Imagine that the Bitcoin in your hands is like a seed sleeping in a dry desert. Although it is precious and has eternal vitality, in this environment, it cannot sprout, nor can it provide you with shade or fruit. In the golden age of cryptocurrency in 2025, we are no longer satisfied with just being a 'coin holder.' The Lorenzo protocol is like a high-tech greenhouse tailored for this seed, and its launched OTF (Operational Tokenized Factor) product is an efficient 'nutrient solution' that precisely converts the vitality of this seed into profits.
If you are still in the primitive stage of 'buying and locking in a cold wallet,' then this practical guide on how to configure your first OTF product on Lorenzo will be the key to stepping into BTCFi (Bitcoin finance).
1. Unpacking the underlying code of Lorenzo: Why OTF?
In the traditional BTC ecosystem, liquidity and yield are often mutually exclusive. Want to participate in staking? You have to endure a long lock-up period; want to maintain liquidity? You have to give up on-chain interest. The emergence of Lorenzo breaks this deadlock.
The OTF product is essentially a 'liquidity distribution protocol.' It decouples the underlying security of Bitcoin (through protocols like Babylon) from the upper-level yield strategies. If Bitcoin is compared to crude oil, then OTF is like refined aviation kerosene; it retains the value of crude oil while providing the power to drive financial engines directly.
As of December 2025, Lorenzo is no longer just a liquidity relay station; it resembles a 'modular Bitcoin yield factory.' Through OTF, users can choose different yield levels based on their risk preferences. This mechanism has become a golden bridge connecting institutional and retail investors between the Bitcoin mainnet and Layer 2 networks against the backdrop of BTCFi TVL (Total Locked Value) surpassing $100 billion.
2. In-depth Analysis: The economic account behind OTF.
Why should we configure OTF instead of simply borrowing on L2?
Granularity of Value Capture: The OTF product allows users to decompose BTC assets into principal Tokens and yield Tokens. This means you can flexibly hedge risks or amplify leverage according to market fluctuations.
2. Multiple Yield Stacking: By configuring OTF in Lorenzo, you can not only earn basic BTC staking rewards but also stack the incentive points from the Lorenzo protocol itself, and even additional subsidies from cooperating Layer2 ecosystems.
3. Extremely Low Friction Costs: Due to Lorenzo's adoption of advanced signature compression technology, the Gas fees for cross-chain OTF configuration have been significantly optimized, now only one-fifth of what they were at the beginning of 2024.
Data indicators show that the average daily trading volume of stBTC (staking tokens) in the Lorenzo ecosystem has accounted for nearly 30% of the BTC LST market, meaning that the OTF products you configure have excellent exit liquidity.
3. Practical Operation: A step-by-step guide to configuring your first OTF.
Before you begin, please ensure that you have a small amount of BTC (for staking) and the corresponding network Gas fees ready in your wallet.
Step 1: Access Protocol. Visit the official Lorenzo App and connect your mainstream Web3 wallet (such as Binance Web3 wallet or Unisat). At this point, you will see various OTF pools for different cycles.
Step 2: Choose 'Mining Pool.' OTF products are typically divided by cycles (such as 14 days, 30 days, 90 days). For novices, I recommend starting with a medium-short term product of 30 days. You will see an option called 'stBTC-Yield-Factor,' which is your yield engine.
Step 3: Asset Injection. Input the amount of BTC you want to participate with. The system will automatically calculate the amount of stBTC you will receive and the corresponding OTF voucher. Click 'Mint' and confirm the signature in your wallet.
Step 4: Strategy Activation. After obtaining OTF, you need to stake it into the corresponding yield pool. This step is crucial; only when activated does your BTC truly start 'working.'
Step 5: Monitoring and Compounding. On Lorenzo's personal dashboard, you can see the growth of your earnings in real time. The 2025 version has already supported the 'one-click compounding' feature, allowing you to automatically reinvest the generated earnings into the next cycle of OTF.
4. Risk Warning: Shadows in the sunlight.
As a professional creator, I must remind you that high returns are often accompanied by risks.
Contract Risk: Although Lorenzo has undergone multiple audits, the robustness of smart contracts remains a primary consideration under extreme market conditions.
2. Slashing Risk: If the underlying Babylon validator nodes violate protocols, there may theoretically be some loss of principal, although Lorenzo has a comprehensive insurance fund to cover this, caution is advised.
3. Liquidity Premium Volatility: The exchange rate between stBTC and BTC may experience brief decoupling during extreme market conditions.
5. Industry Insights: The Future Outcome of BTCFi.
Configuring OTF products is just the first step in exploring the new territory of Bitcoin. As the BTC halving cycle approaches in 2026, Bitcoin has completely transformed from 'digital gold' to 'yield-bearing asset.'
What Lorenzo achieves through the OTF product is the ultimate squeezing of Bitcoin capital efficiency. In the future, we may see BTC perpetual contracts, BTC options, and even BTC stablecoins based on OTF.
As a novice, your action advice is: don't get lost in a volatile market, but enter when the tools are mature. Lorenzo's OTF is not a speculative tool; it is your professional ledger for managing Bitcoin's long-term cash flow. Starting today, don't let your Bitcoin just sit in a cold wallet collecting dust; give it a chance to reshape its value.
This article is a personal independent analysis and does not constitute investment advice.
