Echo Protocol is a rapidly growing DeFi protocol built on the Aptos blockchain, designed to enhance the utility of Bitcoin (BTC) within the Aptos ecosystem. Leveraging the Move programming language, Echo Protocol offers a suite of services including bridging, liquid staking, restaking, and lending & borrowing. This comprehensive approach has propelled Echo Protocol to become a leading DeFi force on Aptos, boasting a Total Value Locked (TVL) exceeding $400 million within just three months of launch, according to DefiLlama.
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Echo Protocol aims to unlock the potential of BTC within the DeFi space by integrating with prominent Bitcoin Layer 2 solutions like Babylon and B² Network. While the project’s native token is known as ECHO, detailed tokenomics remain undisclosed. This article explores the intricacies of Echo Protocol, examining its operational model, key features, and potential for future growth within the burgeoning Aptos ecosystem.
How Echo Protocol Works: The aBTC Mechanism
At the core of Echo Protocol lies aBTC, a liquid staking token pegged 1:1 to BTC. This mechanism allows users to seamlessly integrate their BTC holdings into the Aptos DeFi landscape. The process unfolds as follows:
- Staking on Bitcoin Layer 2: Users initially stake BTC on compatible Layer 2 networks. Currently, Echo Protocol supports uBTC from B² Network, with plans to integrate more platforms like Merlin, Bitlayer, and Babylon in the future.
- Bridging to aBTC: uBTC is then bridged to the Aptos network using Echo Protocol’s bridging functionality, converting it into aBTC.
- Utilizing aBTC in DeFi: This aBTC can be deployed across various DeFi applications within the Echo Protocol ecosystem:
- Echo Lending: Lend aBTC or utilize it as collateral to borrow other assets, earning yields of up to 12% in APT (Aptos’s native token).
- Echo Validator (Upcoming): Restake aBTC to bolster the security of Move-based Layer 2 protocols and earn an estimated 7% yield. This feature is currently under development.
Future plans include Echo LSD, a liquid staking solution allowing users to stake aBTC or APT to receive eAPT, another liquid staking token. eAPT holders can earn staking rewards and participate in other DeFi activities within the Aptos ecosystem.
mô hình hoạt động echo protocol
Essentially, aBTC allows users to accumulate rewards through:
- Staking rewards from participating Bitcoin Layer 2 platforms.
- Echo Point accumulation from bridging activities.
- Yield generated from lending and borrowing activities.
These accumulated points will contribute to future airdrops of the ECHO token upon its Token Generation Event (TGE).
Core Features: Bridging and Lending
Echo Protocol currently offers two primary functionalities: Bridging and Lending.
Seamless Bridging between Networks
The bridging feature facilitates the seamless transfer of wrapped BTC from supported Bitcoin Layer 2 solutions to the Aptos network, converting them into aBTC. The current integration with B² Network allows users to:
- Deposit BTC on the B² Network.
- Utilize UniRouter to stake BTC on B² Network and mint uBTC.
- Bridge uBTC to aBTC via Echo Protocol’s bridge.
Lending and Borrowing with aBTC
The lending feature allows users to lend or borrow aBTC, along with other assets like USDT, USDC, and APT. This functionality is divided into two core components:
Lending: Deposit assets to earn passive income. Each lending pool has a defined capacity limit. Currently, aBTC offers the highest APY at approximately 12%, while APT yields around 1%. Deposited assets can also be used as collateral for borrowing.
Borrowing: Secure loans by collateralizing assets deposited in the Lending section. Users should carefully consider key metrics like Loan-to-Value (LTV) ratio, borrowing APY, and health factor to mitigate liquidation risks.
Earning Echo Points: Participating in the Ecosystem
Echo Protocol utilizes an Echo Point system to reward active users. These points will be crucial for future airdrop eligibility. The platform’s Campaign feature offers additional opportunities to accumulate points through specific time-bound activities. Users can track their progress via:
- Total Echo Points accumulated.
- Leaderboard ranking.
- Total assets held within the protocol.
To participate:
- Connect a compatible wallet (e.g., Petra, OKX Wallet) or use a Google account to generate a wallet address.
- Utilize Echo Protocol’s features (Bridging, Lending) and participate in Campaign activities.
Current point allocation per activity (per day, based on $100 USD equivalent):
- Bridging: 1 point
- Lending: 2 points
- Borrowing: 5 points
- Staking: 10 points
Echo Protocol’s Backing and Future Outlook
Echo Protocol secured pre-seed funding led by The Spartan Group, with participation from notable investors like Arthur Hayes, ABCDE, Aptos, and Movement. This strong backing, coupled with its rapid growth and innovative features, positions Echo Protocol as a key player in the Aptos DeFi ecosystem. Projects with similar functionalities in other ecosystems include Astherus and Lombard, focusing on LST utilization and BTC liquidity respectively. With its ambitious roadmap and strategic partnerships, Echo Protocol is poised to further solidify its position as a leading DeFi platform on Aptos.
