Core: A Bitcoin-Aligned, EVM-Compatible Layer 1 Blockchain

Core is a Bitcoin-aligned, EVM-compatible Layer 1 blockchain. Bitcoin miners, Bitcoin stakers, and CORE stakers all contribute to secure the Core blockchain. For miners, Delegated Proof of Work (DPoW) is the process by which Bitcoin miners can add to their Proof of Work (PoW) rewards by costlessly extending their hash power to secure Core. By increasing miner rewards and expanding their protective capacity to cover Core, Delegated Proof of Work helps to secure and decentralize both the Core and Bitcoin blockchains. Notably, over 73% of Bitcoin miners’ hash power now supports Core’s validator nodes.

In addition to DPoW incorporating miners, Non-Custodial Bitcoin Staking enables Bitcoin holders to participate in securing Core. Currently, around 7,600 BTC is staked non-custodially on Core, bolstering the blockchain’s security. Furthermore, complementing the Bitcoin-based security, Delegated Proof of Stake (DPoS) allows CORE holders to also contribute to Core security. Over 160M CORE tokens are presently staked.

Under the security of Bitcoin’s miners and holders, Core’s goal is to function as Bitcoin’s complementary smart contract platform, dedicated to expanding the Bitcoin-based ecosystem. On-chain data shows that Core has attracted over 26.9 million unique wallet addresses and more than 300 million transactions. Recently, Core’s total value locked (TVL) exceeded $646 million (as of 4 PM UTC+ 8 on November 6). The largest contributors to Core’s on-chain TVL are decentralized finance projects, including Colend, Pell Network, Avalon Finance, CoreX, and Glyph. This article explores Core’s significant developments.

Flagship Projects: Colend and Solv Showcasing Core’s Bitcoin Ecosystem

Core’s ecosystem emphasizes unlocking Bitcoin’s potential value by facilitating decentralized finance (DeFi) on Bitcoin-secured blockchain rails. Over 100 projects are already live on Core, with decentralized exchanges like CoreX and Glyph demonstrating steady growth. Colend, Core’s native lending protocol, is a cornerstone of the BTCfi ecosystem. Users can earn interest by depositing assets into Colend and can leverage these deposits as collateral for loans, enhancing liquidity within the network.

Solv Protocol is another pivotal project, aiming to serve as a decentralized Bitcoin reserve. It supports BTC asset fragmentation, yield generation, and compliant custodianship through its liquidity consensus infrastructure. With backing from investors like Binance Labs, Solv provides users with opportunities to earn BTC yields on the Core network, supporting initiatives such as Avalon-SolvBTC.b, Colend SolvBTC.m, and Colend-SolvBTC.b. Recently, Solv introduced SolvBTC.CORE, a liquid-staked token, which achieved a successful launch with 500 tokens minted within just two hours.

As of now, Colend’s TVL exceeds $180 million, with deposits over $170 million and loans totaling more than $12 million. The growth is anticipated to continue as more BTC liquidity-staked tokens enter the ecosystem. Additionally, BTCfi projects such as perpetual BTC contracts, liquidity management protocols, and Quantifi are further boosting the Core ecosystem’s development.

Core’s Unique Satoshi Plus Consensus Mechanism

The Core network utilizes the unique Satoshi Plus consensus mechanism that combines Delegated Proof of Work (DPoW), Delegated Proof of Stake (DPoS), and Non-Custodial Bitcoin Staking. Each of these elements coalesce in the election of Core validators, who are responsible for generating blocks and verifying transactions.

Bitcoin miners secure the Bitcoin network via Proof of Work (PoW) and can delegate their hash power to Core’s validators by embedding delegation messages in the OP_RETURN field of Bitcoin transactions. This delegation approach is non-intrusive, allowing miners to maintain Bitcoin’s security while simultaneously supporting the Core network. Additionally, CORE token holders contribute to network security by delegating their CORE tokens to validators.

A third component of the Satoshi Plus mechanism is Non-Custodial Bitcoin Staking, which allows any Bitcoin holder to earn rewards by staking BTC without relinquishing control over their assets. BTC stakers operate exclusively through Bitcoin’s existing mechanisms, similarly to how miners delegate to validator nodes using the OP_RETURN field. This mechanism embeds a small amount of data on the Bitcoin network, enabling both BTC stakers and miners to participate in Core’s security while remaining solely on the Bitcoin network. Miners use OP_RETURN in blocks they generate, while BTC stakers use locked transactions with OP_RETURN. Core’s relayers then retrieve this delegation information from the Bitcoin network.

Core updates its validator set and distributes rewards daily. Each day, all validators are assigned a combined score based on three factors: Bitcoin miners’ hash power, BTC staking, and CORE token staking. The top 27 validators with the highest scores form the validator set and are responsible for generating blocks on the Core network throughout the round. At the end of each round, rewards are calculated and distributed, and the validator set for the following day is established.

From Non-Custodial BTC Staking to Dual Staking

According to data from Core’s staking page, since the launch of non-custodial BTC staking on Core in April, Bitcoin holders have delegated over 7,600 BTC (valued at approximately $595 million) to Core’s validators. In parallel, CORE token staking has reached 160 million tokens. Core’s non-custodial BTC staking is distinct because BTC holders lock their BTC directly on the native Bitcoin network, contributing to the security of the Core blockchain in exchange for CORE tokens, all while avoiding counterparty risk. The rewards from this staking mechanism are directed mainly to BTC stakers who select the validator, making it an “intrinsic yield” where staking rewards are generated directly by the protocol itself. Essentially, the Core network requires BTC to be staked to secure its blockchain, and BTC stakers earn node validation rewards as a result.

In the broader market, institutional BTC holders are increasingly focused on unlocking more economic value from their BTC. Due to the current supply-demand dynamics, an inverse relationship exists between BTC staking and yield. For example, an institution with billions in BTC holdings deploying these assets in the market may face an excess of supply over demand, resulting in a decrease in yield. To maintain high BTC staking yields and improve the economic alignment of BTC with CORE, Core is integrating Dual Staking.

The Dual Staking model addresses economic challenges by allowing BTC stakers who also stake CORE tokens to receive a higher BTC staking yield, with the yield proportional to the amount of CORE tokens staked. This mechanism enhances alignment between the BTC and CORE, creating a sustainable yield framework for both. By boosting sustainable BTC yields, dual staking unlocks a potential Bitcoin value of $1.5 trillion within the Core ecosystem. This model also incentivizes long-term BTC holders in Core’s ecosystem — BTC staking rewards increase when both BTC and CORE are staked simultaneously. In this way, Core effectively acts as a secondary reward provider for Bitcoin, distributing CORE tokens to BTC stakers in exchange for their contribution to security. The introduction of Dual Staking adds additional security incentives for both Core and Bitcoin while stabilizing the economic relationship between the two.

Since the announcement of Dual Staking in September 2024, Core’s innovative model has attracted significant institutional interest. Institutions that are already staking Bitcoin are eager to gain increased returns through Dual Staking, aligning their interests with the Core ecosystem.

Introducing stCORE: A Liquid Staking Token

The Core network has introduced liquidity vouchers called stCORE for staked CORE tokens, similar to Ethereum’s stETH. These vouchers allow CORE token holders to stake their tokens while simultaneously using stCORE to participate in on-chain DeFi protocols, enhancing capital efficiency without compromising network security contributions. Holding stCORE enables users to earn rewards from Core’s consensus mechanism in addition to liquidity and yield from ecosystem dApps. Additionally, stCORE supports automatic compounding and has a 7-day redemption period.

Recent On-Chain Event: Core Ignition Drop

The Core Ignition Drop is an initiative launched on Core in 2024 to activate the on-chain ecosystem and reward community members for their contributions. The first season began in March 2024, attracting over 50,000 registered users and generating liquidity participation exceeding $356 million by September. The second season expanded incentives to include gaming and social media interactions, introducing a team incentive model to foster a community-centered approach.

Season 2 began with Solv Protocol’s introduction of SolvBTC.CORE. Minting SolvBTC.CORE during this event earned users 14 XP points from Solv, along with additional on-chain interaction rewards called Sparks. Users could place SolvBTC.CORE in the ecosystem’s lending platform, Colend, or provide liquidity on CoreX, Glyph, and NLX to earn yields. Notably, SolvBTC.CORE was fully minted in less than two hours after launch.

Core’s approach to building Bitcoin DeFi is evident in the thoughtful design of reward mechanisms and interactive on-chain activities. For high-net-worth users, Core integrates developers and dApp resources to provide straightforward on-chain benefits and multiple incentives. Meanwhile, community members can benefit from incentives through social media engagement or by staking stCORE tokens. This incentive mechanism benefits both users and on-chain developers, encouraging further project development on Core through the Core Ignition incentive program. Season 2 achieved a 28% increase in user engagement within one month, and the TVL of dApps on the chain more than doubled over six months.

Core’s Upcoming Fusion Upgrade and Launch of Core Atomic Swaps

Core recently announced the Fusion upgrade, focusing on dual staking and LstBTC. Dual staking allows BTC holders to earn a risk-free base rate, while simultaneous CORE staking offers a “dual staking rate.” LstBTC maintains BTC liquidity for staking and DeFi activities, allowing BTC holders to benefit from both staking and DeFi.

The Fusion upgrade also introduces Core Atomic Swaps, enabling trustless, peer-to-peer transactions between Core and other blockchains. Based on Hashed Timelock Contracts (HTLC), Core Atomic Swaps allow users to lock assets on their respective blockchains and use a hash key for unlocking. This trustless approach ensures secure transactions between Bitcoin and Core or other EVM-compatible blockchains, supporting ERC20, BRC20, NFTs, and Ordinals.

Core Foundation’s Commitment to Unlocking BTC’s Value

Core’s first major mainnet upgrade, the Fusion upgrade, is set for the Q4 2024. This upgrade focuses on introducing Dual Staking and officially launching LstBTC. Following the Fusion upgrade, Core aims to facilitate new discussions around Bitcoin’s economic role by bridging crypto finance and traditional finance, unlocking BTC yields further and deepening the integration of Core with the Bitcoin network.

The upgrade’s dual staking mechanism allows Bitcoin holders to stake their BTC at a base, risk-free rate, while holders who stake CORE tokens alongside BTC can earn a “Dual Staking rate.” This non-custodial approach minimizes risk, as users can keep their BTC secure in their wallets on the Bitcoin network without moving it. However, non-custodial staking typically limits liquidity, restricting BTC holders from participating in both staking and DeFi activities. Core addresses this issue with the introduction of LstBTC, which allows users to receive staking rewards from Core while preserving their BTC’s liquidity and usability in the BTCfi ecosystem. This enables Bitcoin holders to enjoy both staking rewards and DeFi opportunities without compromise.

Enhancing Liquidity for Staked Tokens: Fusion Upgrade Introduces LstBTC

LstBTC is designed to preserve the value of BTC while offering new revenue opportunities simply by holding BTC. Each LstBTC token is pegged 1:1 to BTC, keeping its value stable. As an ERC-20 compatible token, LstBTC allows holders to engage with various DeFi applications, including lending, transferring, swapping, and other use cases within the ecosystem. By bridging the gap between staking and liquidity, LstBTC enables BTC holders to participate more fully in the expanding BTCfi ecosystem.

Beyond enhancing the flexibility of BTC, Core contributors are focused on attracting greater institutional liquidity and supporting a broader range of use cases. A key upcoming feature, Core Atomic Swaps, will enable trustless peer-to-peer transactions between Core and other blockchains, especially the Bitcoin network.

Expanding BTC Economic Liquidity with Core Atomic Swaps

Core Atomic Swaps operate on the Hashed Timelock Contract (HTLC) principle, which combines cryptographic hash functions with time locks to uphold secure transactions. HTLC allows both parties in a transaction to lock assets on their respective blockchains and set a hashed key as the unlock condition. If one party does not reveal this key within the specified time, the other party can withdraw their locked assets, maintaining asset safety for both sides.

Core Atomic Swaps offer simplicity and security by eliminating the need for centralized institutions, oracles, or relays. This unlocks truly trustless asset exchanges between the Bitcoin network, Core, and other EVM-compatible blockchains, with transaction liquidity depending solely on participant consensus. Core Atomic Swaps also support a variety of asset types, such as ERC20, BRC20, NFTs, and Ordinals, enhancing interoperability and liquidity across multiple blockchain protocols.

In the future, Core Atomic Swaps will integrate an automated market-making protocol to improve trading efficiency and user experience. This system will continuously monitor and match orders across blockchain networks, automatically initiating the HTLC process when matching orders are found. This expansion simplifies order matching, enables instant settlement, and provides a trading experience similar to decentralized exchanges (DEX) or traditional platforms, while retaining decentralization and trustlessness. Market makers can also earn transaction fees, further incentivizing liquidity and market participation.

The Core Commitment to Unlocking Over $1.5 Billion in BTC Value

Core has positioned itself as a leader in blockchain innovation, attracting substantial community interest since its launch in January 2023. It now has millions of active adopters, with over 26.9 million unique addresses, more than 300 million transactions, and over $650 million in total value locked (TVL). More than 7,600 BTC (valued at over $595 million) have been staked on Core, with around 73% of Bitcoin mining hash power supporting the network’s security. By bridging staking and liquidity, Core enables BTC holders to participate more actively in the evolving BTCfi ecosystem.

To further unlock BTC value, Core powers its first yield-bearing Bitcoin Exchange Traded Product (ETP), which was launched in June 2024. Through Valour, a DeFi Technologies subsidiary, this Core-powered ETP launched on the Frankfurt Stock Exchange, offering a 5.65% yield through Non-Custodial BTC Staking. This ETP provides an additional way for investors to earn returns on their Bitcoin holdings. Custody service providers like Fireblocks and Copper have also integrated with Core, supporting Non-Custodial BTC Staking and set to unleash institutional Dual Staking as strategic partners in unlocking BTC’s value.

The demand for cryptocurrency ETFs is growing worldwide, but regulatory frameworks are still catching up. Early Core contributor Rich Rines expressed the Core Foundation’s vision, stating, “The Core Foundation’s goal is to launch an ETF in the U.S. within five years, allowing more people to hold digital currency derivatives.” This goal underscores the Core Foundation’s commitment to advancing the important cause of Bitcoin finance.

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