Compared to ETH, the BTC yield track is still a blue ocean. Master aims to open up user access to the track by integrating earnings and simplifying operations.
BTC is the strongest asset in the crypto industry, with the largest market value, and it has reached its peak in the decentralized value storage track. But is there any flaw in such an asset in the current situation?
Yes! Most of the liquidity is locked on the chain and cannot generate earnings for holders. Let’s take a simple example:
Xiao Zhang and Xiao Li entered the cryptocurrency market at the same time. Under the recommendation of a veteran, Xiao Zhang heavily invested in Bitcoin and stopped trading after transferring it to a cold wallet. Xiao Li, on the other hand, bought Ethereum and interacted with various DeFi protocols on the chain. Through their frequent communication, Xiao Zhang gradually learned that Xiao Li had staked his ETH in the LST protocol, participated in “restaking” in EigenLayer, bought PT from Pendle to lock in an annualized yield of over 20%, and accumulated points in Blast to eventually receive a token airdrop. Although the returns from various financial activities varied and the price of Ethereum fluctuated, the number of ETH tokens in Xiao Li’s hands was increasing day by day.
But Xiao Zhang’s BTC remained the same. Since Bitcoin itself does not support smart contracts, he couldn’t find a native and convenient place to “utilize” his BTC. Xiao Zhang felt anxious and thought, “It’s a crime to have idle assets that don’t generate any income when there are opportunities everywhere.” Just like idle real estate, although it doesn’t affect its own value, it “loses” rental income. How can he make his BTC “yield”?
Compared to ETH yield, the BTC yield track is indeed still a blue ocean. The proof-of-work (PoW) mechanism of Bitcoin limits holders from earning income through direct staking. Although Bitcoin dominates in market value, a large amount of Bitcoin is not fully utilized. This is especially evident when compared to Ethereum. While Ethereum’s total market value is much smaller than Bitcoin’s (Ethereum’s market value is $400 billion, accounting for about 1/3 of BTC), its total value locked (TVL) in the decentralized finance (DeFi) field is tens of times that of BTC.
According to the data in the above chart, only 5% of BTC entering the yield track is needed to surpass Ethereum’s TVL. If the ratio of TVL to market value reaches the same level as Ethereum, it will create a super large market with over $150 billion locked. This shows the massive potential of the track. However, the infrastructure development of the BTC yield track is not mature, which undoubtedly indicates a mismatch between the potential of the track and its infrastructure. How to reverse this situation, attract users, and expand the market?
The development of Bitcoin’s Layer 2 (L2) solutions provides new opportunities for BTC yield, but currently, these solutions are not user-friendly enough for retail investors. The vision of Master Protocol is to solve this problem through its product innovation and become the user gateway to the track.
What can Master Protocol bring to Bitcoin? The current situation of Bitcoin yield
As mentioned earlier, a large amount of Bitcoin liquidity is locked on the chain, and its yield potential has not been fully realized. To solve this inefficiency problem and release the massive liquidity of BTC, the industry has developed various Bitcoin Layer 2 (L2) solutions that use different technical approaches to facilitate BTC staking and earnings generation.
Famous Layer 2 solutions like Babylon, Botanix’s Spiderchain, Bitlayer, BounceBit, B2, and Merlin have created various methods to support Bitcoin staking. Except for Babylon, which uses remote staking, most Layer 2 solutions use bridging or mirroring techniques to transfer native Bitcoin to proof-of-stake (PoS) chains.
Through liquidity staking protocols like Master Protocol, pStake, Bedrock, Pell, and Lorenzo, users can stake their Bitcoin on various Layer 2 solutions and receive Liquid Stake Tokens (LST) as proof of stake. This allows users to reinvest their LST in various scenarios and ensure earnings without affecting liquidity. Additionally, by adopting re-staking protocols, users can further stake their LST to obtain Liquid Restake Tokens (LRT) and enhance their investment capacity and asset liquidity.
Staking and re-staking provide network and protocol rewards, so the aforementioned LST and LRT are yield assets. We classify them as single-layer/double-layer yield tokens. Looking ahead, with the development of Babylon’s Active Validating Service (AVS), the wider recognition of application chain value, and the growth of DApps and Memes on other Layer 2 solutions, more new yield tokens will be created in the Bitcoin ecosystem.
Master product positioning
There are already various Layer 2 solutions and liquidity staking protocols (LST protocols) in the Bitcoin ecosystem, such as Botanix Spiderchain. These protocols aim to improve the scalability and liquidity of Bitcoin, but their complexity, such as the need for frequent network switching and multiple asset bridging, makes it difficult for ordinary users to participate. Master Protocol attempts to simplify this process and increase user participation through its product portfolio, especially the Master Yield Market and liquidity staking protocol (LST protocol) on Botanix Spiderchain.
Master Protocol has two main products:
Master Yield Market: Provides yield trading opportunities by aggregating Bitcoin ecosystem assets and packaging them into MSY, which is then split into MPT (principal) and MYT (interest) for user trading.
LST Protocol on Botanix Spiderchain: Improves the liquidity and yield of Bitcoin through the liquidity staking protocol.
From this perspective, Master Protocol can have a synergistic effect among multiple protocols in the Bitcoin ecosystem, benefiting the overall ecosystem development. By packaging and aggregating Bitcoin ecosystem yield assets issued by various protocols, Master Protocol can act as a one-stop Bitcoin ecosystem yield trading center. Users can access opportunities for yield from different protocols through this “gateway,” eliminating the hassle of comparing and switching among various protocols. As a user gateway, in addition to Master Protocol itself being adopted, multiple Bitcoin ecosystem protocols collaborating with it can also benefit from user flow redirection.
All of this is based on the core product of Master Protocol, the Master Yield Market.
Master Yield Market
The basic function of the Master Yield Market is to aggregate Bitcoin ecosystem assets, package them into MSY, and split them into MPT and MYT for user trading. Its principle is similar to the Pendle protocol:
MPT (Master Principal Token): Represents the principal. Buying MPT allows for the early locking of profits from underlying assets, similar to fixed-income products.
MYT (Master Yield Token): Represents the interest. MYT has a lower unit price but increases the utilization of funds, similar to leveraged speculation on expected returns.
The Master Yield Market can be understood as Pendle on BTC. This is a highly regarded comparison and symbolizes unlimited potential. Pendle is the only DeFi protocol that has broken through this year, and its platform and token price have seen significant development, driving the development of on-chain interest rate derivatives. In the TradeFi sector, interest rate derivatives occupy the majority of the market in the derivatives market. As of June 2023, the overall derivatives market position has reached $71.47 trillion, with interest rate derivatives’ open positions reaching $57.37 trillion, accounting for 80.2% of the total. This happens to be the track that is most easily entered by institutions. Since BTC ETF has been officially approved by the SEC, interest rate trading platforms on BTC may first be adopted on Ethereum, bringing greater imagination.
Currently, Master Yield Market has partnered with multiple collaborators such as Botanix, BounceBit, and Bitlayer, supporting assets such as BounceBit’s native assets stBB and stBBTC. Upcoming assets include Pell protocol assets on BounceBit and Bitlayer, Bedrock (uniBTC), and pSTAKE (yBTC) assets on Babylon, Lorenzo protocol assets on multiple BTC Layer 2 solutions, and assets on the Master Protocol, pStake, Bedrock, Pell, and Lorenzo流动性质押协议。Master Yield Market will integrate these diverse assets and offer them to users for trading in the form of MPT and MYT. These strategic integrations will provide better accessibility to the Bitcoin ecosystem, significantly enhance Bitcoin’s liquidity and capital utilization, and promote the ecosystem toward prosperity.
In the future, Master Yield Market will also support USDT and other BTC assets (ETH, BSC, etc.), allowing the direct purchase of underlying assets of various ecological projects using wBTC to obtain MPT and MYT. Essentially, Master Protocol is assisting these projects with asset routing to achieve the required cross-chain transactions and provide users with a smooth and seamless interaction experience.
This also means that retail investors in the Bitcoin ecosystem now have the opportunity for simple access to yield trading, which is the core advantage of Master Protocol. To achieve this, Master Protocol chooses to incentivize users through the Master Yield Pass.
The Master Yield Pass is an incentive measure launched by Master Protocol, with a total of 10,000 available for free casting on Base on June 24. The NFT has already been fully cast for free and is available for purchase on secondary NFT markets such as Opensea. Currently, it is only priced at 0.001 ETH, approximately $3, with very low cost. If you are bullish on the BTC yield track, you may consider purchasing it to stake future airdrops/trading revenue.
The benefits of staking the Master Yield Pass include:
– Earning points from the Trading Pool and Referral Pool, which can be redeemed for token airdrops in the future.
– Platform fee dividends. Assuming the total trading volume reaches $200 million and the platform fee reaches a million dollars, each NFT can receive over $100 in dividends.
– Future benefits such as whitelist qualifications for NFTs, activities, or IDOs.
The main gameplays are the Trading Pool and Referral Pool, with their own independent point calculation systems that do not share point bonuses with each other.
The Trading Pool allows users to earn points based on trading volume, with a 3x bonus for staking the Yield Pass, while the Referral Pool allows users to earn points based on the number of referrals, with additional bonuses for staking the Yield Pass.
In addition to the Master Yield Pass, Master Protocol has also launched its first NFT series, Genesis Master Pass, which also allows participants to earn airdrop points through staking tasks.
Overall, the Master Yield Market is simplifying the process of Bitcoin yield and providing retail investors with the opportunity to directly trade Bitcoin’s LST and LRT assets using USDT, ETH, or WBTC, unlocking substantial income opportunities in a simple and efficient way. The introduction of multiple equity NFT series also incentivizes users, promotes trading activities and user acquisition, and accelerates its adoption. This potential mismatch between the race and infrastructure of the BTC yield track is welcoming its own “user entry.” Perhaps, after truly finding the Project Market Fit, the potential unleashed by this sleeping giant will amaze us all.
Now, users like Xiao Zhang can pledge their Bitcoin liquidity at Master Protocol’s one-stop Bitcoin yield entry, purchase underlying assets like BounceBit stBBTC’s PT to lock in income, buy Bedrock’s uniBTC YT issued in Babylon, and lay out tokens for both Bedrock and Babylon’s airdrops – multiple ways to earn income from their BTC, no longer envying Xiao Li.
For more information about Master Protocol, you can visit its official website, Twitter, Discord, and Telegram.
