BTCFi ushers in the era of free liquidity: how will it develop in the future?

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ODAILY
01-18
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What is the freedom in your heart? Is it the ability to break free from economic constraints? Is it the ability to reclaim your time and live according to your own way? Or is it the ability to choose your own path without any restrictions? Freedom takes many forms, but its essence is always a force that propels humanity forward.

Throughout history, the pursuit of freedom has shaped countless societies and economies. From breaking free of constraints to transcending boundaries, true freedom has never been static - it is a dynamic force that crosses borders and endows individuals with infinite possibilities. In the digital age, this force has found a new manifestation - "free-flowing liquidity".

BTC, as a decentralized, borderless asset, has redefined the flow of wealth, creating a world where value can flow freely and without barriers, ushering in a new era of financial independence and allowing individuals to break free from the constraints of the traditional financial system.

Free-flowing liquidity is the inevitable path of BTC's development, combining the globalization of technology with humanity's thirst for freedom, driving the value expansion across digital platforms without permission and borders, unleashing an unstoppable force.

Wealth and Freedom = An Eternal and Intimate Relationship

Throughout history, wealth and freedom have always been inseparable. Gold once symbolized self-reliance and independence, driving trade and economic prosperity. However, the physical limitations of gold, such as its heavy volume and dependence on a centralized financial system, have made it difficult to truly unleash its potential for freedom. While modern financial tools like fiat currencies and electronic payments promise to improve efficiency, the cost is centralized control.

The current fiat currency system, especially the US dollar as the pillar of global trade, although occupying an important position in the global economy, has often been used as a geopolitical tool, leading to much controversy. The reality of economic sanctions and financial blockades shows that centralized monetary systems cannot provide freedom for all. The foreign exchange controls on the Chinese yuan also further limit its liquidity in the international market. The stability of these currency systems depends on the political environment and power structures, and once these foundations are shaken, the fluidity of wealth will face severe challenges.

The emergence of BTC has broken this traditional monopoly. As a decentralized digital currency, BTC is no longer subject to power structures, but operates based on global consensus. From being a tool for free trade on the Silk Road, to becoming a safe haven in Venezuela, and helping Nigerians circumvent foreign exchange controls, BTC has not only redefined the concept of wealth, but also established its position as a bridge to freedom. Its birth marks a fundamental transformation in the way wealth flows, revealing the limitless potential of decentralized finance.

BTC's Fatal Weaknesses

Although BTC represents free-flowing liquidity, its current ecosystem faces many challenges and significant vulnerabilities. Excessive reliance on speculative trading and cyclical financing activities has created a zero-sum game, where value often stagnates in circulation and fails to drive sustainable growth. As BTC prices have risen, its velocity (a key indicator measuring the frequency of BTC transactions) has been steadily declining.

According to data from CryptoQuant, BTC's velocity has dropped to 14.4, reflecting a significant slowdown in capital turnover since 2022. This trend indicates that the number of transactions in the market is decreasing, and liquidity is becoming more concentrated. The market is no longer a vibrant on-chain activity hub, but is instead dominated by large holders and speculative behavior, making the BTC ecosystem increasingly fragile and vulnerable to external shocks.

Furthermore, the dormancy period indicator revealed after supply adjustments shows a concerning trend: on-chain activity surges during price increases, but the dormancy level rises sharply as prices correct. This cyclical behavior highlights the lack of long-term liquidity support and exposes the market's dependence on short-term speculative interest.

Adding to the complexity is the role of institutional investors. Companies like MicroStrategy hold a large amount of BTC, over 423,650 BTC, making them one of the largest holders. While their participation has provided momentum for short-term prices, it also introduces systemic risk. If these institutions decide to take profits, their sell-offs could trigger a chain reaction, leading to increased market volatility.

To achieve true free-flowing liquidity, BTC must transition from its current fragile, speculation-driven structure to deeply integrate into a vibrant, value-creating ecosystem. This evolution will transform BTC from being merely a financial asset to a true free-flowing asset, unleashing its true value when it circulates freely within a network with real-world utility.

BTCFi provides the foundation for this, converting BTC's consensus on freedom into dynamic liquidity, thereby driving meaningful economic activity.

Building Sustainable Free-Flowing Liquidity

How can we unlock the value of $100,000 BTC, guiding it from the hands of holders into a valuable ecosystem that can drive real economic activity and growth?

As BTC's role in the global financial system continues to grow, its value will depend less on short-term market fluctuations and more on its long-term integration with the global economy. The key to achieving this goal is to build a stable, innovative, and self-sustaining financial ecosystem. This system should be built on three pillars:

  • User-centric design

  • Providing new utilities in high-growth ecosystems

  • Connecting with the real world

These three pillars will drive the growth and widespread adoption of BTC. By advancing these core foundations, BTC will not only serve as a store of value, but also become the cornerstone of true free-flowing liquidity.

1. User-Centric Design

To break through and stabilize above $100,000, BTC must evolve from a simple "digital gold" into an asset that can meet the diverse needs of the global economy. This evolution requires bridging two key user groups:

Large Holders (Whales):

  • Focus on security and stable returns

  • Need to deploy BTC through lending, staking, and yield generation

  • Require institutional-grade security while maintaining asset productivity

Active Ecosystem Users:

  • Value permissionless and barrier-free transactions

  • Need BTC to flow freely across different chains

  • Require the use of decentralized finance tools without central control

BTCFi bridges these two sets of needs by:

  • Providing secure yield generation protocols for large holders

  • Offering cross-chain liquidity solutions for active traders

  • Providing decentralized lending and staking modules that meet the needs of both groups

By connecting these user demands, BTCFi transforms BTC from a static store of value into a dynamic asset that can freely circulate within the crypto economy, while maintaining the security and returns required by holders.

2. Providing New Utilities in High-Growth Ecosystems

Let's see how free-flowing liquidity is realized through the high-growth ecosystems within BTCFi. In this evolution, two pioneering protocols play crucial roles: Solv and Zeus, each playing a different part in unlocking BTC's true potential.

Solv has demonstrated how Bitcoin holders can create sustainable value while maintaining security. By connecting with the broader BTCFi ecosystem, including protocols like Bedrock, Lombard, and Pell Network, Solv transforms static Bitcoin holdings into productive assets. It can be seen as a sophisticated yield engine where holders can safely re-stake their Bitcoin across multiple protocols, participating in the growth of the DeFi ecosystem while maintaining the security they require.

Another example embodying the concept of free-flowing liquidity is Zeus, which breaks down the traditional barriers that have confined Bitcoin to a single blockchain. Zeus truly makes Bitcoin borderless, allowing it to flow seamlessly across different blockchain ecosystems and DeFi protocols. This cross-chain functionality means Bitcoin can always pursue opportunities, whether it's higher yields on one chain or emerging DeFi innovations on another. Zeus essentially transforms Bitcoin into a liquid asset that can adapt and move as the digital economy evolves.

These two protocols collectively demonstrate how BTCFi goes beyond basic trading and lending. Other supporting protocols, such as Babylon and Shell Finance, add more utility layers, providing lending markets and yield opportunities, further enhancing Bitcoin's liquidity. This creates a virtuous cycle: the more Bitcoin flows through these high-growth ecosystems, the more value it generates, and the more its promise as a truly free-flowing liquid asset is realized.

3. Integrating with the Real World

The path for Bitcoin to break through $100,000 is not through speculation, but through deep integration with the real world. Genuine sustainable growth requires Bitcoin to drive actual economic activity: payments, settlements, and real-world asset applications.

In this process, multi-chain infrastructure becomes crucial. With the leadership of Solana and other thriving ecosystems, Bitcoin can finally break free from traditional constraints. Imagine Bitcoin flowing as freely as information today, seamlessly moving between different blockchain environments and real-world applications.

At the forefront of this real-world integration stands PayFi, Solana's strategic initiative, which bridges the gap between Bitcoin and everyday economic activity. PayFi can be seen as the key "translator" between the crypto world and the traditional world, making Bitcoin a truly useful tool in daily life. Through PayFi, Bitcoin can ultimately fulfill its promise of being more than just a digital asset, becoming an actual business tool, from simple payments to complex financial settlements.

The transition from speculative gains to real-world utility represents Bitcoin's most important evolution. When Bitcoin can drive actual economic activity, it creates sustainable value that speculation alone cannot achieve. This is a crucial step for Bitcoin to become an indispensable part of the global economy.

From Staking to a Morning Coffee

Imagine your day starting with your held Bitcoin generating yield, and in just a few minutes, you can use that yield to purchase a morning coffee. This is what BTCFi can achieve. Your Bitcoin seamlessly transitions from an appreciating asset to everyday currency, demonstrating true free-flowing liquidity.

Of course, the coffee is just an example. Recalling the famous 10,000 BTC pizza purchase, now worth millions of dollars, no one wants to be the next cautionary tale of spending Bitcoin on consumer goods. The key is not in directly spending Bitcoin, but in having its yields seamlessly flow into everyday transactions.

Bitcoin's Integration with the Real World: Building Tomorrow's Infrastructure

The true power of Bitcoin lies in how it begins to provide funding for the future. Through lending mechanisms, your Bitcoin can help build solar power plants, fund sustainable housing projects, or support DePIN.

The way it works is this: Bitcoin holders can lend their assets to carefully vetted real-world projects, earning a return while supporting actual development.

Want to fund a green energy project? Your Bitcoin can do that. Want to support housing construction? Your Bitcoin can do that too.

Each lending opportunity bridges the gap between digital wealth and physical progress, while providing a return for the lender.

This is where Bitcoin transcends its identity as digital gold, becoming a force driving real-world development and innovation. By connecting Bitcoin holders with actual investment opportunities, BTCFi creates a virtuous cycle: digital freedom drives physical progress, and physical progress in turn strengthens digital value.

Through these real-world applications, Bitcoin fulfills its original intent: to become a truly liquid asset, flowing seamlessly between the digital and physical realms, creating value at every step. This is the most mature form of free-flowing liquidity, where Bitcoin's power extends beyond the blockchain, permeating all levels of global economic development.

Freedom Has Found Its Path

The era of BTCFi's free-flowing liquidity marks the true beginning of Bitcoin's evolution. Through protocols like Solv and Zeus, Bitcoin is breaking free from the constraints of speculation. Through PayFi and integration with the real world, it is bridging the gap between the digital economy and the physical economy.

This is the promise of free-flowing liquidity: Bitcoin flowing purposefully through the economy, from daily yields to global infrastructure, driving everything. The technology is ready, and the infrastructure is maturing. What remains is for us to embrace the next stage of Bitcoin's journey, where freedom is not just stored, but also flows freely, creating value in the real world.

The era of free-flowing liquidity is here.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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