Summary
This proposal recommends listing Lombard’s LBTC—a liquid-staked Bitcoin built on Babylon—as a supported asset on Venus Core Pool for Ethereum and BNB Chain. By adding LBTC, Venus will unlock the borrowing demand for pegged BTC assets such as BTCB and WBTC to provide a foundational source of yield for BTC lending within the Venus ecosystem while fostering greater liquidity and user engagement.
Background
Lombard’s mission is to expand Bitcoin’s role in decentralized finance (DeFi), turning it from a passive asset into a productive financial tool. Our core product, LBTC, is a secure, liquid-staked Bitcoin token that enables users to earn yield by securing PoS networks via Babylon, while preserving the original value of their BTC. As a 1:1 BTC-backed, yield-bearing token, LBTC facilitates cross-chain movement without fragmenting liquidity, aligning Bitcoin seamlessly with DeFi use cases.
Our team includes seasoned DeFi experts from Polychain, Babylon, Argent, Coinbase, and Maple, each with deep experience in scaling DeFi ventures. Lombard is incubated by Polychain Capital, which led a $16 million seed round in July 2024 with investments from Babylon, dao5, Franklin Templeton, Foresight Ventures, Mirana Ventures, Mantle EcoFund, Nomad Capital, OKX Ventures, and Robot Ventures. In October 2024, Binance Labs further strengthened Lombard’s backing by joining this extensive list of strategic partners.
Official Website: www.lombard.finance
Documentation: https://docs.lombard.finance
Analytics: https://dune.com/lombard_protocol/lombard
Lombard’s Security
Lombard stands as the most secure Bitcoin Liquid Staking Token (LST) protocol, addressing both custody and depeg risks.
Custody Security: Lombard employs a trust-minimized, decentralized custody model for BTC. Using a validator network, custodial responsibilities are distributed, with validators incurring economic or social penalties (slashing) for misconduct. Validators notarize deposits to mint derivatives and authorize redemptions to burn them, with transparency ensured through on-chain monitoring.
Depeg Protection: LBTC is the most liquid Bitcoin LST on the market, supported by $50 million in DEX liquidity on Ethereum. With plans to expand across chains, we intend to scale in a very comparable fashion, which means that Lombard’s DEX will keep expanding exponentially. Lombard’s LBTC is exclusively backed by native BTC, is fully redeemable since launch. Additionally, Lombard was the first to introduce a proof-of-reserves oracle built in collaboration with Redstone.
LBTC: The Market Leader
Beyond its security-first design, LBTC has emerged as the leading market player in Bitcoin staking, representing over 40% of the Bitcoin LST market share and serving as the largest staker on Babylon. Additionally, LBTC ranks as the third-largest overall BTC derivative, trailing only WBTC and BTCB.
Key Performance Metrics (as of October 25, 2024):
- Public Beta Launch Date: September 3, 2024
- LBTC Market Cap: $700m (circulating supply of 10,300 LBTC)
- LBTC TVL on DEXs: $50m
- LBTC %TVL in DeFi: >60%
LBTC Value Proposition
Yield-Bearing Collateral: LBTC provides an underlying yield from staking BTC within Babylon, making it a yield-bearing asset. Bitcoin LSTs are positioned to follow the success of yield-bearing ETH LSTs by offering BTC holders an effective way to maximize capital efficiency.
Ideal Collateral for Underutilized BTCB and WBTC: Demand for leveraged LBTC exposure is consistently high across lending markets, where utilization rates for LBTC borrowing frequently reach maximum capacity. This presents a unique opportunity for BTCB and WBTC lenders on Venus Protocol to unlock sustainable lending yields, addressing a gap in DeFi where BTC lending yields historically remain below 0.15% APY.
Incentives: Listing LBTC on Venus opens the door for users to tap into a range of incentives from leading BTCfi protocols, including Lombard and Babylon. LBTC deployed on Venus earns Babylon Points and benefits from Lombard’s Lux program, providing a 3x Lux boost for LBTC collateral on Venus.
Lombard Ecosystem Flywheel: Integrating LBTC within Venus feeds into a powerful “flywheel” effect within the Lombard ecosystem, enhancing its value proposition across DeFi. In just two months since launch, Lombard has demonstrated strong network effects, establishing exclusive partnerships that benefit every protocol utilizing LBTC. Examples include LBTC’s role as the exclusive collateral for ether.fi’s LRT eBTC and the Lombard DeFi Vault, built in partnership with Veda and uniquely incentivized by Corn. These strategic integrations create additional opportunities for protocols integrating LBTC to access net new liquidity and unique incentives.
Conclusion
This proposal outlines a strategic opportunity for Venus Protocol to tap into a rapidly growing BTCfi ecosystem, onboarding the leading asset within the category - LBTC. With over 40% market share in Bitcoin LSTs and ranking as the third-largest BTC derivative, LBTC combines secure, yield-bearing capabilities and robust liquidity.
Adding LBTC will tap into high borrowing demand for BTC-pegged assets like BTCB and WBTC, providing a strong yield source for BTC lending and enhancing ecosystem liquidity. Venus users will gain access to incentives from Lombard’s ecosystem, creating a flywheel effect that drives adoption, liquidity, and rewards, supporting DeFi growth.
