BTCFi's top project CORE completes Fusion upgrade: a comprehensive 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. The security of Core is maintained by validating nodes through a combination of miners, Bitcoin staking, and Core's native token staking. With its innovative Satoshi Plus consensus, Core combines delegated proof of work (DPoW) and delegated proof of stake (DPoS) to provide long-term and stable income opportunities for Bitcoin holders.

Currently, about 75% of the global Bitcoin mining hash power has been contributed to the Core model through DPoW, and more than 9,000 bitcoins have been involved in its non-custodial Bitcoin staking. Core is unlocking the potential of Bitcoin to make it a key guardian and core asset for future decentralized finance.

On November 19th, CORE completed the Fusion upgrade, introducing two innovative products: CORE Dual Pledge and CORE LstBTC. This article will delve into the important changes of this upgrade and explore institutional adoption trends for BTCFi.

Deep into the Bitcoin community, innovatively launched the Satoshi Plus consensus

Core's foundation is its innovative Satoshi Plus consensus mechanism, in which the DPoW mechanism allows Bitcoin miners to settle hash power on the Bitcoin mainnet through a syntax like OP_Return and delegate it to preferred validators to earn CORE token rewards. In this way, Core not only gains the protection of Bitcoin miners, but also improves the miners' earnings, especially in the context of the reduction of the Bitcoin block reward, Core's block reward fills the reward gap after the halving.

On the other hand, Delegated Proof of Stake (DPoS) in the Satoshi Plus consensus allows CORE token holders to support network security by delegating CORE to validator nodes, thereby participating in the election of these validators and receiving CORE token rewards for securing the chain. The key to this mechanism is the 'mixed score', which selects the top 27 validators by calculating delegated hash and delegated stake, updating every 24 hours to ensure the decentralization and stability of the network.

The third important component of the Satoshi Plus consensus is non-custodial Bitcoin staking. Since its launch in April 2024, the delegation volume of Core blockchain validators has exceeded 9,000 BTC at one point. This method revolves around the absolute time lock, a local Bitcoin feature that allows holders to lock their Bitcoin for a predefined period of time during which it cannot be spent. While the Bitcoin is locked on the Bitcoin blockchain, the staker delegates it to elect Core validators who secure Core and receive CORE token rewards. Through this process, Bitcoin holders receive daily CORE token rewards without giving up custody of their assets or taking on counterparty risk.

It is worth noting that Core has a deep connection with the Bitcoin community, especially miners and Bitcoin holders. This sets Core apart 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 the validating nodes on the chain and receiving security rewards. The zero-risk and asset-transfer-free characteristics of non-custodial Bitcoin staking make many large Bitcoin holders and institutions willing to trust Core's technology and delegate their Bitcoin to validating nodes to maintain network security. Unlike other Bitcoin projects, Core focuses more on meeting their concerns for security and practical needs while providing income opportunities for Bitcoin holders.

Key points of Fusion upgrade: Dual staking and introduction of LstBTC

In January of this year, the Bitcoin spot ETF was approved, and in November, the results of the US presidential election were announced. Subsequently, the cryptocurrency industry once again became a hot topic. The traditional financial industry has been looking for more flexible ways to participate in Bitcoin.

Against this background, on November 19th, CORE further launched the Fusion upgrade. Through Core's dual pledge and LstBTC, Fusion upgrade enhances Core's BTCFi ecosystem and provides institutional investors with more efficient participation channels.

Among them, the launch of the double pledge product is aimed at solving the community reward distribution balance problem that may arise when Bitcoin pledgers lock their assets and claim CORE token rewards through validation nodes in the non-custodial pledging process. Especially in the case of a large amount of Bitcoin being pledged by institutions, the released CORE rewards will correspondingly increase. Against this background, in order to encourage Bitcoin pledgers to re-pledge the received CORE rewards to the validation nodes, the double pledge provides a higher annualized yield (APY) to enhance user participation willingness. The double pledge is divided into four levels, and the yield ratio varies according to the proportion of pledged CORE quantity to Bitcoin. They are Base, i.e. 0 CORE:1 BTC; Boost, i.e. 1,000 CORE:1 BTC; Super, i.e. 3,000 CORE:1 BTC; Satoshi, i.e. 8,000 CORE: 1 BTC, which will receive the highest yield ratio.

The operation basis of dual staking is to further develop the non-custodial Bitcoin staking launched in April, allowing Bitcoin stakers to receive higher validation node rewards by staking CORE tokens. On the other hand, it also incentivizes CORE token holders to obtain higher staking rewards by holding and staking small amounts of Bitcoin (minimum participation is 0.01 BTC) instead of just staking CORE tokens. With the staking mechanism, Core is more closely aligned with Bitcoin and allows many institutions to explore the possibilities of Bitcoin returns while maintaining the security and sustainability of the Core blockchain.

Overall, the Fusion upgrade has brought important and favorable impacts to the entire Core ecosystem. Prior to the Fusion upgrade, delegated proof of work (dPoW) had attracted more than half of the total Bitcoin hash rate. However, not all of the dPoW participants 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 token enhancement introduced by the Fusion upgrade can improve the staking utility and incentivize miners to stake their CORE rewards, earning returns on Bitcoin reserves.

In addition, before the upgrade, Bitcoin pledgers earn CORE tokens, which they can also pledge, but CORE pledging is separate from their main interest in Bitcoin pledging. Through dual pledging rewards, Bitcoin pledgers also pledge CORE tokens, closing the economic value loop and further aligning Bitcoin with CORE assets. This capability enhances Bitcoin pledgers' returns and security commitments to Core.

Before Fusion, the three components of the Satoshi Plus consensus operated basically in isolation, even though the miners and Bitcoin stakers were closely associated with the Core community, but after the double collateral, these components were integrated together, allowing all stakeholders to reach a consensus around the Core network and the CORE token.

Another key part of this upgrade is LstBTC, which allows Bitcoin pledgers to maintain their liquidity in the Core DeFi ecosystem while pledging BTC. In addition, they will also receive CORE tokens as rewards when pledging. Users can use their LstBTC to borrow, exchange, re-pledge, and participate in other on-chain activities while earning Bitcoin pledging rewards.

There are over 200 projects in the ecosystem, and it has become a trend for institutions to adopt them.

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

In 2024, the data on the Core chain has grown significantly: as of the third quarter, its TVL has grown by 614%, and the amount of Bitcoin and CORE token staking has increased by 85%. As of December 12th, Core's TVL has surpassed $983 million, with over 31.5 million unique addresses on the chain, and a total of 327 million transactions completed.

Core's innovation has not only attracted Bitcoin holders, but also caught the attention of institutions. In June 2024, Core launched its first income-generating Bitcoin Exchange Traded Product (ETP), providing investors with the opportunity to earn income through non-custodial Bitcoin staking. In collaboration with DeFi Technologies' subsidiary Valour, this ETP offers investors a 5.65% yield, becoming an important avenue for institutional investors to enter the BTCFi ecosystem.

In addition, Core has established strategic partnerships with multiple custodial service providers such as Fireblocks, Copper, Cactus, and Hashnote. These are important service providers participating in Core's dual-staking mechanism. One of the key competitive areas for Bitcoin staking protocols and layer two solutions is custodial service providers, as most Bitcoin holders prefer to manage their assets through trusted custodians. These service providers typically offer risk-free and stable income solutions, which is a primary consideration. Now, these service providers have become a collective force in unlocking the potential of BTC for Core.

It is worth mentioning that after the successful Bitcoin strategy of MicroStrategy, a large number of listed companies followed suit to buy Bitcoin and other encrypted assets. In November, the listed company DeFi Technologies announced the launch of a strategy called CoreFi, further enhancing Core's attractiveness among institutional investors. The inspiration for the CoreFi strategy comes from the successful experiences of MicroStrategy and Metaplanet. The CoreFi strategy provides investors with a regulated investment method to obtain leveraged income from Bitcoin and CORE, allowing investors to gain exposure to high-beta Bitcoin and BTCFi's economic exposure.

On December 9th, the Core Foundation announced a partnership with BitGo, which became the first custodian to support user participation in Core's 'double staking.' This partnership marks further breakthroughs in Core's institutional adoption.

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

In the future, with the launch of more innovative features and the growth of market demand, CORE is expected to play a more important role in the Bitcoin ecosystem, serving as a bridge between Bitcoin holders and BTCFi. For investors, CORE's innovation brings new vitality to the market.