Binance Labs-backed liquid staking protocol pSTAKE Finance has unveiled its liquid staking solution for Bitcoin, the latest development in Bitcoin-native decentralized finance (DeFi).

Simplifying Bitcoin Staking

pSTAKE Finance's solution, built on top of Babylon's Bitcoin staking protocol, aims to simplify the process and offer additional yield generation opportunities for Bitcoin (BTC) holders.

According to Mikhail Pandey, the co-founder and chief strategy officer of pSTAKE Finance, the protocol decided to build Bitcoin-based staking solutions from a fundamental belief in the world's oldest cryptocurrency, aiming to make it a yield-generating asset.

Pandey told Cointelegraph:

"Having fundamental faith and belief in Bitcoin, yields, and constantly identifying and solving crucial problems in this industry are some of the reasons behind moving in Bitcoin's direction.

The opportunity to make Bitcoin a yield-generating asset that hasn't existed inherently is fascinating. Yield-generating Bitcoin is powerful for all ecosystems and not just Bitcoin L2s."

Part of the Bitcoin DeFi Movement

The initiative is part of a broader movement known as Bitcoin DeFi (BTCFi), which aims to bring DeFi capabilities to the world's first blockchain network.

Investor interest in Bitcoin-native DeFi solutions started growing with the 2024 halving, which also saw the launch of Bitcoin Runes -- a new protocol for issuing fungible tokens on the Bitcoin network.

The independent venture capital (VC) arm of Binance, Binance Labs, has also shifted its focus to BTCFi ahead of the halving after announcing an investment in Bitcoin-native restaking protocol BounceBit on April 11.

pSTAKE's First Bitcoin-Native DeFi Endeavor

Launching the liquid staking solution marks pSTAKE's first endeavor into Bitcoin-native DeFi after building its liquid staking protocol on Cosmos for the past three years.

BTCFi is making Bitcoin a yield-generating asset for the first time. pSTAKE's new solution is among many protocols aiming to make Bitcoin a yield-generating asset.

At the beginning of May, Hermetica announced the launch of the first-ever Bitcoin-backed synthetic United States dollar with yield-generating capabilities. Slated for release in June, the new synthetic dollar, USDh, will offer users up to 25% yields.

Future of BTCFi

According to pStake's co-founder, the BTCFi industry is seeing the culmination of various promising products that make Bitcoin more capital-efficient.

However, he believes more development is needed before BTCFi matches Ethereum-level DeFi. Pandey explained:

"Ethereum's tech had to go through a lot of evolution before the actual DeFi Summer in 2020. The Bitcoin DeFi landscape will likely follow a similar journey of development and progress before we see a full-fledged BTCfi Summer."

However, making Bitcoin a more versatile asset holds a significant financial opportunity, added Pandey:

"With less than 1% of the Bitcoin market cap in DeFi today, we could see huge growth as we develop more secure and reliable ways to generate yield on Bitcoin."