BTC Liquidity Trap and Mezo's Solution: How to Turn Your BTC into 'Productive' Capital The attribute of 'digital gold' is both a blessing and a curse for BTC. one ️⃣ BTC liquidity trap The historical market price dataset has verified that BTC has excellent long-term value preservation ability, but for institutions and professional individual investors, Bitcoin itself, like gold, does not generate returns and often becomes a limitation. For institutions, professional investors, and BTC holders (especially in US jurisdictions), holding BTC can serve as a reserve asset and a macro hedging strategy, but it cannot be used to directly pay salaries, borrow heavily, buy a house, or pay for college tuition. Selling BTC can also trigger tax issues and undermine long-term holding strategies. What was the result? Capital is idle, opportunity costs rise, and IRR (internal rate of return) is eroded. The most ironic thing is that these institutions' most favored assets have become the least efficient 'deadweight assets' in their investment portfolios. Traditional financing models typically require assets that can generate cash flows. Therefore, Bitcoin is difficult to incorporate into the regular balance sheet for optimization. This is what we call the 'BTC liquidity trap'. two ️⃣ Mezo's Solution Mezo solved this problem in an elegant way by launching MUSD - a CDP stablecoin fully collateralized by Bitcoin. Unlike other DeFi protocols, MUSD is fully supported by BTC (allowing native BTC and Wrap type BTC as collateral), implemented through an oversold smart contract vault. This allows holders to lock in BTC and obtain stable USD liquidity without giving up long-term BTC holdings. Its core features include: --Fixed rate lending (only 1-5% APR) --No license required, build scalable --Suitable for large vaults seeking liquidity --Each MUSD can be exchanged for Bitcoin equivalent to $1 at any time From the perspective of capital cost, Mezo provides higher efficiency than centralized platforms. Compared to the standard lending market's 8.95%+APR, Mezo's fixed rate is only 1-5% APR. Now, users can deposit tBTC, cbBTC, and WBTC through Upshift Vault to receive early rewards from the Mezo ecosystem. Vault activity link: https://mezo.org/vaultcamp These vaults bridge assets to the Mezo mainnet, strategically allocating BTC to the Tigris liquidity pool and minting MUSD using August (a DeFi fund). The minted MUSD is optimized in the Mezo ecosystem to generate real returns, rather than just receiving constantly inflated and devalued tokens or a "wave of airdrops". three ️⃣ Why choose Mezo? In the previous bull market cycle, cryptocurrency lending platforms such as Celsius, BlockFi, and Genesis attracted BTC depositors by offering high interest rates funded by aggressive, opaque re collateralization strategies. This model seems sustainable during the bull market in 2021, but the collapse of major borrowers such as Sanjian Capital led to a liquidity crisis. Celsius filed for bankruptcy in July 2022, BlockFi filed for bankruptcy in November 2022, and Genesis filed for bankruptcy in January 2023. The reason why such a tragic death spiral risk has been cleared up is analyzed from the perspective of "experienced people" as follows: --The re collateralization of user BTC deposits means that customer funds are often used as collateral for risky loans or speculative transactions; --Liquidity mismatch becomes a key structural defect; --The platform promises depositors daily liquidity while locking assets in longer-term, less liquid investments; --The counterparty risk is concentrated among a few borrowers. The practice of insufficient guarantee means that when the counterparty defaults, the depositor's recovery rate is extremely low. These lessons remind us of the importance of decentralized alternatives, especially when it comes to core assets like Bitcoin. Unlike the failed centralized lending mentioned above, Mezo operates on a decentralized, permissionless, and transparent chain. Overcollateralization is its core: each MUSD loan must be supported by BTC of higher value. To cast MUSD, you must provide at least 110% collateral. In other words, for every 100 MUSDs borrowed, you need to lock in at least $110 worth of Bitcoin. This 110% is the minimum requirement. In fact, users may wish to maintain a higher ratio (such as 250% or more) to ensure security and consider the price fluctuations of Bitcoin. Excess collateral creates a buffer zone where loans are fully supported by enough BTC even if the price of Bitcoin falls. This is the key to how MUSD uses volatile assets while maintaining stablecoin anchoring. Compared to traditional centralized lending and other DeFi solutions, Mezo offers several unique advantages: --Full Bitcoin Mortgage: MUSD will be the first truly 100% Bitcoin backed stablecoin; --Safe and transparent: Overcollateralized CDP is anchored through automatic clearing of stable pools and market driven arbitrage; --Untrusted: Your BTC remains in smart contracts rather than centralized physical hands; --Fixed interest rate: Compared to the high floating interest rates in the market, Mezo's 1-5% APR is more competitive. conclusion From the trend, more and more BTC holders are looking for ways to generate returns on their assets, hoping to transform their assets from a value storage carrier into a productive financial instrument. The adoption of BTC ETF scale has further increased institutional demand, especially for those institutions that wish to generate returns while maintaining BTC exposure. Mezo's actions are not intended to overturn the core value proposition of Bitcoin's "digital gold", but to find an elegant solution to the liquidity and capital efficiency issues that Bitcoin holders have long faced, allowing them to convert time into returns.