Bitcoin Liquid Staking Gains Traction with Lombard's $BARD
Liquid Staking on Bitcoin: Lombard Finance Leads the Charge
Bitcoin, traditionally viewed as a store of value, is increasingly being integrated into decentralized finance (DeFi) through liquid staking. This unlocks the potential of trillions of dollars in idle BTC, enabling yield generation and composability.
Liquid staking allows users to stake their crypto assets to secure a network and receive a liquid, tradable token representing their staked assets. This token can then be used within DeFi while the original assets continue to earn staking rewards.
Lombard Finance is emerging as a key player in the Bitcoin liquid staking space, primarily through its LBTC token. LBTC is backed 1:1 by BTC and earns yield through staking.
How LBTC Works
When BTC is deposited into the Lombard protocol, the underlying coins are staked, primarily through Babylon, a protocol for trustless Bitcoin staking. Users receive LBTC in return, which can be deployed across DeFi ecosystems while the original Bitcoin earns rewards.
LBTC can be used for lending, borrowing, and liquidity provision across protocols such as Aave, Morpho, Pendle, and Ether.fi. Its interoperability across Ethereum, Base, BNB Chain, and other networks ensures Bitcoin can participate in a multi-chain DeFi environment.
Bitcoin DeFi: A Multi-Billion Dollar Opportunity
Lombard and other liquid staking projects aim to mobilize Bitcoin's dormant liquidity, channeling its vast market cap into on-chain capital markets, thus fostering Bitcoin DeFi.
While Ethereum’s liquid staking market boasts a market cap of approximately $38 billion, the Bitcoin LST sector is still nascent, with a total market capitalization around $2.5 billion. Lombard’s LBTC accounts for roughly $1.4 billion of that, or around 40% of the market.
Introducing Lombard's $BARD Token
Lombard has announced the creation of the Liquid Bitcoin Foundation and its native $BARD token, alongside a $6.75 million community sale. This development is designed to further solidify its position in the Bitcoin DeFi landscape.
The Foundation will act as an independent steward of the protocol, funding research, grants, and education. $BARD will serve as the utility and governance token, allowing holders to stake, vote on proposals, and access new products. Platforms like Codeum offer security audits that are essential for newly launched tokens and protocols to ensure user safety.