The First Asset Acquisition in the Crypto Industry
On October 30th, an asset acquisition sent ripples through the crypto community. Lombard took over BTC.b from Ava Labs—a wrapped Bitcoin asset with a circulating supply of approximately $5.5 billion. On the surface, this seems like just another business collaboration. But upon closer inspection, you'll find that this might be the first true "asset acquisition" in the crypto industry, unlike the code forks, team mergers, or brand alliances we're used to. The interesting part is this: BTC.b is not a concept, not a whitepaper, nor an experimental product still on the testnet. It's a living product with 12,000 real users, integrated into mainstream protocols like Aave, BENQI, and GMX, with real money flowing daily.
Ava Labs packaged and sold the entire thing—users, integration relationships, technical architecture, the complete set. This is almost unprecedented in the crypto world. What's even more intriguing is the timing. Bitcoin just hit a new all-time high, institutional funds are flooding into the crypto market, and regulators are starting to frown upon centralized wrapped assets. WBTC is being questioned for its custody risks, cbBTC is criticized for its KYC barriers—the market needs a new story. Lombard's move at this juncture is no coincidence. But we need to ask calmly: Is this truly a signal of industry evolution, or just another meticulously packaged marketing narrative? Can the logic behind this transaction withstand market scrutiny? More importantly, what structural changes does it reveal are happening in the Bitcoin DeFi ecosystem?
Behind the Transaction: Is the Crypto Industry Finally Starting to "Buy Companies"?
In the traditional financial world, asset acquisitions are commonplace business practices. But in the crypto space, the main theme for over a decade has been "copy and paste": See a good project? Fork it. Want competition? Issue a new token. Need expansion? Build another chain. Actually spending money to buy an operational asset? Hardly anyone does that. Why? Because the underlying logic of the crypto world has always been "code is law" and "open source above all." Since everything is open source, why pay? Just fork one, give it a new name, change the logo, get a few KOLs to shill it, and you're done, right? That's why we see countless "XX swap", "YY finance" – they are essentially variants of Uniswap or Compound.
But this time it's different. Lombard didn't replicate a wrapped Bitcoin protocol; they directly bought the ready-made one. This reflects a shift in industry perception: user relationships, protocol integrations, brand trust—these things are starting to have value. You can copy the code, but you can't copy Aave's willingness to accept your collateral, you can't copy the daily usage habits of 12,000 users, you can't copy the security record accumulated over more than two years. From this perspective, Ava Labs' choice is also interesting. As the core team of the Avalanche ecosystem, they could have continued operating BTC.b, making money slowly from fees and ecosystem growth. But they chose to divest. What does this mean? Either they judged that BTC.b's growth potential is limited, and cashing out is more cost-effective; or they want to focus resources on more core tasks, outsourcing the "dirty work" of wrapped assets.
Either way, it reflects a reality: even top projects are beginning to acknowledge the need for specialization; you don't have to do everything yourself. If this transaction succeeds, it might open a new market: the M&A market for crypto assets. Projects with users, integrations, but limited team resources might become acquisition targets. Large platforms with capital and ambition might use acquisitions for rapid expansion. This sounds very much like the story of the internet era—Google buying YouTube, Facebook buying Instagram—only now it's with tokens and smart contracts. But there's a huge uncertainty here: Will the community buy into it? Crypto world users believe in decentralization and dislike corporate-style M&A operations. If Lombard messes up BTC.b after taking over, or if users perceive this as a "betrayal," the entire narrative could collapse instantly.
WBTC's Troubles, The Opportunity for Decentralized Wrapped Assets
To understand the significance of this transaction, one must first understand Bitcoin's awkward position in the DeFi world. Bitcoin is the totem of the crypto world, with a market cap exceeding $1.3 trillion, but its presence in DeFi is extremely low. The reason is simple: Bitcoin is not a smart contract platform; you can't use native BTC directly on Ethereum or Solana for DeFi. Hence the business of "wrapped Bitcoin"—locking real BTC somewhere and issuing an equivalent amount of tokens on other chains to represent it. Over the past few years, this market has been basically monopolized by WBTC. Over $80 billion in circulation, holding absolute dominance. But WBTC has a fatal flaw: it's too centralized. All the Bitcoin is custodied by BitGo. You have to trust that BitGo won't abscond, won't get hacked, won't have its assets frozen by regulators.
For an industry that claims to be decentralized, this trust model is a huge irony. This year's developments have made this problem more prominent. Regulators are starting to target stablecoins and wrapped assets, demanding transparency, compliance, and KYC. WBTC was forced to make some changes, which in turn sparked community dissatisfaction. Meanwhile, Coinbase launched cbBTC, trying to carve a slice of the pie using its brand and compliance advantages. But cbBTC has a problem: it requires KYC, which goes against the crypto spirit. Many users and protocols don't want to be tied to a centralized exchange's ecosystem. The market needs a third option: both decentralized and compliance-friendly; having security assurances, yet without a single point of failure. This is the paradigm shift happening in the wrapped Bitcoin track.
BTC.b's previous problem was that it was just a product within the Avalanche ecosystem, lacking the resources and motivation for cross-chain expansion. Ava Labs' core business is building a public chain; wrapped assets were just a side gig. Now with Lombard taking over, the situation is different. Lombard's entire business model is built around Bitcoin DeFi. It has the incentive to promote BTC.b, the resources for multi-chain deployment, and the team to integrate with more protocols. But there's a key question here: What gives Lombard the ability to challenge WBTC? The liquidity network effect is extremely powerful. Users use WBTC because all protocols support WBTC; protocols support WBTC because all users use WBTC. It's a vicious cycle that's hard for newcomers to break. Lombard's strategy is differentiation. It offers not only non-yield-bearing BTC.b but also yield-bearing LBTC, giving users more choices.
The question is, can this logic be validated in the market? Do users really care about decentralization and product diversity, or do they only care about which token has the best liquidity and the lowest fees? The next 6-12 months will provide the answer. If Lombard can significantly increase BTC.b's circulation and protocol integrations during this period, then the strategy is effective. But if the data stagnates or even shows user loss, then all theoretical advantages are just armchair strategies. More crucially, Lombard needs to prove that the validation network composed of 15 institutions is indeed safer and more transparent than single custody. If any technical failures or trust crises occur during this process, the entire narrative could collapse instantly.
Bitcoin DeFi's 1% Conundrum
A number is often cited: Of Bitcoin's $1.3 trillion market cap, less than 1% is active in DeFi. This sounds like a huge opportunity—if this ratio could be raised to 5%, that's a $650 billion market; 10% would be $1.3 trillion. All projects working on Bitcoin DeFi tell this story, and Lombard is no exception. But we need to ask: Is this 1% a temporary phenomenon or a structural reality? Why are Bitcoin holders unwilling to put their coins into DeFi? The first reason is security. Bitcoin is "digital gold," and holders have a long-term storage mindset, not short-term trading. Bridging Bitcoin to other chains inherently increases risk—smart contract vulnerabilities, cross-chain bridge attacks, wrapped protocol failures—these are things that have actually happened.
The collapses of FTX, Celsius, and Terra-Luna are still fresh in memory; users are extremely cautious about "putting assets elsewhere." The second reason is that the returns are not attractive enough. In a bull market, Bitcoin's own price appreciation is substantial; why take risks to earn a few percentage points of DeFi yield? In a bear market, capital preservation is the top priority, and taking risks is even less likely. Only during a special window—when Bitcoin's price is relatively stable, but market sentiment remains optimistic—does DeFi yield become attractive. And such windows are not common. The third reason is the technical barrier. For average users, understanding the concept of "wrapped Bitcoin" is already challenging, let alone operating on different chains, managing gas fees, and dealing with liquidity risks. Those active in DeFi are often the technically savvy, experienced players with higher risk tolerance.
So, the 1% figure might not be a bug, but a feature. It reflects not a "huge untapped market," but that "most Bitcoin holders are inherently unsuitable for DeFi." If so, then all projects selling the promise of "unlocking Bitcoin's potential" might be deceiving themselves. But there's another possibility: the market hasn't found the right product form yet. Perhaps in the future, a simpler, safer, more user-friendly way will emerge, allowing ordinary Bitcoin holders to enjoy the benefits of DeFi without taking on excessive risk. If that day comes, 1% could indeed become 10% or more. The question is, who can create that product? This requires not just technological innovation, but also user education, regulatory cooperation, and infrastructure maturity. By acquiring BTC.b now, Lombard has essentially obtained an entry ticket to this race.
Ava Labs' Calculations: Keep What Should Be Kept, Sell What Should Be Sold
From Ava Labs' perspective, this transaction is quite intriguing. BTC.b is an important asset within the Avalanche ecosystem and a crucial bridge connecting to Bitcoin. Selling it might seem like weakening the ecosystem at first glance, but there could be deeper logic behind it. First, managing custodial assets is cumbersome. It requires maintaining reserves, integrating with protocols, handling user support, passing audits, and keeping up with regulatory changes. For a team focused on infrastructure development, the resource investment has a low cost-performance ratio; it's better handed over to professional institutions. Second, BTC.b's growth might have neared its bottleneck. Although the $5.5 billion scale is impressive, it's still insignificant compared to WBTC. Ava Labs' core competency lies in building chains, not promoting custodial assets, so further expansion is difficult. Handing it over to Lombard could reignite growth, as they will invest significant resources in cross-chain expansion. Finally, this is also a smart risk transfer. Custodial assets face rising regulatory risks. If policies tighten in the future, Lombard would bear the impact, not Ava Labs. Conversely, if BTC.b succeeds under Lombard's operation, Avalanche still benefits because it remains the ecosystem's "core hub."
Conclusion: An Experiment, A Signal
It's too early to conclude whether this transaction will ultimately succeed or fail. But it has indeed opened a window, allowing us to see the changes happening in the crypto industry: from disorderly growth to strategic consolidation, from code worship to user-centricity, from single-chain competition to multi-chain collaboration. Whether Lombard can carve a path amidst the pressure from WBTC and cbBTC depends on its execution, market judgment, and a bit of luck. Whether BTC.b can grow from a regional asset into a global infrastructure depends on whether it can truly solve user pain points, not just provide a theoretically better solution.
More broadly, this case will become a sample for the crypto industry. If successful, more similar asset acquisitions will appear, the M&A market will gradually mature, and the industry will move closer to traditional business practices. If it fails, it might reinforce the belief that "decentralization doesn't require corporate-style operations," and the industry will maintain its chaotic yet vibrant state. Regardless, this is an experiment worth watching. It involves not just the transfer of a $5.5 billion asset, but an exploration into the future form of the crypto industry. In the coming months, we will see the market provide answers. Those numbers—circulating supply, activity, number of integrations, market share—will reflect reality more honestly than any whitepaper or roadmap. And as observers, what we need to do is stay attentive, remain skeptical, and await verification.
