At the end of the year, you open your account book and find that after a whole year of effort, your return rate is not even as good as that friend next door who just holds BTC. Doesn't that feel particularly heartbreaking? Especially in this uncertain market, simply hoarding coins is like holding cash without depositing it in the bank, watching the opportunity cost evaporate right before your eyes.
The problem is not that you are not working hard enough, but that you are not using the right tools. Today, from the perspective of an old construction worker, I will break down for you why the liquidity of the Lorenzo Protocol's re-staked token stBTC, especially in conjunction with its on-chain trading fund (OTF), may be the key to gaining an advantage over simple holders in the next cycle.
First, we must acknowledge that HODL is a good strategy, but it is not the optimal strategy. Bitcoin itself does not generate interest; this is its 'chronic issue.' Later, various methods emerged for wrapping BTC to earn interest on Ethereum, but the risks of cross-chain bridges and the trust issues of wrapped assets have always been a sword hanging overhead. Lorenzo is different; it is based on Babylon's native staking mechanism, allowing BTC to participate in staking directly at the mainnet level, enhancing security by an additional dimension. After staking BTC, you receive a liquidity certificate, stBTC, which is equivalent to turning your BTC from a 'dead asset' into 'living money' that can participate in other DeFi activities at any time.
But having stBTC alone is not enough; it only addresses the liquidity issue, and the source of income is relatively singular. The main highlight is Lorenzo's on-chain trading fund, which is OTF. You can think of it as an on-chain 'strategy supermarket.' Previously, complex strategies like quantitative trading and volatility arbitrage, which were only accessible to institutions, are now packaged into tokenized fund shares. You don't need to research how to operate; you just need to choose the OTF products you believe in and buy them with your stBTC or other assets. The execution of the underlying strategies and risk management are entrusted to a professional team. This model has lowered the threshold for professional asset management, allowing ordinary people to participate.
Of course, speaking of this, the word 'risk' must be mentioned. This reminds me of my experience last year, where I lost a sum of money in another re-staking project, the root cause being an insufficient understanding of the underlying AVS confiscation mechanism, thinking that returns were risk-free. There is no such thing as a free lunch; OTF is no exception. Its risks mainly include several aspects: first, strategy risk, where the fund manager's actions may also incur losses, leading to a decline in the net value of OTF tokens. Second, smart contract risk, as code vulnerabilities are a perpetual Damocles' sword. Third, transparency risk, although on-chain operations are relatively transparent, if the strategy involves off-chain components, we still need to trust the disclosures from the project party. Therefore, when selecting OTF products, one should not only look at expected returns but also study its strategy logic, historical performance, and management team carefully.
In summary, from simply hoarding coins to liquid staking, and then to participating in structured products like OTF, this is an evolutionary process of continuously improving asset efficiency. It means we are no longer satisfied with passive price increases of assets but are starting to actively seek ways to manage assets and earn active returns. Through the combination of stBTC and OTF, Lorenzo is essentially providing BTC holders with a toolbox for transitioning from 'savers' to 'investors.' This reflects that the entire industry is moving from reckless speculation to a more mature and refined era of asset management.
Besides Lorenzo's OTF, what other protocols have you come across that can make idle assets work? When choosing such products, do you prioritize returns or the transparency of the team?
Disclaimer: This article represents only personal views and does not constitute any investment advice. The risks in the crypto market are significant; proceed with caution.
