Twitter Space Summary: BITCOIN Staking Breakthrough

Moderator:

Jenny — Marketing Lead at HTX Ventures

Speaker:

Matt Marshall — Head of Product at Lombard

Spadaboom — Co-Founder at Corn

Jenny: Today, we’ll be talking about the latest developments in Bitcoin finance, particularly in Bitcoin restaking and additional DeFi products.

Let me provide some context on why we’re focusing on DeFi and Bitcoin today. For a long time, Bitcoin, as the leading cryptocurrency, had primarily two use cases: holding as a store of value and transactions. Now, with the integration of DeFi, we’re seeing a third use case — Bitcoin staking, which is a core part of BTCFi. Let me post some data for reference. You can see that BTCFi has seen significant growth this year, led mainly by the Babylon ecosystem towards the end of the year.

We’re really excited to dive into why now is the right time for restaking, why it’s important for the Bitcoin ecosystem, and what other DeFi services may evolve from this.

To get started, could each of you give a brief introduction about yourselves, your projects, and explain the niche your project fills within the broader Bitcoin ecosystem?

Matt: Hi everyone, I’m Matt, Head of Product at Lombard. At Lombard, we’ve built LBTC, the leading liquid staked token for Bitcoin, backed one-to-one by Bitcoin. This offers users the opportunity to earn yield on their otherwise idle Bitcoin. Our platform is built on Babylon as an economic security marketplace, which gives us a mechanism for near-native Bitcoin staking. We’re really excited about the opportunities this opens up for us. We launched two months ago and currently have over 10,000 Bitcoin deposited in our protocol, amounting to approximately $750 million. We’re aiming to establish ourselves as a foundational piece of DeFi. Thanks for having me.

Spadaboom: Hello, everyone. Chris in the real world, Spadaboom on X, and Corn Daddy among my fellow farmers. I’m one of the co-founders of Corn. Matt, good to see you again, buddy. As many of you might know, I’m a big fan of Lombard. For those unfamiliar with Corn, we like to say we are the “better place to use your Bitcoin.” It’s a network dedicated to fostering an ecosystem of applications that enable people to put their Bitcoin to productive use. Instead of just holding Bitcoin, we’re helping users earn a base yield, which is why we’re excited about Babylon’s staking initiatives.

We launched from stealth two months ago, and we’ve already attracted almost $500 million in Bitcoin assets in our pre-network launch. We’re anticipating a network launch by the end of the year. Most of the deposits are from active DeFi users through our integration with Pendle and collaborations with partners like Lombard and, of course, on the back of Babylon.

Jenny: Amazing! So what’s the main reason that drives both of you to focus on BTC staking and BTCFi in general? There are so many other areas that you could have chosen to build on.

Spadaboom: For me, it’s pretty straightforward — Bitcoin is the biggest asset in the crypto space, and it should also be the biggest in DeFi. Just recently, I tweeted about Bitcoin dominance hitting a three-and-a-half-year high, at over 60%. The question for me is why it’s not one of the most used assets in DeFi. We’re at the beginning of what I call a “DeFi renaissance.” DeFi infrastructure has become mature, and I think Bitcoin is the key to bringing new liquidity into this space. We’re already seeing that happen with Lombard and Babylon — new Bitcoin liquidity isn’t just the same recycled capital moving from one hand to another; it’s genuinely new liquidity coming in. That’s what makes it so exciting.

I’ve been working for almost five years to bring Bitcoin into DeFi, and I think now the timing is absolutely right. People want to put their Bitcoin to use, we have the infrastructure to bring it in, and we’re ready to help them do it.

Matt: Totally agree with what Spadaboom said. For me, it’s interesting to hear that you’ve been working on this for five years — I’m relatively new to the Bitcoin DeFi space. Historically, most DeFi has been very Ethereum-centric, but the potential for Bitcoin liquidity is huge. Just to give a sense of scale, roughly a quarter of all Ether is currently staked, and half of that is through liquid staking. So, applying that to Bitcoin, we’re talking about potentially doubling or tripling DeFi’s liquidity. We’ve also seen an influx of Bitcoin derivatives being launched, either by single custodians or centralized exchanges. When you add a yield opportunity like LBTC, it makes for an even stronger value proposition, leading to more Bitcoin-based DeFi.

Jenny: Both of you have highlighted some really promising aspects — the scale and potential of Bitcoin compared to Ethereum. Recently, we’ve seen the Babylon staking event gain a lot of traction, with around $1.6 billion staked. Matt, Lombard played a significant role — can you share more about this event and what the key takeaways were?

Matt: Absolutely. The response to Babylon has been phenomenal. Over 21,000 Bitcoin were staked across Cap1 and Cap2, representing just over 0.1% of the entire Bitcoin supply, which is a big milestone. In Cap1, we took a conservative approach because the staking turned into a “gas war,” where teams spent hundreds of thousands of dollars on mining fees — we stuck to our plan instead of chasing yield at any cost. In Cap2, we adjusted and staked over 7,000 Bitcoin, which represented a third of the total staked. We did this at fairer gas prices while being conscious of the impact on our users. It’s been great to see the community’s trust in us, as well as the excitement for Babylon and BTCFi in general.

Jenny: It’s always exciting to see this kind of engagement, especially when Babylon tallied those Bitcoin deposits, and Lombard jumped to the top. Now, both Lombard and Corn are built on Ethereum, with Corn being native to Ethereum Layer 2 and Lombard operating across the Bitcoin mainnet and Ethereum. Can you each explain how your projects integrate Bitcoin with Ethereum and layer 2 solutions? How do these cross-chain interactions benefit both ecosystems?

Spadaboom: For us, if the goal is to enable people to put their Bitcoin to use, we want the best and most secure environment for that — which is Ethereum. We take a hub-and-spoke approach where native Bitcoin can be brought in via different routes, depending on how users prefer to custody their Bitcoin. Whether that’s through Lombard, using a permissionless bridge, or using wrapped solutions from a centralized custodian, all of these roads lead to BTCN, our tokenized Bitcoin that serves as the network’s gas token. Ethereum provides the best foundation for experimenting with new use cases for Bitcoin.

Matt: We started on Ethereum because it’s the hub for most DeFi activity, but our intention is to expand to other chains, both Layer 1 and Layer 2. We want to meet user demand wherever it’s present, provided we’re comfortable with the security. Our focus is also on Babylon’s core component — Babylon Chain, which runs in the Cosmos ecosystem. We’re building a Cosmos app chain to increase transparency around protocol operations, and we think this multi-chain approach is going to play an important role in BTCFi’s evolution.

Jenny: Sounds like both projects have a lot of exciting things on the horizon. What are some of the challenges you’ve encountered when bringing users into BTCFi, and how are you addressing these obstacles?

Spadaboom: I think the biggest challenge is still the perceived risk — many Bitcoin holders are not yet comfortable interacting with DeFi. There are multiple layers of perceived risk that deter folks. However, the Ordinals craze from about a year ago proved that there’s appetite for more utility. We believe in reducing risks through solid infrastructure — that’s why we chose to build on Arbitrum, which is scalable, battle-tested, and secure. We’re also working with trusted partners like Lombard and others who share the same commitment to security.

Matt: Totally agree. User experience is a big challenge. I’ve spent years in DeFi, and even I found BTCFi to be a learning experience. We’re trying to simplify things as much as possible — users shouldn’t need to worry about concepts like Taproot or SegWit. We make sure that when users interact with our platform, they only have to press a button to deposit, making it simple and familiar. On the security side, transparency is key for us. Everything is open source, and we’re constantly working to innovate and provide new levels of security, such as collaborating with Chainlink on new methods for proof of reserves.

Jenny: Absolutely. Education, user experience, and security are top priorities, especially for people who have held Bitcoin for a long time and are now exploring its use in DeFi. Building on that, institutional investors are increasingly buying and holding Bitcoin — have you faced any challenges with institutional adoption of your DeFi services, and what role do institutions play in BTCFi?

Matt: There’s definitely a growing demand here. Over the past few years, institutions have become comfortable holding Bitcoin on their balance sheets. When they have dollars, they don’t leave them idle; they invest in assets with different risk profiles. Now, they’re looking to do the same with their Bitcoin. We’ve seen staking ETFs launch recently — which is an exciting signal for where the market is heading — and we think Bitcoin staking has a similar appeal for institutions looking for new risk profiles.

Spadaboom: I completely agree — it’s not a question of “if” but “when” institutions will get involved. I think Matt said it well — Lombard, Corn, and Babylon are all still relatively new, and institutions need time to get comfortable. But once they see the potential, especially with the progress already being made, I think institutional involvement in Bitcoin-based DeFi will be inevitable.

Jenny: I completely agree. Now, with the U.S. election coming up soon and Bitcoin being a hot topic, what regulatory challenges do you see for BTC staking, and how are you planning to navigate these challenges?

Matt: It’s going to be an interesting time in the financial markets with the election, for sure. We’re seeing a lot more involvement from crypto projects within regulatory discussions globally, and that’s a good sign. We’re ready to engage with regulators as needed, but the approach will differ by region based on demand for LBTC. We’ll stay adaptable.

Spadaboom: Yeah, it’s definitely an exciting few weeks ahead. This election is unique because it’s the first major one where crypto is a prominent topic, and I don’t think it’ll be the last. The mission for us remains unchanged — we’re focused on bringing more utility to Bitcoin, and regardless of the regulatory changes, we see a big opportunity.

Jenny: Great points. To wrap things up, I’d like to hear your thoughts on what infrastructure or projects are still missing in the BTCFi space that could help drive further adoption?

Spadaboom: In my opinion, permissionless bridging is something that’s still lacking. Users need more trustless and seamless ways to bring Bitcoin into ecosystems like Corn’s. We’re making progress, but it’s a necessary development for further adoption.

Matt: I agree. Projects like BitVM, which aim to simplify security and trust assumptions for Bitcoin bridging, are incredibly promising. Additionally, the technical improvements on the Bitcoin network itself, such as Op-Cat, will make a significant impact. We also need more experienced builders — like Chris with Corn — to continue innovating and driving the space forward.

Jenny: Absolutely. And as a venture capital firm, HTX Ventures is excited to support great teams like yours in building out this promising space. Now, as we at the end of the space, could each of you share what exciting things we can expect from your projects by the end of the year or next year?

Spadaboom: For us, it’s all about the upcoming MazeNet launch, which will include new applications, bridging infrastructure, and incentive programs. We’re also progressing with scaling solutions for our roll-up infrastructure, and today we’re revealing more about how we’re going to do that. Our goal has always been to work with the best partners in the space, and we’re looking forward to sharing more soon.

Matt: On our end, we’re focusing on cross-chain rollouts and blue-chip integrations with projects like Aave, Compound and MakerDAO. We’re also exploring new opportunities within the Babylon ecosystem, particularly regarding how rewards can be distributed in more efficient ways as Babylon evolves. Transparency and community involvement are also core to our efforts, and we’re excited to continue expanding in these areas.

Jenny: It sounds like you both have a lot of great progress ahead. Thank you Chris and Matt for joining today’s space and for providing such valuable insights into Bitcoin staking, BTCFi, and the broader ecosystem. I’m sure everyone here learned a lot. Thanks again!

Listen to the full twitter space: https://x.com/i/spaces/1ZkKzRyOQzoKv