Introduction

Welcome to the second edition of our biweekly market report, HashStack!

HashStack offers readers key updates on the latest market trends, insights, and developments. Each edition provides timely analysis of major news, sector developments, and emerging opportunities, helping you stay on top of everything in the Web3 space.

Coinbase cbBTC launches on Solana

Even as the largest cryptocurrency by market capitalization, Bitcoin is still significantly underutilized in many financial applications. Recently, BitcoinFi — using Bitcoin in decentralized finance (DeFi) to unlock yield-generating opportunities — has gained momentum across various blockchain ecosystems.

BitcoinFi protocols are expanding Bitcoin’s utility beyond a store of value, allowing holders to participate in yield farming, lending, and other DeFi activities, making Bitcoin a more versatile financial asset. The growth of BitcoinFi bridges the traditionally siloed Bitcoin ecosystem with the broader DeFi space.

Within a few days of Coinbase’s launch of cbBTC on Solana in September, the token already exceeds $33M in total value locked (TVL) held by more than 2,000 holders. Protocol integrations with Kamino, Jupiter, Orca, and Meteora have made cbBTC accessible to Solana users, driving its success.

With cbBTC, Coinbase captures a slice of the fast-moving Solana ecosystem, which has recorded the largest net inflow over the past three months. The token is now the third largest wrapped Bitcoin, with a 6% market share.

Taking the ratio of WBTC supply on Ethereum and the total BTC supply as a yardstick for adoption, we believe there is more room for growth driven by new entrants, increasing support for wrapped Bitcoin on different chains, and growing institutional and retail demand for Bitcoin yields.

Source: Dune Analytics (@yandhii)

Avalon Labs launches USDa, a stablecoin backed by Bitcoin

Avalon Finance, a leading BTC asset lending platform, introduces USDa, a Bitcoin-backed stablecoin. Supporting over 13 networks, the platform is gaining significant traction, with its TVL increasing by more than twofold within a month. The launch of USDa underscores Avalon’s commitment to providing users with a stablecoin fully backed by Bitcoin. With a LayerZero integration, USDa can also be bridged across Ethereum, BNB, Mantle, and Base chains.

The platform is running a boosted yield incentive campaign for early USDa stakers to encourage early adoption. The campaign aims to drive USDa adoption and further enhance the growth of its Bitcoin lending ecosystem. Initial results are encouraging, with over $55 million in USDa already staked on the platform.

Core DAO announces the launch of BitFLUX and critical updates to the upcoming Fusion Upgrade

Core DAO, the EVM-compatible PoS layer for Bitcoin that enables non-custodial Bitcoin staking, announces the launch of BitFLUX, a Bitcoin DEX on Core. Core DAO has provided several updates on key features that can be expected in their imminent Fusion Upgrade.

1. A dual staking mechanism for $CORE and $BTC, offering retail and institutional users enhanced yields;

2. LstBTC, an ERC-20 token that is pegged 1:1 to BTC, offering BTC stakers access to liquidity that could be used to participate in various DeFi activities on Core.

Since September 4, Core has grown from a TVL of $41.64M to $855.55M, a testament to the growing appetite for leveraging BTC to generate additional yield through liquid staking and staking.

Core is also partnering with more than 100+ EVM-compatible projects which will be crucial for its future success as more utilities are introduced to its native lstBTC across various onchain activities beyond staking and restaking.

Source: DeFiLlama

Pell Network announces integration with Babylon

Pell Network, an omnichain restaking platform based on Bitcoin LSTs, announces an integration with Babylon that allows users to earn enhanced yields on their Bitcoin LSTs by restaking and securing decentralized validated services (DVS). Since its inception, the protocol has amassed over $570M in TVL. Compared to Eigenlayer, which has $12B in TVL, the Bitcoin LSTs could offer more growth opportunities as the BTCFi narrative takes off and the demand for Bitcoin yields grows.

Thriving BTCFi ecosystem on BNB Chain

With the renewed momentum of the BTCFi narrative, the BNB Chain is benefitting from the rising interest in Bitcoin yields, driven partly by the BTCFi incentive campaign, Gold Miner, on BNB Chain that offers holders access to lucrative yields and rewards. Key players driving BTCFi adoption on BNB include Avalon Finance and Solv Protocol.

Since early November, Avalon Finance’s TVL on BNB has surged by nearly 50%, with USDa surpassing $100 million. Similarly, Solv Protocol’s TVL has increased by approximately 33% during this period. Although incentive campaigns have helped to boost liquidity initially, BNB’s already established ecosystem — featuring over $6 billion in TVL across more than 800 protocols and its commitment to fostering diverse DeFi integrations — has been crucial to its recent growth.

Amidst the ongoing hype around BitcoinFi, various architectural discussions on the underlying Bitcoin protocol have also taken place in the past two weeks, addressing Bitcoin scalability issues.

OP_NEXT Conference

During the OP_NEXT Conference, developers discussed many technical proposals about Bitcoin, such as:

• OP_CTV receives near-universal support from developers. Check out our previous report about OP_CTV with Bitcoin covenants for further insights.

• OP_CAT implementations were also discussed, some of which may not need soft-fork.

• Participants discussed how the proposals could be activated. Given the controversy around the Taproot soft-fork activation, we can expect similar issues for the upcoming soft-fork.

ColliderScript

In addition to solutions like OP_CTV and OP_CAT that enable covenants, a new design called ColliderScript has been proposed within the past two weeks. ColliderScript leverages 160-bit hash collisions to implement covenants without introducing a new opcode. However, its computational demands are high, potentially limiting its practicality in the near term.

Ark’s new design to unlock early liquidity

Discussions also occur regarding off-chain solutions. In addition to the Lightning Network, Ark emerges as another notable option. Ark has recently introduced a new design by simplifying the VTXO tree signing process. Transactions are now only signed by participants whose VTXO is the descendants of the transactions, removing the requirement to have ephemeral keys and sign all transactions in the key.

Other relevant Bitcoin News

• Following Lorenzo’s announcement of stBTC on Ethereum, it will now integrate with Wormhole to enable the native transfer of stBTC and enzoBTC across Ethereum, BNB Chain, and Sui Network.

• Pell Network partners with Satoshi to introduce satUSD, a stablecoin backed by Bitcoin that is interoperable across the Bitcoin mainnet, L2s, and EVM chains.

Ethereum Researcher Justin Drake proposes Beam Chain

During Devcon early last week, Ethereum Researcher Justin Drake proposes Beam Chain, a redesign of the priorities for the consensus layer by focusing on three core areas: block production, staking, and cryptography. Key features from the Beam Chain proposal include:

• 4 seconds block time

• faster finality using 3-slot FFG

• enshrining zero knowledge at the base layer, transforming computation into zk-SNARKs or zk-STARKs without revealing all the information to the network

• introducing hash-based, post-quantum cryptography as we enter the age of quantum computing

The Beam Chain proposal will still include annual incremental upgrades. However, several ambitious goals that require more testing will be bundled together as part of the beam chain upgrade, which may only be realistically implemented a few years into the future. Therefore, if implemented, the Beam Chain will not have a material positive impact on the network in the short term.

While this redesign could provide more clarity regarding the roadmap and priorities, the announcement of Beam Chain is sparking some controversy. Some worry that the lengthy timeline would cause Ethereum to lose its market share to other L1s, such as Solana. Others believe that Ethereum’s size cannot be taken lightly, which warrants the time needed to battle-test key major upgrades.

Paradigm’s new compiler Solar shows promising results when compared with Solc, Solang

After releasing Foundry, the toolkit for Ethereum application development in 2021, some issues are surfacing amid its successful adoption. Compilation timing is long and generates suboptimal code, resulting in the compiler becoming a bottleneck in application development.

The Paradigm team has developed a new frontend compiler called Solar, written in Rust, that will enable developers to scale their productivity. Initial results for lexing and parsing are promising, with Solar outperforming Solc at emitting ABI for Solady by 41x and other compilers across various benchmarks.

RISC Zero introduces Kailua

RISC Zero launches Kailua, a tool that upgrades optimistic rollups to hybrid ZK rollups, leveraging OP’s upcoming Kona suite. With Kailua fully compatible with the OP Stack, networks can significantly benefit from reducing finality times from less than an hour up to 7 days while avoiding the high operational costs associated with constant zk proving.

Additionally, Kailua hybrid rollups can outsource their proving infrastructure to RISC Zero’s Boundless, cutting down on the need to build expensive and complex proving infrastructure. Kailua also minimizes the rollup collateral costs from linear scaling to a fixed cost. Kailua’s official product launch will be supported by various rollup-as-a-service providers, marking a positive development towards a hybrid rollup future.

NEAR announces AI Assistant in the alpha stage and NEAR Intents in the beta stage

As the hub for AI innovation, NEAR protocol announces the release of NEAR AI Assistant and NEAR Intents. NEAR AI Assistant can act on users’ behalf and transact with other AI Agents. Users can already use their NEAR account to engage agents to perform transactions such as launching a memecoin, swapping tokens, or making an online purchase for a physical good. Additionally, NEAR Intent was announced to allow AI Agents to seamlessly transact information, assets, physical goods, and services with each other onchain.

Currently, NEAR Intent is in beta rollout, with support for the NEAR, Ethereum, Aurora, and Bitcoin networks available now and more chains coming in 2025. This development comes at a time when AI Agents are the talk of the town, and the release of AI Assistant and Intents marks an important next step for NEAR in providing a seamless cross-chain, AI-powered user experience.

Nous Research introduces their Forge Reasoning Engine API

Nous introduces Forge Reasoning Engine API, a solution that helps LLMs enhance their inference speed through a combination of Monte Carlo Tree Search, Chain Of Code, Mixture of Agents, and Code Interpreter use. The use of Forge Reasoning API on Nous’ Hermes 70B models has yielded positive results, outperforming several larger LLMs in AIME, an assessment test used in determining eligibility for the US Math Olympiad.

While currently only available to a small group of beta testers, the Forge Engine API will eventually be opened up to a broader audience. It will also be model agnostic, allowing any LLM to make the next leap in performance through inference optimization.

Source: Nous Research

Everything can be tokenized

Tether announces the Hadron Tokenization platform that supports tokenizing a broader range of assets, such as stocks, bonds, stablecoins, loyalty points, and more. With a focus on regulatory adherence, Hadron will come with comprehensive compliance tools. Hadron will also support multiple blockchain networks and Bitcoin Layer 2 solutions like Liquid by Blockstream. As the largest stablecoin issuer, Tether’s successful endeavor into the RWA space could further drive greater adoption of USDT.

BNB Chain also announces its one-stop tokenization platform, allowing individuals and businesses to tokenize their assets easily into BEP-20 and BEP-721 tokens. Key partners in this initiative include Bitbond, Brickken, InvestaX, Matrixdock, TokenFi, and Tokeny.

Projects such as CarbonFi and Hydrokken are already using BNB as their go-to chain for asset tokenization, tapping into the BNB chain’s millions of active users. Although RWA is not new, the growing number of tokenization solutions underscores the maturity and effectiveness of blockchain technology in enhancing efficiency for real-world asset management.