Forward the Original Title‘激活 BTC 生息潜力，Master Protocol 剑指用户入口’

BTC is the strongest consensus asset in the crypto industry with the highest market value, reaching the pinnacle of decentralized value storage. However, even such assets have imperfections. What are the current flaws?

Many liquidity pools are locked on-chain, unable to generate returns for holders. Here’s a simple example:

Both Xiao Zhang and Xiao Li entered the cryptocurrency market under the guidance of experts. Xiao Zhang heavily invested in Bitcoin, transferred it to a cold wallet, and left it untouched. Xiao Li, on the other hand, purchased Ethereum and actively engaged in various DeFi protocols on-chain. Through their frequent communications, Xiao Zhang gradually learned that Xiao Li had staked his ETH in the LST protocol, participated in “restaking” on EigenLayer, earned over 20% APY by locking PT tokens in Pendle, and accumulated tokens through Blast airdrops. Despite varying returns from these financial activities and Ethereum’s price fluctuations, Xiao Li’s holdings of ETH were steadily increasing.

In contrast, Xiao Zhang still held onto his BTC. Due to Bitcoin’s lack of native support for smart contracts, he couldn’t easily find a convenient way to “utilize” his BTC. Feeling anxious, Xiao Zhang thought, “With opportunities everywhere, letting assets sit idle without generating returns feels like a missed opportunity.” It’s akin to owning a property that’s left vacant—it doesn’t lose its inherent value, but it misses out on rental income. How can he make his BTC “generate yield”?

BTC Yield Generation: Potential of the Track and Infrastructure Mismatch

Compared to ETH yield generation, the BTC yield generation track indeed remains largely untapped.

Bitcoin’s proof-of-work (PoW) mechanism restricts holders from earning yields directly through staking. Despite Bitcoin’s dominant market position, a significant amount of BTC remains underutilized. This is particularly evident in comparison to Ethereum — while Ethereum’s total market value is significantly smaller than Bitcoin’s (ETH’s market value is around $400 billion, roughly one-third of BTC’s), Ethereum’s total value locked (TVL) in decentralized finance (DeFi) protocols is several times higher than BTC’s.

According to data from DeFiLlama, the total value locked (TVL) and market value ratio for various chains show significant potential. With just 5% of BTC entering the yield generation track, its TVL could surpass that of the Ethereum mainnet. Moreover, reaching a TVL-to-market value ratio comparable to Ethereum could create a market with over $150 billion locked in, highlighting the massive potential of this track.

However, the current infrastructure for BTC yield generation is immature, highlighting a mismatch between potential and infrastructure. How can this situation be reversed to attract users and expand the market?

The development of Bitcoin’s Layer 2 (L2) solutions offers new opportunities for yield generation, but these solutions are currently not very user-friendly for retail investors. The vision of the Master Protocol aims to address this issue through product innovation, aiming to become the gateway for users in this track.

What can Master Protocol bring to Bitcoin?

Current status of Bitcoin interest earning

In response to the inefficiency where a large amount of Bitcoin liquidity remains locked on-chain without fully realizing its yield potential, the industry has developed multiple Bitcoin Layer 2 (L2) solutions. These solutions employ various technological approaches to facilitate BTC staking and yield generation.

Notable Layer 2 solutions like Babylon, Botanix’s Spiderchain, Bitlayer, BounceBit, B², and Merlin have introduced diverse methods to support Bitcoin staking. Apart from Babylon’s use of remote staking, most Layer 2 solutions utilize bridging or mirroring technologies to transfer native Bitcoin onto proof-of-stake (PoS) chains.

Furthermore, liquidity staking protocols such as Master Protocol, pStake, Bedrock, Pell, and Lorenzo enable users to stake Bitcoin on different Layer 2 networks and receive Liquid Stake Tokens (LST) as their staking certificates. This operation allows users to reinvest their LST in various scenarios while ensuring returns without affecting liquidity. Moreover, through the adoption of restaking protocols, users can further stake LST to earn Liquid Restake Tokens (LRT), thereby enhancing their investment capabilities and asset liquidity.

Staking and restaking provide users with network and protocol rewards, making LST and LRT the yield-generating assets mentioned earlier. These assets are categorized as single-layer or multi-layer yield tokens. Looking ahead, with developments like Babylon’s upcoming Active Validating Service (AVS), increased recognition of application chain values, and growth of DApps and Memes on other Layer 2 solutions, the Bitcoin ecosystem is poised to create more new yield tokens in the future.

Master product positioning

In the Bitcoin ecosystem, there are multiple Layer 2 solutions and liquidity staking protocols such as Botanix Spiderchain. These protocols aim to enhance Bitcoin’s scalability and liquidity. However, their complexity, such as frequent network switching and multiple asset bridging, makes it challenging for ordinary users to participate.

Master Protocol aims to simplify this process and increase user engagement through its product suite, especially the Master Yield Market (yield market) and the Liquidity Staking Protocol (LST protocol) on Botanix Spiderchain.

Master Protocol’s two main products:

1. Master Yield Market provides opportunities for yield trading by aggregating Bitcoin ecosystem assets, packaging them as MSY, and splitting them into MPT (Principal) and MYT (Yield) for user transactions.
2. LST Protocol on Botanix Spiderchain enhances Bitcoin liquidity and yield through a liquidity staking protocol.

Bitcoin Ecosystem and Master Protocol’s Product Positioning

In the context of the Bitcoin ecosystem, Master Protocol appears to play a synergistic role among various protocols, which benefits the overall ecosystem development. By packaging and aggregating Bitcoin ecosystem yield assets issued by different protocols, Master Protocol serves as a one-stop Bitcoin ecosystem yield trading center. Through this gateway, users can access earning opportunities from different ecosystem protocols without the hassle of repeatedly comparing and switching between various protocols.

As a user gateway, Master Protocol not only gains adoption itself but also directs traffic and users to multiple Bitcoin ecosystem protocols with which it collaborates. All of this is based on Master Protocol’s core product, 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 (Master Yield Tokens), and split them into MPT (Master Principal Token) and MYT (Master Yield Token) for user trading. Its principle is similar to the Pendle protocol:

1. MPT (Master Principal Token): Represents principal. Purchasing MPT allows for early locking of underlying asset profits, akin to fixed-income products.
2. MYT (Master Yield Token): Represents yield. MYT has a lower unit price but enhances capital utilization, similar to leveraged speculation on expected returns.

The Master Yield Market can be likened to Pendle on BTC, a comparison that reflects high praise and signifies boundless potential. Pendle stands out as the only DeFi protocol to break new ground this year, achieving significant platform and token price growth, which has greatly stimulated the development of on-chain interest rate derivatives. Within the TradeFi sector, interest rate derivatives dominate a substantial portion of the derivatives market. As of June 2023, the total positions in the derivatives market have reached $71.47 trillion, with outstanding interest rate derivatives amounting to $57.37 trillion, capturing an 80.2% market share. This sector is particularly attractive to institutional participation.

With the SEC’s formal approval of BTC ETFs, interest rate trading platforms on BTC may replicate Ethereum’s success in attracting institutional adoption, offering substantial growth potential.

Master Yield Market Interface

Currently, the Master Yield Market has established partnerships with multiple collaborators such as Botanix, BounceBit, and Bitlayer, supporting assets like BounceBit’s native assets stBB and stBBTC. Upcoming launches include assets from BounceBit and Bitlayer’s Pell protocol, Babylon’s Bedrock (uniBTC), and pSTAKE (yBTC) assets, assets from multiple BTC Layer 2 protocols like Lorenzo, and Master Protocol assets (mpBTC) on Botanix Spiderchain.

The Master Yield Market integrates these diverse assets and offers them to users in the form of MPT and MYT for trading. These strategic integrations aim to enhance accessibility within the Bitcoin ecosystem, significantly boosting liquidity and capital utilization, thereby promoting ecosystem prosperity.

In the future, the Master Yield Market plans to support USDT and other BTC assets (such as ETH, BSC, and others), enabling users to directly purchase MPT and MYT corresponding to underlying assets of various ecosystem projects using wBTC. Essentially, Master Protocol facilitates asset routing for these projects to achieve necessary cross-chain transactions, providing users with a seamless and intuitive interaction experience.

This approach democratizes yield trading opportunities for retail investors within the Bitcoin ecosystem, leveraging the core strengths of Master Protocol. However, the success of any protocol depends on user adoption. To achieve this, Master Protocol incentivizes users through Master Yield Passes.

Master Yield Pass

Master Yield Pass is an incentive measure introduced by Master Protocol, totaling 10,000 units, which were freely minted on Base on June 24. Currently, all NFTs have been minted for free and are available for purchase on secondary NFT markets like Opensea. The current price on the secondary market is only 0.001 ETH, approximately $3, making it very cost-effective. If you are optimistic about the BTC yield track, consider buying to potentially benefit from future airdrops or trading profits.

The rights after staking Master Yield Pass include:

1. Earn points from the Trading Pool and Referral Pool, which can be exchanged for token airdrops in the future.
2. Dividends from platform handling fees. Assuming that the total transaction volume reaches 200 million US dollars and the platform handling fee reaches one million US dollars, each NFT can receive more than 100 US dollars in dividends. (For comparison, Pendle, a yield trading platform on Ethereum, has accumulated billions of dollars in trading volume.)
3. Future rights and interests: Whitelist qualifications such as NFT/event/IDO, etc.
   

Master Yield Pass Minting and Staking Page

Trading mining (Trading Pool) and referral mining (Referral Pool) are the main gameplay mechanisms, but it’s important to note that they use separate scoring systems. The points and bonuses earned in each pool are not shared between them.

Trading Pool

Points are awarded based on trading volume, with a 3x bonus for staking Yield Pass.

Point Calculation Rules

1. Personal total points = Personal total trading volume × Points multiplier;
2. Personal airdrop amount = Personal total points during the event / Total points across the network during the event × Total airdrop quantity
3. 1 - Yield Pass holders who have staked:
4. If a user’s total trading volume is 1,000 USDT, they can earn points as follows: 1,000 (total trading volume) × 3 (Yield Pass bonus) = 3,000 Points
6. 2 - Pass holders who have not staked and non-Pass holders:
7. They only receive basic trading points.
8. If a user’s total trading volume is 1,000 USDT, they can earn points as follows: 1,000 (total trading volume) × 1 (no bonus) = 1,000 Points

Referral Pool

Points are earned based on the number of invitees, and bonuses can be obtained by staking Yield Pass.

Referral Pool score panel

1. 1 - Points Calculation Rules
2. Stake Pass Holder: Automatically earns 200 points per day, multiplied by buff bonuses to calculate actual points earned. The formula is: Points = 200 (daily base points) [100% (base coefficient) + 2% (each Holder Buff bonus) number of Holders + 1% (each non-Holder Buff bonus) number of non-Holders + 50% invitation points bonus].
3. For example, if A stakes NFT, invites 50 stakeholding Holders and 100 non-Holders who meet a $100 trading volume requirement, and joins Team B with a 50% points bonus, then A’s daily points would be: 200 x (100% + 50 x 2% + 100 x 1% + 50% * 50%) = 650 points.
4. Pass Holders who have not staked and non-Pass Holders: No automatic mining points, no Buff bonuses.
5. 2 - As an Inviter
6. Only staked Pass Holders can act as inviters.
7. If the invitee is a staked Pass Holder: Each invitee provides a 2% Buff bonus, and both parties receive 1 random points red envelope.
8. If the invitee is an unstaked Pass Holder or a non-Pass Holder: Each invitee provides a 1% Buff bonus (the invitee must complete at least $100 USD in trading volume to validate as an active user), and after validation, both parties can receive 1 random points red envelope.
9. 3 - As an Invitee
10. If the invitee is a staked Pass Holder: After joining the team, the invitee enjoys a 50% Buff bonus from the inviter (if the inviter’s current Buff bonus is 50%, the invitee receives a 25% Buff bonus after joining the team).
11. If the invitee is an unstaked Pass Holder or a non-Pass Holder: They cannot receive any bonuses; however, if the user completes validation (trading volume reaches $100 USD), they can receive a participation reward (random red envelope, 10-200 points).

Genesis Master Pass

Genesis Master Pass Staking Page

In addition to the Master Yield Pass, the Master Protocol has launched its first NFT series, Genesis Master Pass. Participation in staking tasks also qualifies for airdrop points. This series is currently available for purchase on secondary markets like Opensea. Interested readers can learn more and participate through official @MasterProtocol_/genesis-master-pass-rulebook-maximize-your-benefits-fb448f3f121e">documentation and tutorials.

Participate in the BTC ecosystem through Master Protocol

In summary, Master Protocol’s Master Yield Market simplifies the process of earning interest on Bitcoin, allowing retail investors to directly trade Bitcoin’s LST and LRT assets using USDT, ETH, or WBTC. This unlocks significant earning opportunities in a straightforward and efficient manner. Alongside innovative products, the platform incentivizes users through multiple equity NFT series, fostering trading activities and user acquisition to accelerate its adoption.

The Bitcoin yield track, which historically lacked alignment with infrastructure, now welcomes its own “user gateway”. Perhaps upon discovering the true Project Market Fit (the intersection of product and market), this sleeping giant’s potential could astonish us all.

Now, Xiaozhang can utilize Master Protocol as a comprehensive gateway for Bitcoin earnings. They can stake their Bitcoin liquidity on Botanix Spiderchain, secure returns by purchasing underlying assets like BounceBit’s stBBTC PT, and invest in uniBTC YT issued by Bedrock on Babylon. Additionally, they can strategically position themselves to benefit from token airdrops from both Bedrock and Babylon protocols—thus diversifying their Bitcoin earnings strategy and no longer envying Xiaoli’s gains.

Disclaimer：

1. This article is reprinted from [ForesightNews]. Forward the Original Title‘激活 BTC 生息潜力，Master Protocol 剑指用户入口’. All copyrights belong to the original author [Alex Liu，Foresight News]*. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.