Key Points:
– The launch of the first Bitcoin-backed synthetic dollar, USDh, with a yield of up to 25% is imminent.
– Stacks, a Bitcoin layer-2 network, saw a record high of 122,497 active accounts in April, driven by increasing interest in Bitcoin DeFi.
– Zircuit Staking surpassed $3 billion in Total Value Locked (TVL) after a 65% month-over-month growth, allowing users to stake ETH, LSTs, and LRTs to earn Zircuit Points.
– The BTCFi sector, along with restaking and liquid restaking protocols, are gaining traction as alternative sources of yield in the DeFi space.
– Merlin Chain, with a TVL surpassing $1 billion, experienced significant growth by introducing SolvBTC to its ecosystem, attracting over 14,000 BTC in capital.
Details:
The highly anticipated launch of USDh, the first Bitcoin-backed synthetic dollar offering a yield of up to 25%, is on the horizon. Drawing inspiration from EthenaUSD on Ethereum, this yield is determined by Bitcoin futures funding rates and is expected to be sustainable due to the consistent demand for long leverage.
Meanwhile, Stacks, a Bitcoin layer-2 network, achieved a new all-time high of 122,497 active accounts in April, reflecting the growing enthusiasm for Bitcoin DeFi. At the same time, Zircuit Staking crossed the $3 billion TVL milestone after experiencing a remarkable 65% increase month-over-month. Users can stake various assets to earn Zircuit Points, which will later be transferred from Ethereum to the Zircuit mainnet. The imminent mainnet launch, coupled with collaborations with Ether.fi and EigenLayer, fueled Zirkut’s growth this month.
Looking ahead, restaking, liquid restaking, and BTCFi protocols are expected to maintain their momentum if the broader crypto market remains weak. These alternative yield-generating strategies have the potential to provide significant returns even in subdued market conditions by staking assets multiple times to amplify yields.
In the sentiment analysis, BTCFi, restaking, and liquid restaking protocols are solidifying their positions as viable options for generating yield in the DeFi sector. Their ability to preserve liquidity while offering competitive returns is seen as a key driver for their growth.
The BTCFi sector witnessed substantial expansion recently, with Merlin Chain leading the way by surpassing $1 billion in TVL. This growth, highlighted by a 240% increase during the period under review, propelled Merlin into the top 10 chains on DefiLlama. The introduction of SolvBTC, which attracted over 14,000 BTC in capital, played a significant role in Merlin Chain’s success. To incentivize participation, Merlin Chain and Solv launched a reward scheme offering Solv Points and $MERL tokens to active participants and major stakers.
SolvBTC, part of the Solv Protocol, provides a yield ranging from 5 to 10% through funding rate strategies, cross-exchange arbitrage, and other yield-bearing assets. Similarly to liquid staked tokens on Ethereum, SolvBTC is tradable on both decentralized and centralized exchanges, can be used as collateral for borrowing, or lent out on platforms like Avalon Finance on Merlin Chain.
The governance and operational decisions of the Solv protocol involve a decentralized autonomous organization (DAO) and an advisory council. However, a considerable portion of SOLV governance tokens is allocated to early investors and the development team, giving them significant influence over governance decisions. Liquid restaking has emerged as a growing trend in the DeFi space, with a TVL exceeding $11 billion as of May 20th. Users can utilize liquid restaking protocols to stake assets multiple times across different chains, enhancing security and functionality while maintaining liquidity.
Staking on the Ethereum base chain offers APYs of 2-7%, and with liquid restaking protocols, users can further boost their yields by restaking tokens across multiple networks. While these strategies can amplify returns, they also introduce additional risks associated with smart contracts and interdependent DeFi investments.