For most of its history, bitcoin has been prized as digital gold: an asset to hold rather than use. That passivity has left trillions of dollars’ worth of BTC sitting idle in wallets, disconnected from the yield strategies and composability that define decentralized finance (DeFi).

The rise of liquid staking tokens promises to change that, positioning bitcoin not only as a store of value but as a productive asset integrated into onchain capital markets.

Liquid staking refers to the process of uses offering their crypto to help secure a network, and receive a liquid, tradable token in return that represents their staked assets and can be used across DeFi while the original tokens continue earning staking rewards.

Lombard Finance has emerged as one of the prominent projects in bitcoin liquid staking. Its flagship product, LBTC, is a yield-bearing token backed 1:1 by BTC.

When BTC is deposited into the Lombard protocol, the underlying coins are staked, primarily via Babylon, a protocol enabling trustless, self-custodial bitcoin staking. Users receive LBTC in return, which can be deployed across DeFi ecosystems while the original Bitcoin earns staking rewards.

This dual functionality is key. Holders can keep exposure to bitcoin while using LBTC in lending, borrowing, and liquidity provision across protocols such as Aave, Morpho, Pendle, and Ether.fi. Designed for interoperability, LBTC moves across Ethereum, Base, BNB Chain, and other networks, preventing liquidity fragmentation and ensuring bitcoin can participate in a multi-chain DeFi environment.

A market potentially worth billions

By mobilizing BTC’s dormant liquidity, Lombard and other liquid staking projects aim to provide the infrastructure for Bitcoin DeFi, channeling the asset’s vast market cap into onchain capital markets.

This effort mirrors Ethereum’s own transformation through liquid staking derivatives, but with the potential to unlock a deeper pool of value given bitcoin’s scale.

To contextualize the difference in scale, Ethereum’s liquid staking market, led by Lido’s stETH, boasts a market cap of approximately $38 billion. In contrast, the entire bitcoin LST sector is still nascent, with total market capitalization around $2.5 billion. Lombard’s LBTC alone accounts for roughly $1.4 billion of that, or around 40% of the bitcoin LST market.

Lombard’s BARD

Building on that foundation, Lombard this week announced the creation of the Liquid Bitcoin Foundation and its native $BARD token, alongside a $6.75 million community sale.

The Foundation will act as an independent steward of the protocol, funding research, grants, and education, while establishing governance frameworks to preserve neutrality. $BARD will serve as the utility and governance token of the ecosystem, giving holders the ability to stake to secure Lombard’s core infrastructure, vote on proposals, and gain access to new products.

Jacob Phillips, Lombard’s co-founder, described the community sale as “an invitation to over 260,000 LBTC holders and others in the Bitcoin ecosystem to help shape the future of bitcoin onchain.” Erick Zhang, founder of Buidlpad who will host the sale, added that Lombard is “a pioneer unlocking bitcoin’s full potential as digital gold and a foundation for next-gen capital markets.”