From Bitcoin profits to CeFi tokenization, how does Lorenzo reconstruct on-chain asset logic?

Lorenzo is currently focused on on-chain asset management, dedicated to bringing traditional financial products onto the chain through tokenization technology, and seamlessly integrating with the Decentralized Finance ecosystem.

Written by: 1912212.eth, Foresight News

The crypto market is by no means a mecca for gambling and speculation, it still has a lot of real pain points that remain unmet, and many capital utilization efficiencies still need to be fully explored and released. As a well-developed BTCFi, Lorenzo once led the market limelight, integrating with more than 20 chains and more than 30 DeFi protocols in 2024 to provide stable income services for BTC assets worth more than $600 million. However, the huge crypto market is not limited to Bitcoin, with the continuous growth of stablecoins, DeFi, and RWA, focusing on a single asset of Bitcoin is still far from meeting the market demand.

Since 2020, the total locked value in DeFi has once surpassed 250 billion USD, becoming the core engine of the crypto market. However, in the fields of on-chain asset management and yield generation, complex operations, high Gas fees, and the fragmentation between protocols have made it difficult for institutions and ordinary users to participate widely. The yield models of DeFi mostly rely on short-term incentives, lacking long-term stability and struggling to meet institutions' needs for risk management and stable returns.

At the same time, the construction of on-chain yield infrastructure is far behind the growth of crypto assets. PoS chains like Ethereum support staking, but the integration of cross-chain liquidity and asset management is insufficient, leading to low capital efficiency. The rise of PayFi has promoted the integration of on-chain payments and financial services, while the demand for tokenization of traditional financial products has surged. The trading volume of stablecoins has now exceeded the total of Visa and Mastercard, with over $160 billion in stablecoins circulating on-chain; however, the infrastructure for managing and deploying these funds to generate yields is still lacking. Institutional investors are eager to bring the mature financial tools of CeFi into DeFi, but existing platforms lack a unified framework to achieve this.

Lorenzo Protocol sees a greater market opportunity and naturally ventures into "on-chain investment banking" to accommodate more complex asset structures and higher-level financial service needs.

From BTCFi to Institutional-Grade On-Chain Asset Management, Moving Towards the Financial Abstraction Layer

Based on the technology and funds accumulated in its past Bitcoin liquidity ecosystem, the Lorenzo Protocol further upgrades to an institutional-level on-chain asset management platform. By tokenizing CeFi financial products and deeply integrating with DeFi scenarios, it fills the gap in on-chain asset management, providing safe, efficient, and transparent solutions for institutions and high-net-worth users. In short, it transforms core crypto assets like Bitcoin from a single value storage into financial primitives for on-chain asset management, offering users a one-stop asset management experience.

Lorenzo's core advantage lies in its Financial Abstraction Layer (FAL), a modular financial framework that abstracts the process of asset management and yield generation. It supports the tokenization of assets such as BTC, generating tradable on-chain tokens. At the same time, Lorenzo transforms asset custody, yield generation, and strategy management into on-chain native standardized components, thereby achieving a seamless connection between CeFi financial products and on-chain financial scenarios.

Lorenzo is more like an "on-chain investment bank," receiving assets such as Bitcoin and stablecoins, and then packaging them into standardized yield products through strategies like staking, arbitrage, and quantitative trading, for easy integration by partners like wallets, PayFi, or RWAFi.

On April 18, 2025, Lorenzo Protocol completed its IDO through Binance Wallet and PancakeSwap, issuing the governance token BANK (total supply of 2.1 billion tokens, initial circulation of 425 million tokens). The TGE attracted over 35 million USD in subscriptions, with the overall subscription amount oversubscribed by 18,329%, reaching its fundraising goal in less than a minute after launch. Since the IDO, Lorenzo has evolved from focusing on Bitcoin liquidity financial layer to an institutional-grade on-chain asset management platform, focusing on the tokenization of CeFi financial products and integrating them with DeFi.

Lorenzo abstracts on-chain asset management and yield generation through a unified financial framework, providing seamless interaction experiences for institutions and users. Additionally, Lorenzo focuses on real yields and sustainable business models: Lorenzo offers stable returns through DeFi yield aggregation and tokenization financial products, with its revenue coming from protocol fees, cross-chain bridging fees, and ecosystem partnership sharing. The governance mechanism of the BANK Token (veBANK) further incentivizes community participation, ensuring long-term stability.

In the future, Lorenzo plans to consolidate its leading position through technological optimization, ecological expansion, and community empowerment (ranking system and task rewards).

Operational Logic

Lorenzo's product design and technical architecture revolve around the core needs of institutions and on-chain asset management, covering asset tokenization, yield generation, cross-chain liquidity, and risk management.

Lorenzo has built a clear and sustainable asset flow path: first, users deposit on-chain assets such as stablecoins into the co-management account of Lorenzo and its partners (such as PayFi or RWAfi platforms) as the basic input. These assets are deployed to multiple on-chain protocols through Lorenzo's internally designed strategy modules to generate stable yields, forming the first layer of value for asset appreciation.

Subsequently, these yield-bearing assets (or tokenized certificates) are standardized and packaged, further integrated as composable asset modules into PayFi products, wallet yield accounts, the deposit side of lending protocols, and RWA platforms, thereby completing yield reuse and value amplification. Throughout this process, users receive continuous returns, while the Lorenzo protocol realizes a logical closed loop of asset inflow, yield generation, and re-circulation, enhancing the system's reuse efficiency and capital utilization.

Lorenzo's core products mainly consist of three parts. First is the Vault model, which is divided into two categories: simple strategy pools and composite strategy pools. In the simple strategy pool, each Vault corresponds to a specific yield strategy, with a clear structure and transparent execution; while the composite strategy pool further aggregates multiple simple pools based on this, dynamically managed and rebalanced by individuals, institutions, or even AI, to achieve more flexible yield optimization.

The second part is the modular API output, where Lorenzo provides a series of interfaces for client-side output of yield calculation and distribution logic, asset Value status data, as well as front-end UI components that can be directly integrated, facilitating quick integration for ecosystem projects.

The final part is the tokenization capability of financial services, covering everything from on-chain fundraising to off-chain actual operations, and then back to the on-chain settlement process, bridging the connection between traditional financial services and on-chain asset management.

Summary

Lorenzo Protocol successfully fills the gap in on-chain asset management by tokenizing CeFi financial products and deeply integrating with DeFi scenarios. Its universal financial abstraction layer releases the liquidity and yield potential of assets such as BTC, providing institutions and high-net-worth users with safe, transparent, and efficient asset management solutions. From the "Bitcoin Liquidity Infrastructure Layer" to the launch of IDO, which once attracted market attention, Lorenzo has not stopped its pace. On the journey towards the "Financial Abstraction Layer," Lorenzo truly demonstrates its determination for long-term construction and forward-looking vision.

As one of the leading stablecoin projects in this cycle, Ethena's tokenized dollar USDe has seen its market capitalization soar. Tokenizing a single financial asset can reach a market scale of hundreds of millions of dollars. After supporting the tokenization of various financial products and fully integrating and utilizing them, Lorenzo may become a pioneer in on-chain asset management, leading a new wave of crypto finance.