This is a segment from the 0xResearch newsletter. To read full editions, subscribe.

The rise of “Bitcoin DeFi” on new networks looking to scale Bitcoin has primarily come through bitcoin-backed derivatives like SolvBTC.BBN and LBTC. These derivatives receive staking rewards from Babylon, offering new avenues for liquidity and yield generation. However, concerns about the transparency of these platforms, particularly regarding the management of bitcoin reserves, have sparked debate within the Bitcoin community.

A recent article by the co-founder of Nubit, known online as Hans, raised alarms about the potential for unbacked reserves and the inflation of total value locked…

Read more on Blockworks