Compared to ETH staking, the BTC staking track is still a blue ocean. Master aims to create a user entry point for the track by integrating earnings and simplifying operations.
BTC, as the strongest consensus and largest asset in the crypto industry, has reached its peak in the race for decentralized value storage. But is there any flaw in such an asset?
Yes! Most of the liquidity is locked on-chain and cannot generate earnings for holders. Let’s take a simple example:
Both Xiaozhang and Xiaoli entered the crypto market at the same time, with Xiaozhang heavily invested in Bitcoin based on the recommendation of a big shot, and he stopped operating after transferring it to a cold wallet. Xiaoli, on the other hand, bought Ethereum and interacted with various DeFi protocols on the chain. Through their frequent communication, Xiaozhang gradually learned that Xiaoli staked his ETH in the LST protocol, participated in “restaking” in EigenLayer, bought PT in Pendle to lock in an annualized yield of over 20%, and accumulated points in Blast to receive airdropped tokens. Although the returns from different financial activities varied and the price of Ethereum fluctuated, Xiaoli’s ETH holdings were increasing day by day.
But Xiaozhang still had the same amount of BTC. Since Bitcoin itself does not support smart contracts, he couldn’t find a native and convenient way to “utilize” his BTC.
Xiaozhang felt anxious, thinking, “It’s almost a crime to have idle assets that don’t generate earnings in a situation full of opportunities.” It’s like having a vacant property, which doesn’t affect its own value but “loses” rental income. How can he make his BTC “earn interest”?
BTC staking: Mismatch between track potential and infrastructure
Compared to ETH staking, the BTC staking 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 terms of market value, a large amount of Bitcoin is not fully utilized. This is especially evident when compared to Ethereum. Despite Ethereum’s market value being much smaller than Bitcoin (Ethereum’s market value is $400 billion, about one-third of BTC), Ethereum has a TVL (total value locked) in the decentralized finance (DeFi) field that is tens of times higher than BTC.
Based on the data in the above figure, only 5% of BTC entering the staking track would surpass Ethereum’s TVL. If the ratio of TVL to market value reaches the same level as Ethereum, it would create a market with a locked value of over $150 billion. This indicates the massive potential of the track. However, the infrastructure development for BTC staking is not yet mature, which undoubtedly represents a mismatch between track potential and infrastructure. How can this situation be reversed to attract users and broaden the market?
The development of Bitcoin’s Layer 2 (L2) solutions provides new opportunities for BTC staking, but these solutions are currently not user-friendly for retail investors.
The vision of the Master Protocol is to solve this problem through product innovation and become the user entry point for the track.
What can Master Protocol bring to Bitcoin? The current state of BTC staking
As mentioned earlier, a large amount of Bitcoin liquidity is locked on-chain, and its staking potential is not fully realized. To solve this inefficiency problem and unlock the massive liquidity of BTC, the industry has developed various Bitcoin Layer 2 (L2) solutions using different technical approaches to facilitate staking and earnings generation.
Famous Layer 2 solutions such as Babylon, Botanix’s Spiderchain, Bitlayer, BounceBit, B2, and Merlin have created various methods to support Bitcoin staking. Apart from Babylon, which uses remote staking, most Layer 2 solutions use bridging or mirroring techniques to transfer native Bitcoin to proof-of-stake (PoS) chains.
And 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 their staking certificate. This operation allows users to reinvest their LST in various scenarios, ensuring earnings without affecting liquidity. Additionally, by adopting re-staking protocols, users can further stake their LST to obtain Liquid Restake Tokens (LRT), enhancing their investment capabilities and asset liquidity.
Staking and re-staking provide network and protocol rewards, making LST and LRT the income-generating 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 value in application chains, and the growth of DApps and Memes on other Layer 2 solutions, new yield tokens will be created in the Bitcoin ecosystem.
Master product positioning
There are already various Layer 2 solutions and liquidity staking protocols (such as Botanix Spiderchain) in the Bitcoin ecosystem. These protocols aim to improve Bitcoin’s scalability and liquidity, but their complexity (such as the need to switch networks frequently and bridge assets multiple times) makes it difficult for ordinary users to participate. Master Protocol aims to simplify this process and increase user participation through its product portfolio, especially the Master Yield Market and the liquidity staking protocol (LST protocol) on Botanix Spiderchain.
The two main products of the Master Protocol are:
1. 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.
2. 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, which is beneficial for the overall development of the ecosystem. By packaging and aggregating Bitcoin ecosystem yield assets issued by various protocols, Master Protocol serves as a one-stop Bitcoin ecosystem yield trading center. Users can access different protocol yield opportunities through this “entry point,” eliminating the hassle of comparing and switching between various protocols. As a user entry point, Master Protocol itself will be adopted, and multiple Bitcoin ecosystem protocols cooperating with it will also benefit from the flow of users.
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:
1. MPT (Master Principal Token): Represents the principal. By purchasing MPT, users can lock in the profit of underlying assets in advance, similar to fixed-income products.
2. MYT (Master Yield Token): Represents the interest. MYT has a low unit price but can increase capital utilization, similar to leveraged speculation on expected returns.
The Master Yield Market can be understood as the Pendle on BTC. This is a high evaluation and symbolizes unlimited potential. Pendle is the only DeFi protocol that broke through this year, and its platform and token price have developed very well, fully driving the development of on-chain interest rate derivatives. In the TradeFi field, interest rate derivatives account for the majority of the derivatives market. As of June 2023, the overall position in the derivatives market has reached $71.47 trillion, and the unclosed position in interest rate derivatives has reached $57.37 trillion, accounting for 80.2% of the market share. This is precisely the track that is easiest for institutions to enter. With the approval of BTC ETF by the SEC, interest trading platforms on BTC may first achieve institutional adoption on Ethereum, bringing greater imagination.
Currently, Master Yield Market has partnered with multiple collaborators such as Botanix, BounceBit, Bitlayer, supporting assets like BounceBit’s native assets stBB and stBBTC. Planned upcoming assets include Pell assets on BounceBit and Bitlayer, Bedrock (uniBTC) and pSTAKE (yBTC) assets on Babylon, Lorenzo protocol assets on multiple BTC Layer 2 solutions, and Master Yield Market on Botanix Spiderchain.
Master Protocol has the potential to play a synergistic role among multiple protocols in the Bitcoin ecosystem, benefiting the overall development of the ecosystem. Through its product portfolio, especially the Master Yield Market and the liquidity staking protocol on Botanix Spiderchain, it aims to simplify the process and increase user participation in BTC staking.Master Yield Market will integrate various assets such as Bitcoin (BTC), Ethereum (ETH), Binance Smart Chain (BSC), and Master Protocol assets (mpBTC) to provide users with trading options in the form of MPT and MYT tokens. These strategic integrations will enhance accessibility, liquidity, and capital utilization in the Bitcoin ecosystem, promoting its prosperity.
In the future, Master Yield Market will also support USDT and other BTC assets on multiple chains, allowing users to directly purchase MPT and MYT tokens with assets such as wBTC. This means that Master Protocol facilitates asset routing for these projects to achieve cross-chain transactions, providing users with a smooth and seamless interactive experience.
This opens up opportunities for retail investors to engage in yield trading in the Bitcoin ecosystem, which is the core advantage of Master Protocol. However, even the best protocol relies on user adoption. 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 passes. They were freely minted on Base on June 24. Currently, all the NFTs have been minted and can be purchased on secondary NFT markets such as Opensea. The current price on the secondary market is only 0.001 ETH, equivalent to $3, making it very cost-effective. If you believe in BTC yield trading, you can consider buying the pass to participate in future airdrops or trading rewards.
The benefits of staking the Master Yield Pass include earning points from the Trading Pool and Referral Pool, which can be exchanged for token airdrops in the future. Pass holders also receive platform fee dividends. If the total trading volume reaches $200 million and the platform fee reaches a million dollars, each NFT can receive dividends of over $100. In addition, pass holders may also enjoy future benefits such as whitelist qualifications for NFTs, activities, and IDOs.
The main gameplay of Master Yield Market involves trading mining in the Trading Pool and referral mining in the Referral Pool. It is important to note that these two pools have independent point calculation systems, and the points from each pool do not overlap.
In the Trading Pool, points are obtained based on trading volume. Pass holders receive a 3x bonus. The calculation rules for points are as follows: personal total points = personal total trading volume x bonus coefficient; the number of airdrop tokens an individual can receive = personal total points during the activity period / total points of the entire network during the activity period x total airdrop quantity.
For pass holders who have staked their pass, they receive a 3x bonus. For example, if a user has a total trading volume of 1,000 USDT, they can earn points equal to 1,000 (total trading volume) x 3 (Yield Pass bonus) = 3,000 points. For pass holders who have not staked their pass and non-pass holders, they only receive the basic trading points. Using the same example, they would earn 1,000 (total trading volume) x 1 (no bonus) = 1,000 points.
In the Referral Pool, points are obtained based on the number of referrals. Pass holders receive a bonus. For pass holders who have staked their pass, they automatically mine 200 points daily, which is then multiplied by the buff bonus to calculate the actual points received. For pass holders who have not staked their pass and non-pass holders, they do not receive automatic mining points or buff bonuses.
Pass holders can also act as referrers. If the referred person is a pass holder and has staked their pass, both the referrer and the referred person receive a random point red packet, and the referrer provides a 2% buff bonus. If the referred person has not staked their pass and is a non-pass holder, both the referrer and the referred person receive a random point red packet, and the referrer provides a 1% buff bonus. The referred person needs to complete a minimum trading volume of 100 USDT for the validation of a valid user.
If the referred person is a pass holder and has staked their pass, they can enjoy a 50% buff bonus as a member of the referrer’s team. If the referred person has not staked their pass and is a non-pass holder, they do not receive any bonuses. However, if the non-pass holder completes a valid user validation (trading volume reaches 100 USDT), they can receive a participation award (random point red packet, 10-200 points).
In addition to the Master Yield Pass, Master Protocol has also launched the Genesis Master Pass NFT series. Participating in staking tasks for this series also earns airdrop points. The Genesis Master Pass NFTs can currently be purchased on secondary markets like Opensea.
Overall, Master Yield Market simplifies the process of Bitcoin yield farming, allowing retail investors to directly trade BTC and unlock significant profit opportunities using USDT, ETH, or WBTC. The protocol also incentivizes users through various NFT series, promoting trading activities and user acquisition. This provides a user-friendly entry point for the BTC yield market, unlocking its potential when it finds the right fit between the product and the market.
Now, users like Xiao Zhang can pledge their Bitcoin liquidity on Botanix Spiderchain through the Master Protocol, purchase stBBTC PT (BounceBit) to lock in their earnings, and invest in uniBTC YT (Bedrock) issued by Babylon. They can also participate in the token airdrops of both Bedrock and Babylon protocols, diversifying their BTC yield in multiple ways.
For more information about Master Protocol, please visit their official website, Twitter, Discord, and Telegram.
References:
[1] All Chains TVL – DefiLlama https://defillama.com/chains
[2] Master Yield Market: A Revolutionary Step in Bitcoin Yield Trading https://www.morningstar.com/news/accesswire/880956msn/master-yield-market-a-revolutionary-step-in-bitcoin-yield-trading
[3] Master Protocol Launches BTC LSDFi Product, Master Yield Market https://www.binance.com/en/square/post/2024-06-22-master-protocol-launches-btc-lsdfi-product-master-yield-market-9812392963426
[4] Introducing Master Yield Market: Unlocking Multiple Benefits of Bitcoin Yield Trading https://medium.com/@MasterProtocol_/introducing-master-yield-market-unlocking-multiple-benefits-of-bitcoin-yield-trading-bdf659459ae4
[5] Unveiling: Genesis Master Pass Mint Time and Exclusive Early Bird Campaign https://medium.com/@MasterProtocol_/unveiling-genesis-master-pass-mint-time-and-exclusive-early-bird-campaign-07bac2f64504
Source: https://foresightnews.pro/article/detail/63613
