For quite some time, Bitcoin's been viewed mainly as digital gold. The typical strategy was just to buy and hold it. Unlike proof-of-stake systems, Bitcoin didn’t really provide a way for holders to earn rewards.
That’s starting to shift. New liquid staking options are popping up, allowing Bitcoin holders to earn yield while still having their BTC invested. A couple of examples are Solv and PumpBTC. Now, there's a new player in the game.
Lombard has raised over 90 million bucks and their token launch is happening tomorrow. This signals that investors are seeing Bitcoin staking as a potential big break.
The main question is if this model is here to stay. Liquid staking might enhance Bitcoin's role in DeFi, giving holders fresh opportunities to expand their investments. However, it also comes with its fair share of risks, like smart contract vulnerabilities, possible centralization, and whether the Bitcoin community will embrace these changes.
If it succeeds, BTC liquid staking might transition Bitcoin from just sitting there to being a more active participant in the DeFi space.
The thing is if bitcoin is what will be staked or an altcoins? Bitcoin can not be staked directly because it is using PoW and not PoS. But there are altcoins like wBTC and many others in the past that can be staked.
Also if there is another idea to bitcoin staking, I will still be an altcoins and not bitcoin but not something new.
That sounds great until I checked the APY and
0.83% APY, what you're gonna do with it? For such abysmal APY, the bitcoin better sit in my wallet. No risk of contract exploit, nothing.
To coin a phrase from Michael Saylor -
Meaning Bitcoin itself is the best, nothing else comes close to it so there isnt even
a second best.
What is better than just HODLing Bitcoin itself, no need to get involved with
side shows chains. You can make your "portfolio" as complicated and "diverse"
as you want but there is a simpler option in just HODLing Bitcoin itself.
Nah, I will have to disagree though, no need for Bitcoin to be stake, it's not an altcoin.
Yeah, I sounded like Bitcoin maximalist, but if you know how to hold and control Bitcoin, then that is the pure definition of staking already. At least here, you have the private key and mnemonic phrase so you have total control.
HODLing>Staking.
Has no one gotten bored since the inception of wrapped Bitcoin?
Multiple fold of dollar value increase every cycle not good enough that we want a few percentage points more APY in return for loss of self-custody and network security?
For lombard if you deposit BTC, b you get LBTC in return and you can stake that and earn yields.. same process for withdrawals
Technically it's btc staking cos you're converting your token to LBTC in case of lombard.. it's an evolving concept and I believe I'll try to hold the token just to see if it'll do good in the long run. I've set an entry around $0.85 on Bitget.. hopefully it picks up!
There are Wrapped BTC across EVM based chains where you can use to add LP and lend it on a lending platform such as AAVE.
I think it kinda resembles liquid staking and you can literally do any staking related activity with it. It's been a thing since long ago.
Though this LBTC can serve different purpose, I guess that's why the FDV is huge on TGE. I still don't buy the prospect of liquid staking with BTC though.
For sure it's another growing part of bitcoin and technology.
There are many of these projects that would help people to "earn" revenue on bitcoin locked/stacked etc etc...
Also we are seeing "pocket" wallet that fit in androin/iOS with an easy app. I don't know if you can rely and trust such initiatives but it's clear that you don't need anymore complicated system and relative setup.
Bitcoin make use of proof of work and if you understand mining correctly, you will have to see some other vital aspects of it coming more than even what proof of stake is and how the centralized networks make use of it, we are much better the way we are with bitcoin network.
Bitcoin does not need to be part of what comes out of it, if you could remember well, bitcoin was the begining of all these, then why should it go after them, when they are already after it.
Staking has always been something interesting for me. The idea amuses me about just staking our coins to yield profit without doing anything. PoW concept was good too but we needed a lot of computing power and there were a lot of drawbacks like expensive hardware, heavy maintenance and high electricity bills.
PoS concept eliminates all these complications and makes it much easier to enjoy profits just by staking few coins and enjoying profits. What I really doubt about liquid staking is that bitcoins were never meant to be stakable. They mainly depend on PoW concept so if liquid staking comes into picture then who will actually mine bitcoins?
It would be a good way to earn a passive income while holding bitcoins in our wallet but the community acceptance is really a bit difficult here. There already are a number of coins which we can stake to earn fixed rewards so why to change bitcoin's core functionality. I'm not against it but really think bitcoins should only support PoW instead of changing into PoS.
With bitcoins, yes holding itself is rewarding enough and can be considered as staking if we are thinking about long term. Bitcoins have shown immense growth over the years and this will continue so even if we hold bitcoins, we will see the dollar value increasing eventually so there really is no need of staking. As you said, bitcoins are not altcoins. They work completely different. Bitcoins were never meant to work like altcoins and vice-versa, altcoins have totally different use cases. Some altcoins are just meant for staking as they work on proof of staking concept. Bitcoins does not need governance added to stake and get rewarded.
Holding private keys is like having complete access on bitcoins. Liquid staking concept takes it away from us as we won't be holding the private keys, instead we will be holding our bitcoins on some platform which will reward us for staking those coins. I too do not like this concept and don't think it will be supported at least by miners who will loose their hardware values over time.
So I risk losing my btc and get some interest if I do it.
Or put 115k cash in my paypal savings federal insured liquid and get 3.8%
yeah i am aware the cash may be worth less money in a year.
but 115x1.038=119.37 k cash in a year for sure.
and 1 btc could be 0 btc
or 1 btc and some crap coin.
no thanks.
Honestly this liquidity staking has always been a touch and go. Sometimes people made some money, sometimes it is used and abused by bots and became nothing. So I do not see the benefit of it considering the risks involved and I do not do it. I get that people may like it, but that is their thing and I do not do it.
I personally feel like the best way to move would be just making sure that we are dealing with something that is going to end up with less risk. Holding normal bitcoin for long term itself is good enough, I do not feel like I need anything else with my bitcoin. It goes up enough to justify holding it, and gives me better return than other investments in the world. And it is not that risky neither.
I liked the math but still I would like to point out, 1 btc can never be 0 at least what we have seen so far. Bitcoins have an appreciating value due to rising demand and they will never be worthless not now and never in future as well. Yes staking bitcoins can be worthless as we will not actually be staking bitcoins but some derivates as bitcoins are never designed for staking so there is no actual option to stake bitcoins. Those derivates might surely be 0 in the future and that's why we are staying away from this liquid staking protocols with bitcoin.
Still investing that money in paypal or even banks will give us good amount of returns so why risking it in these liquid staking protocols being unsure about the profits. This is a really good point pointed out by you.
Do we really need Bitcoin to become an active part of the DeFi world? Bitcoin is doing just fine. If something works, don't make changes.
DeFi and staking is more related to the altcoin world, and I believe that it should stay that way. This "liquid staking" thing looks like another buzzword and another "shiny object syndrome" for the speculative altcoin investors. We've seen this before and it ended badly. ICOs, NFTs, Terra/Luna stablecoins, etc. I'm 99% sure that one of those liquid staking projects would most likely collapse and end up as an exit scam.