Bitcoin News Today: Lombard Finance Launches LBTC on Etherlink, 70% Supply in DeFi as Bitcoin Staking Expands to Tezos L2

Lombard Finance, a developer of Bitcoin-focused decentralized finance (DeFi) solutions, has introduced its flagship liquid-staking Bitcoin token, LBTC, on Etherlink, a Layer 2 (L2) blockchain built on the Tezos network. The integration, announced on July 28, 2025, allows users to stake Bitcoin and receive LBTC—a tokenized, redeemable representation of Bitcoin that can be utilized across Etherlink’s DeFi applications. This move expands Bitcoin’s interoperability with Tezos-based protocols, enabling holders to access lending, staking, and liquidity provision opportunities without transferring custody of their assets.

LBTC, which is audited by Immunefi and Halborn and backed 1:1 by native Bitcoin, generates staking rewards via the Babylon protocol. Users can redeem LBTC for Bitcoin at any time, ensuring exposure to Bitcoin’s value while participating in DeFi activities. The token’s deployment on Etherlink aligns with Lombard’s multi-chain strategy, following its integration with the Sui blockchain earlier in 2025. Currently, LBTC is operational on Ethereum, Sui, Base, and BNB Chain, with 70% of its supply actively deployed in DeFi protocols such as Aave and Morpho.

The collaboration with Etherlink highlights a strategic effort to bridge Bitcoin’s liquidity with Tezos’ DeFi infrastructure. Etherlink’s EVM-compatible L2 solution offers low transaction costs and high throughput, addressing scalability challenges that have limited Bitcoin’s utility in DeFi. By enabling cross-chain interoperability, the partnership aims to attract developers to build protocols that combine Bitcoin’s store-of-value properties with Tezos’ energy-efficient proof-of-stake consensus. Anthony Hayot, Head of DeFi Adoption at Nomadic Labs, emphasized LBTC’s role as the primary Bitcoin asset for Etherlink, offering users access to “one of the most sophisticated Bitcoin solutions in the DeFi landscape” [1].

From a market perspective, the launch reflects growing competition among blockchain networks to host Bitcoin-based DeFi activity. While Ethereum remains dominant for wrapped Bitcoin tokens, Tezos’ developer-friendly environment and energy efficiency position it as a viable alternative. Jean-Frédéric Mognetti, Executive Director of the Tezos Foundation, stated that the integration aligns with the ecosystem’s innovation-driven vision, providing BTC holders with “new and exciting opportunities in DeFi” [1]. Analysts note that LBTC’s success will depend on user adoption, liquidity provision, and the extent to which Tezos-based projects integrate the token.

The initiative underscores broader industry trends toward cross-chain interoperability. As investors seek diversified DeFi exposure, the ability to leverage a single asset across multiple ecosystems enhances capital efficiency. However, challenges such as regulatory scrutiny of wrapped tokens and technical complexities in maintaining security across networks remain. Lombard’s approach mirrors strategies employed by Ethereum-based protocols like Aave and Compound but introduces a Tezos-centric alternative for Bitcoin-centric DeFi.

With nearly $2 billion in LBTC minted and circulating across EVM-compatible chains, the integration with Etherlink could significantly boost liquidity in the Tezos-powered ecosystem. LBTC will be accessible on protocols like Superlend, Hanji, IguanaDEX, and oku, and will also feature in Etherlink’s Apple Farm program, incentivizing usage through reward mechanisms. The move positions Bitcoin as a foundational asset in multi-chain DeFi architectures, balancing scalability with sustainability.

Source: [1] [Lombard Finance Launches LBTC on Etherlink, Expanding Bitcoin DeFi Opportunities on Tezos L2 (28 Jul)] [https://coinmarketcap.com/community/articles/688769ba3c1f324d51532ee9/]