BTC Liquidity Expands In Chain Integrations

Integration of fully-backed BTC tokens LBTC and sBTC onto Starknet and Sui represents a significant step towards cross-chain DeFi opportunities for Bitcoin holders.

Starknet Foundation & Lombard Protocol: Introducing LBTC

Starknet and Lombard Protocol have partnered to introduce LBTC, a fully-backed Bitcoin liquidity token within Starknet. Borrowing from Lombard’s already established Babylon integration, LBTC maintains a 1:1 backing with bridged-native BTC reserves.

Lombard receives native BTC deposits, stakes them via Babylon, and issues LBTC.
LBTC is structured for multi-chain deployment, targeting Ethereum, Arbitrum, Sui, Genesis (Babylon), and further platforms.
Eli Ben-Sasson, Starkware CEO, emphasized the appeal for developers seeking Bitcoin’s credibility alongside DeFi functionality.

The rollout phases include bridging, liquidity provision, and eventually staking options within Lombard vaults, enabling yield generation without custody relinquishment.

Sui Integrates Stacks’ sBTC

Sui blockchain preparers for sBTC (Stacks’ Bitcoin-backed token) integration. sBTC leverages a threshold-signature multisig system secured by 15 institutional signers.

Integration aims to support lending, borrowing, and trading while preserving decentralization.
Stacks founder Muneeb Ali stated sBTC will enable bridging via a non-custodial, trust-minimized Bitcoin security process.
Integration strategy targets institutional Bitcoin finance (BTCfi) users.
According to Sui Foundation reports, over 10% of Sui’s total TVL now stems from Bitcoin-derived assets.

Both integrations underscore a competitive trend: major L1s and L2s vying for BTC liquidity to enhance their DeFi ecosystems.

Shift Towards Decentralization

These developments signal a broader shift away from centralized custodians for cross-chain Bitcoin deployments.

While Babylon’s BTC staking is perceived as trust-minimized, LBTC introduces custody-related trust assumptions, whereas sBTC’s integration features a trust-minimized bridging process.

The expanding BTC liquidity options in DeFi platforms provide yield-generation opportunities for holders maintaining self-custody.

Updated, May 15: Edited for clarity.