BTCFi top project Core completes Fusion upgrade: A detailed explanation of changes and market opportunities

Author: Weilin, PANews

In the decentralized finance (BTCFi) ecosystem of Bitcoin, Core is an L1 blockchain driven by Bitcoin and compatible with EVM, where the security is maintained by validation nodes supported by miners, Bitcoin staking, and the staking of Core's native tokens. With its innovative Satoshi Plus consensus, which combines Delegated Proof of Work (DPoW) and Delegated Proof of Stake (DPoS), Core is providing long-term and robust yield opportunities for Bitcoin holders.

Currently, approximately 75% of the global Bitcoin mining hash power has contributed to Core's model through DPoW, and over 9,000 Bitcoins have participated in its staking through non-custodial Bitcoin staking. Core is unlocking the potential of Bitcoin, making it a major protector and core asset for the future of decentralized finance.

On November 19, Core completed the Fusion upgrade, introducing two innovative products: Core Dual Staking and Core LstBTC. This article will delve into the significant changes brought by this upgrade and explore the trend of institutional adoption of BTCFi.

Deepening the Bitcoin Community, Innovatively Introducing Satoshi Plus Consensus

The foundation of Core is its innovative Satoshi Plus consensus mechanism, where the DPoW mechanism allows Bitcoin miners to settle hash power on the Bitcoin mainnet through syntax like OP_Return and delegate it to preferred validation nodes to earn CORE token rewards. In this way, Core not only gains protection from Bitcoin miners but also enhances miners' earnings, especially in the context of reduced Bitcoin block rewards, where Core's block rewards supplement the post-halving reward gap.

On the other hand, the Delegated Proof of Stake (DPoS) in Satoshi Plus consensus allows CORE token holders to support network security by delegating their CORE to validation nodes. This enables participation in the election of these validators and earns CORE token rewards for securing the chain. The key to this mechanism is the "hybrid score," which selects the top 27 validators by calculating delegated hash and delegated shares, updated every 24 hours, ensuring the decentralization and stability of the network.

The third important component of Satoshi Plus consensus is non-custodial Bitcoin staking. Since its launch in April 2024, the delegated amount of Core blockchain validators has exceeded 9,000 Bitcoins. This method centers around absolute time locks, a Bitcoin native feature that allows holders to lock their Bitcoins for a predefined period during which they cannot be spent. When Bitcoins remain locked on the Bitcoin blockchain, stakers delegate these Bitcoins to elect Core validators, who secure Core and earn CORE token rewards. Through this process, Bitcoin holders receive daily CORE token rewards without relinquishing custody of their assets or incurring counterparty risk.

It is noteworthy that Core has a deep connection with the Bitcoin community, particularly with miners and Bitcoin holders. This distinguishes Core from other Bitcoin L2 or sidechain projects. Over 75% of the global mining hash power supports the Core network through Delegated Proof of Work (DPoW), contributing hash power to on-chain validation nodes, thereby earning security rewards. The zero-risk, non-asset transfer nature of non-custodial Bitcoin staking has led many large Bitcoin holders and institutions to trust Core's technology and delegate their Bitcoins to validation nodes, maintaining network security. Unlike other Bitcoin projects, Core places greater emphasis on meeting Bitcoin holders' concerns regarding security and practical needs while providing yield opportunities.

Key Points of the Fusion Upgrade: Introduction of Dual Staking and LstBTC

With the approval of Bitcoin spot ETFs in January and the results of the U.S. elections in November, the cryptocurrency industry has once again reached a peak of attention. The traditional financial sector has been seeking more flexible ways to participate in Bitcoin.

Against this backdrop, on November 19, Core further launched the Fusion upgrade. The Fusion upgrade enhances Core's BTCFi ecosystem through Core Dual Staking and LstBTC, providing institutions with more efficient participation pathways.

The introduction of the dual staking product aims to address the balance of community reward distribution issues that may arise when Bitcoin stakers lock their assets and receive CORE token rewards through validation nodes during the non-custodial staking process. Especially in cases where institutions stake large amounts of Bitcoin, the released CORE rewards will correspondingly increase. Based on this context, to encourage Bitcoin stakers to re-stake the CORE rewards they receive back to validation nodes, dual staking enhances user participation willingness by offering higher annual percentage yields (APY). Dual staking is divided into four tiers, with the yield ratio varying based on the ratio of staked CORE to Bitcoin. They are Base, which is 0 CORE:1 BTC; Boost, which is 1,000 CORE:1 BTC; Super, which is 3,000 CORE:1 BTC; and Satoshi, which is 8,000 CORE:1 BTC, with the latter tier receiving the highest yield ratio.

The foundation of dual staking is the further development of the non-custodial Bitcoin staking launched in April, allowing Bitcoin stakers to earn higher validation node rewards by staking CORE tokens; on the other hand, it also incentivizes CORE token holders to earn higher staking rewards by holding and staking small amounts of Bitcoin (with a minimum participation of 0.01 BTC) compared to single staking of CORE tokens. Through this staking mechanism, Core has further strengthened its alignment with Bitcoin, allowing many institutions to explore Bitcoin yield possibilities while maintaining the security and sustainability of the Core blockchain.

Overall, the Fusion upgrade has a significant and favorable impact on the entire Core ecosystem. Before the Fusion upgrade, Delegated Proof of Work had already attracted over half of the total Bitcoin hash power. However, not all hash power delegators were clear on how to handle their CORE token rewards. Although CORE is the most useful token on the Core blockchain (used for paying gas fees, staking, and governance), miners often do not pay attention to non-mining activities. The CORE tokens introduced by the Fusion upgrade enhance the utility of staking, incentivizing miners to stake their CORE rewards to earn returns from Bitcoin reserves.

Moreover, before the upgrade, Bitcoin stakers earned CORE tokens, which they could also stake, but CORE staking was independent of their primary interest in Bitcoin staking. By rewarding Bitcoin stakers with dual staking to also stake CORE tokens, the economic value cycle is closed, further aligning Bitcoin with CORE assets. This capability enhances Bitcoin stakers' commitment to the yields and security of Core.

Before Fusion, the three components of Satoshi Plus consensus operated largely in isolation, even though they closely connected miners and Bitcoin stakers with the Core community. However, after dual staking, these components have merged, aligning all stakeholders around the Core network and CORE tokens.

Another key part of this upgrade is LstBTC, which allows Bitcoin stakers to maintain liquidity in the Core DeFi ecosystem while staking BTC. Additionally, they will earn CORE tokens as rewards while staking. While earning Bitcoin staking returns, users can use their LstBTC for lending, swapping, re-staking, and participating in other on-chain activities.

Over 200 Projects in the Ecosystem, Institutional Adoption Becomes a Trend

With the continuous development of the Core network, more and more decentralized finance projects are being built on its platform. Currently, the number of ecosystem projects on the Core chain has exceeded 200, including Pell Network, Solv Protocol, Avalon Finance, DeSyn Protocol, Colend, and others. The addition of these projects not only drives the expansion of the Core ecosystem but also provides momentum for its Total Value Locked (TVL) growth.

In 2024, the data growth on the Core chain has been significant: as of the third quarter, its TVL increased by 614%, and the staking volume of Bitcoin and CORE tokens rose by 85%. As of December 12, Core's TVL has surpassed $983 million, with over 31.5 million independent addresses on-chain, completing 327 million transactions.

Core's innovations have not only attracted Bitcoin holders but have also caught the attention of institutions. In June 2024, Core launched its first yield-bearing Bitcoin exchange-traded product (ETP), providing investors with the opportunity to earn returns through non-custodial Bitcoin staking. In collaboration with DeFi Technologies' subsidiary Valour, this ETP offers investors a yield of 5.65%, becoming an important pathway for institutional investors to enter the BTCFi ecosystem.

Additionally, Core has established strategic partnerships with several custodial service providers such as Fireblocks, Copper, Cactus, and Hashnote. These companies are key service providers participating in Core's dual staking. One of the main reasons custodial service providers have become a key competitive area for Bitcoin staking protocols and second layers is that most Bitcoin holders prefer to manage their assets through trusted custodial service providers. These service providers typically offer zero-risk, stable yield solutions, which are their primary considerations. Now, these service providers together form the institutional force unlocking BTC's potential through Core.

It is worth mentioning that after the success of MicroStrategy's Bitcoin strategy, many publicly traded companies have followed suit in buying Bitcoin and other crypto assets, while the publicly traded company DeFi Technologies announced in November the launch of a strategy called CoreFi, further enhancing Core's appeal among institutional investors. The CoreFi strategy is inspired by the successful experiences of MicroStrategy and Metaplanet. The CoreFi strategy provides investors with a regulated investment approach to obtain leveraged Bitcoin and CORE yield opportunities, giving investors high Beta exposure to Bitcoin and BTCFi.

On December 9, the Core Foundation announced a partnership with BitGo, making BitGo the first custodial institution to support user participation in Core's "dual staking." This collaboration marks a further breakthrough for Core in institutional adoption.

Through the Fusion upgrade, Core has not only enhanced the scalability and flexibility of the Bitcoin decentralized finance ecosystem but also provided more yield opportunities for Bitcoin holders and institutions. The introduction of dual staking and LstBTC has solidified Core's position in the BTCFi space.

In the future, with the launch of more innovative features and the growth of market demand, Core is expected to play an increasingly important role in the Bitcoin ecosystem, becoming a bridge connecting Bitcoin holders with BTCFi. For investors, Core's innovations bring new vitality to the market.