Does Bitcoin need liquidity staking to improve capital efficiency?

By Mikhil Pandey

Compiled by: Xiaobai Navigation coderworld

Introduction

This article is by Co-Founder and Chief Strategy Officer of Persistence LabsMikhil PandeyThe results of a “deep dive into the rabbit hole of today’s Bitcoin landscape” written by .

Through this article, Mikhil Pandey tries to lead everyone to understand the role of Bitcoin incryptocurrencyHe discussed his role in the cryptocurrency space, the current Bitcoin landscape, the role of BTC liquid staking, and where he sees things heading next.

Learn about Bitcoin

Is Bitcoin a store of value? The largest peer-to-peer payment network? The world's remittance system? Digital gold? A tool for hedging traditional finance? The first proof of work in historyBlockchain?

What exactly is Bitcoin? Which of the above describes Bitcoin? In short, I think it is all of them, and more.

Bitcoin is a layer 1Blockchain, was originally designed for the trustless and transparent flow of monetary value, the idea for which emerged during the 2008 global financial crisis.

驱动这一网络的原生数字资产BTC已经从我们这个时代最大胆的金融实验之一发展成为最大的加密货币。

Today, Bitcoin, both the network and the asset, has become a playground of finance, mechanism design, and hope.

• The smartest peopleMoving Bitcoin towards a more useful, capital efficient and programmable future

• The world’s largest institutions are offering BTC ETFs to provide exposure to ordinary people

• A new generation of builders are finding unique ways to utilize Bitcoin blockspace, including Ordinals, NFTs, BRC-20, Runes, Staking, and more

• Bitcoin network activity reaches all-time highand generate more value (fees) for miners than ever before

BitcoinXiaobai NavigationSomething for everyone. The best part is that BTC’s varying perceptions are a feature, not a bug.

Two pillars built on Bitcoin

To the public, Bitcoin is gradually transitioning from a “network” to an “ecosystem.” Recently, the ecosystem built on top of Bitcoin has seen exponential growth.

But this is not uncommon, exceptCommunityIn addition to network improvements, multiple stakeholders have attempted to build on top of Bitcoin. In fact, this was part of Satoshi’s vision.

Satoshi Nakamoto once said: “This design supports all kinds of possible transaction types that I designed a few years ago. Secured transactions, margin contracts, third-party arbitration, multi-party signatures, etc. If Bitcoin becomes popular, these are all things we want to explore in the future, but they all have to be designed at the beginning to ensure that they are possible later.”

Since 2012, there have been attempts to expand Bitcoin’s use beyond payments:

• Decentralized Domain Name Service (Namecoin)

• Wider asset representation (Colored Coins, MasterCoin, Counterparty)

• Through sidechains, Rollups andL2Expanding the Bitcoin network (Taproot, Stacks, Liquid Network, Merlin, Urbit, Lightning, bitVM, etc.)

• Expand BTC functionality (Memes, NFT, BRC-20, BRC-420) and revenue through Ordinals and Runes (Babylon,BounceBit, Stroom Network,Trustless Machineswait)

But where do these developments lead Bitcoin?Bitcoin Viewpoint ArticlesBest summed up:

• Making Bitcoin more programmable, solvingintelligentcontractand scaling limitations to deploy on the Bitcoin network

• Making BTC more capital efficient, building hyper-financialization with BTC

Where does BTC Liquid Staking apply?

Bitcoin is a proof-of-work network where miners contribute computing power to solve the mathematical puzzle of block production and are rewarded with new bitcoins.

So how did staking come to the market, let alone liquid staking? Let’s take a look at someBlockchainbasis.

Consensus involves the ongoing agreement on the state of the network (data, transactions, balances, etc.). While PoW relies on computing power (mining) to achieve and maintain network consensus, PoS includesSafetyThe concept of pledge. Staking involves lockingTokenParticipate in consensus and contribute to the overall networkSafetyMake contributions and receive staking rewards.

When we need to trust that another person/counterparty will behave well, we often set up a security deposit to guarantee good behavior. A typical example is a landlord collecting a security deposit from a tenant.

In short, PoS is driven by trust in the economic security of an asset. What’s better than an asset with billions of dollars of economic trust? And what’s better than Bitcoin?

通过“锁定”BTC，它的经济安全可以导出到几乎任何加密应用。想象一下一个世界，在这个世界中，金融应用包括各种形状和大小的区块链都可以利用BTC，为每一个应用增添活力和安全性。

Trustless BTC staking (hence liquid staking) opens up the possibility for a thriving BTC-dominated DeFi, making BTC more capital efficient. Money markets, stablecoins, economic security, insurance, and more. The applications are endless.

What is the future of Bitcoin?

One could argue that BTC is already capital efficient in terms of market cap growth, adoption, and premier store of value status among cryptocurrencies?

This brings us to the question: what exactly is capital efficiency? Wall Street defines it as “how effectively a company uses capital to operate and grow.” In this context, BTC is essentially sitting idle most of the time with retail holders, miners, and institutions.

This can be attributed to several factors:

• Lack of sustainable revenue opportunities

• Friction for risk-averse holders to “move” BTC

• Lack of institutional-friendly income products

• Unknown security risks of moving BTC off the Bitcoin network

• Opposition from some OG Bitcoin holders

Recently, the entire industry has been working hard to address the various obstacles mentioned above that BTC faces in order to unlock its liquidity and capital efficiency in the crypto world.

虽然比特币社区似乎有些分裂（这总是最好的），但要密切关注像比特币L2、最小信任BTC质押、Ordinals和Runes、VM等比特币生态系统的重要发展。

BTC Liquid Staking is more than just a saying. It’s coming and could determine crypto’s returns. With simple BTC-led financial products expected to bring much-needed liquidity and utility to today’s DeFi landscape, the future of Bitcoin has never been more exciting.

We’ve seen the exponential growth of Ethereum liquid staking and the subsequent burgeoning progress in on-chain finance. When the same thing happens to assets that first created the “crypto” asset class, one can only imagine the possibilities and the doors that open.

The article comes from the Internet:Does Bitcoin need liquidity staking to improve capital efficiency?

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