Concerns Over False Bitcoin Locking Practices In BTCFi Ecosystem

According to Foresight News, Yu Feng, the founder of Nubit, has raised concerns about certain practices within the BTCFi ecosystem. He highlighted that many protocols are using offline pre-signed transactions to create a misleading appearance of locked Bitcoin. This method does not actually secure Bitcoin on the mainnet but instead gives a false impression of being locked. Users can submit multiple pre-signed transactions with the same UTXO, allowing various protocols to count it as Total Value Locked (TVL), even though the Bitcoin is not genuinely secured anywhere. This practice results in inflated TVL figures and significant trust issues. Yu Feng proposed two solutions to address these concerns. The first is to ensure transactions are genuinely recorded on the blockchain by locking funds through Bitcoin script addresses. The second solution involves using zero-knowledge proof designs to make the locking process both transparent and secure, thereby avoiding the risk of double-spending.