is a key little trick: Lorenzo separates 'principal' and 'interest' forcefully. stBTC and enzoBTC only represent the ownership of individual BTCs. All earnings generated from Babylon staking, DeFi strategies, and OTF structures are distributed in the form of derivatives like YAT. This means that if there are issues with the underlying chain or strategy, the protocol can theoretically first sacrifice the earnings side (lowering rewards, cutting part of expected returns) to try to preserve the principal's 1:1 lifeline, rather than letting 'earnings realization' and 'principal safety' blow up together. Additionally, stBTC itself is an LPT (Liquid Principal Token), more like a 'bond certificate' that can be redeemed for BTC at maturity, rather than an interest token that inflates itself, which is actually crucial for pressure resistance design.
Looking deeper, you will find that 1:1 is not just based on words, but on traditional methods like 'full reserves + strict mint/burn.' BTC itself is either in the Babylon staking system or in multi-signature cold wallets managed by experienced custodians like Cobo, Ceffu, and ChainUp, responsible for the specific staking and management; the issuance of stBTC is tied to this staking path, while enzoBTC is designated as the only official wrapped standard, with all minting and burning needing to correspond to the actual BTC reserves, and cannot just 'create coins out of thin air.' Furthermore, enzoBTC's multi-chain issuance operates through an 'omnichain gateway': total supply is accounted for uniformly in this gateway, and the increases and decreases on each chain must refer back to this master account to avoid isolated over-issuance on any one chain.
The true test of the architecture is in pressure scenarios. The first type of pressure is actually the most common: market prices first encounter issues, but the protocol itself is still functioning well. For example, if stBTC or enzoBTC experiences a 2%-3% discount compared to BTC on a certain DEX, in such cases, the protocol uses economic tools rather than slogans— as long as the official redemption channel is still open, you can buy stBTC / enzoBTC at a discount, then turn around and redeem BTC at 1:1 from the protocol, with the price difference becoming an arbitrage opportunity. For professional arbitrage players, this is a standard 'discount ticket'; as long as gas and time costs are manageable, they will be willing to enter the market and help you pull the price back to 1:1. In other words, the 'pressure resistance' here is not mysterious, relying on available redemption channels + arbitrage capital to naturally repair the discount.
The second type of pressure is on the liquidity level: especially with enzoBTC running on over 20 chains, it's inevitable that the pool on a certain chain may be relatively thin, and encountering panic selling will result in larger discounts. Lorenzo's approach is to treat 'global reserves' and 'single-chain limits' separately: total supply is tied to BTC reserves, and all issuance and destruction go through an omnichain gateway; if the liquidity on a single chain is too vulnerable during stressful moments, that channel can be temporarily throttled or even closed, directing liquidity to thicker main paths (like Ethereum, BNB Chain). For users, this might feel less 'plug-and-play,' sometimes requiring more detours or even waiting in line, but the overall integrity of the 1:1 reserves can be preserved, which is equivalent to shutting down the most pressured on-ramp on a highway to prioritize ensuring the main road doesn’t blow up.
The third type of pressure is even more extreme: issues arising from the cross-chain layer / routing itself, such as bridge attacks or forced closures of certain routes. In such cases, the protocol documents envision 'isolation first, then redemption'—first freezing the problematic channel to prevent risks from spreading from one chain to the entire network, and then ensuring that the redemption functions on the mainnet and healthy channels continue to operate. This means that when a certain side chain is on fire, priority is given to ensuring that the BTC in the total warehouse has not been affected, and then evacuating people from the smoke-filled stairwell to a smoke-free exit. For players, this means that during the worst days, you might need to accept restrictions like 'can only redeem on certain chains' or 'waiting in line and limits,' but as long as the reserves are genuinely stored at 1:1, that path for redeeming BTC will logically not be hollowed out.
The most complex layer is the one tied to Babylon—this is the restaking risk of 'BTC as collateral.' The BTC behind stBTC is essentially being used to provide security for a bunch of PoS / L2 projects that depend on Bitcoin's security. In extreme cases, these networks could face penalties (slashing) or significant rewards reductions. Lorenzo's official narrative is that the 1:1 redemption rights of stBTC strictly correspond to the principal BTC; the risks are primarily reflected in the earnings side (YAT, reward flow), and only in extreme 'disaster-level' scenarios could losses potentially be shared among participants. To ensure this scenario remains largely theoretical, they designed it with an 'institutional style' from the outset—setting limits on staking strategies, carefully selecting validators and partners, diversifying across multiple PoS destinations, while using treasury and insurance pools as buffers instead of relying on high-risk AVS accumulation for all earnings.
In addition to algorithms and mechanisms, Lorenzo has also built a layer of safety nets around 'people' and 'audits.' The custody of BTC is handled by institutions like Cobo, Ceffu, and ChainUp that have been managing cold wallets and multi-party custody for many years. Staking and delegation use multisignature and Staking Agent structures; on the contract side, they engaged CertiK and Cantina for audits, with the former giving the protocol and enzoBTC module a safety rating above 90, and the latter specifically monitoring OTF contracts, NAV updates, and profit routing logic. These elements should not be considered as 'risk-free' endorsements, but they at least indicate that this is not a makeshift platform that simply copied a contract to go live, but a BTCFi platform aligned with traditional financial practices of 'custody + audit + risk control.'
Of course, Azu won't sugarcoat it either. The three words '1:1' carry many misunderstandings that need to be unpacked. For instance, the gas on the Lorenzo chain is paid in stBTC, and the actual stBTC received for staking one BTC will have a small fee deducted, so the amount you hold may not match the exact BTC amount initially deposited, but the underlying BTC principal remains prepared at a 1:1 ratio. Additionally, the price of stBTC in the secondary market may not always exactly equal BTC, often showing a slight discount due to 'interest rate expectations,' similar to how a bond with a coupon fluctuates with interest rate changes. As a packaging layer, enzoBTC's price usually stays close to 1:1, but on chains with very thin depth, it may briefly deviate. None of this means the protocol is lying; it simply reminds you that 1:1 refers to 'redemption rights and reserves,' not 'every moment all market conditions are perfectly aligned.'
From the user's perspective, if you want to seriously examine the pressure resistance of stBTC / enzoBTC under stress scenarios, Azu would suggest breaking this down into several specific actions rather than just saying 'I believe / I don't believe.' The first action is to confirm the official redemption path: which chains can you currently redeem BTC directly from stBTC / enzoBTC, how are the fees, wait times, and limits written, and run a small transaction to ensure it's not just nice on paper. The second action is to learn to look at discount and arbitrage space: on days of significant declines, if the stBTC discount on a certain chain exceeds 1%-2%, ask yourself two questions—Is the protocol's redemption channel still open? Is the profit positive when redeeming BTC from the current discount, deducting fees and time costs? If so, the market will naturally bring in capital to balance the price difference, and you won't have to panic sell your tokens at the bottom. The third action is to keep an eye on announcements and governance proposals: if you encounter issues like cross-chain halting, withdrawal speed limits, or adjustments in profit distribution, the official will definitely issue announcements or on-chain governance. These are the key signals that determine whether '1:1 is just written in the white paper or will be seriously maintained.'
As for position allocation, I personally draw this line more conservatively than most. My approach is to split the BTC position into three layers: cold storage faith position, cash flow position, and aggressive position, with only part of the middle layer participating in the Babylon + Lorenzo structure; within that portion, I will also carve out a specific segment for stBTC / enzoBTC trial positions, preferring to gradually increase rather than going all in from the start. Because for me, 1:1 is not a mantra of 'go all in with closed eyes,' but a boundary line of 'am I willing to entrust more principal to this structure.' As long as you have this line in mind, combined with the aforementioned checks, during extreme market conditions, you will at least not make the worst decisions in those emotionally charged moments on the highest K-lines.
To bring the conversation back, Lorenzo's pressure-resistant design on stBTC / enzoBTC can be summed up in four words: separation of principal and interest, full reserves. It relies on strict reserve management, available redemption channels, and multi-layered risk control and governance to transform '1:1' from a marketing slogan into an institutional goal that can be repeatedly verified by the market and extreme market conditions. This does not mean that risks disappear, but at least it gives BTC holders a relatively clear path—within the risk boundaries you are willing to accept, allowing a portion of BTC to no longer be just a static position but to earn interest and liquidity benefits of this era in a controlled and logical manner.
