Summary

Market Outlook & Altcoin Challenges

Jeff: Market sentiment remains split. A solo BTC trader expects weakness in the coming weeks, while a top U.S. trading firm sees Q3 as more promising. Overall, Bitcoin holders are still relatively confident, even a drop to 80K–90K would leave them in a good position compared to last year. But for altcoins like ETH and MERL, it’s a much tougher environment. Unlike previous cycles, BTC dominance hasn’t rotated back into altcoins, making it a uniquely challenging time for altcoin holders.

Is This the Start of a New DeFi Summer?

Jeff: It’s hard to say if we’re repeating the 2020 cycle, because this time feels different. Bitcoin’s trajectory is clearer, with institutional and even national adoption. But altcoin-season depends entirely on strong narratives. Without them, price action alone doesn’t trigger FOMO. In past cycles, narratives like NFTs, the metaverse, AI, and memes (e.g., PEPE, BONK) sparked major runs. The real catalyst is not timing, but the emergence of something genuinely exciting—like Ordinals in 2023. Catching that early matters far more than trying to predict exact market phases.

Can the Bitcoin Ecosystem Become the Next Big Narrative

Jeff: I hope so, but it is not there yet. The Bitcoin ecosystem has strong potential with emerging sectors like Layer 1 projects, hybrid models, and Layer 2s such as Merlin Chain. However, the real challenge is whether it can capture attention outside the current small circle. Narratives like stablecoins and RWAs are already attracting broader interest, especially among retail users in Asia, where discussions are growing around local stablecoins like the Hong Kong dollar or Chinese yuan version.

In comparison, the Bitcoin narrative feels stuck between cycles. Many early supporters of Bitcoin-native innovations like Ordinals are no longer active or have shifted focus. This is not the beginning of a new cycle yet. For real momentum to return, we need more time, more builders, and new products that can re-engage past users and onboard new ones. The growth will not come from hype alone but from consistent effort and meaningful development.

BTCFi & Merlin's BTC Staking Vault

Launching Merlin’s BTC Staking Vault for Simplified BTCFi Access

Jeff: We started exploring BTCFi last year with various tools—staking BTC or MBTC, using platforms like Solv, Avalon, bridging to chains like Mode, Taiko, zkSync, and more for farming opportunities. Some users earned very high APRs—over 50%—but others didn’t. The truth is, these strategies were often too complex for most users.

Even advanced users struggle to compare strategies or assess risk. You have to decide which DEX or lending protocol to trust, how to bridge safely, calculate gas and fees, and manage everything manually. Many users just don’t have the time or technical knowledge, and even small mistakes—like inefficient bridging—can lead to losses.

That’s why we’re launching the BTC staking vault. It’s designed as a much easier way to access BTCFi. You simply deposit BTC into the vault, and a professional team handles everything: farming, bridging, risk management. Users don’t need to pick strategies or protocols—they just need to stake BTC, and we handle the rest. This approach makes BTCFi safer and more accessible, especially for users who want yield without having to micromanage their assets. Phase 1 will be capped at 50 BTC, and we’re optimistic this vault will become a key on-ramp for broader BTCFi participation.

What Determines the 8% to 21% APR Range for BTC Staking

Jeff: The final APR depends heavily on market conditions. If Q3 performs well, yields could climb to 20–30%. In a weaker market, we’ll rely on more conservative strategies—like using BTC to mint stablecoins and farming with those—to ensure a baseline yield. We expect a minimum of 5–6%, but we’ll top that up to 8% using our treasury if needed. So while the floor is protected, the upside depends on broader market performance.

Will the 50 BTC Cap Expand in Future PhasesJeff: We're starting with a 50 BTC cap to keep APR attractive and ensure it's retail-focused—not dominated by whales. If demand is strong and it fills quickly, we may expand slightly with another 50 or 100 BTC. But we won’t scale it to 1,000 BTC or more, as that would dilute returns and create too much operational pressure.

Locking Terms and Yield Timeline for BTC StakingJeff: Yes, BTC staked in the vault will be locked for about three months. This allows us to deploy funds into selected chains and protocols where we’ve done security checks and have confidence in generating yield. While Bitcoin yield cycles can vary—some like Solv or Babylon take 6–9 months—we aim to strike a balance and return both principal and yield after around three months. During that time, funds can't be moved. This compromise offers users clarity and a realistic timeline without overly long lockups.

Mainnet Upgrade & Wizard

Jeff: Yes, the BTC staking vault terms will be announced when it goes live tomorrow. On the technical side, we’re upgrading Merlin Chain from version 9 to version 12 this week. We started with Polygon CDK fork 5 last year and have steadily improved. This latest upgrade will boost TPS by 10 to 20 times, making the chain more efficient and competitive with top L1s and L2s like Arbitrum and Ethereum. This prepares us for higher on-chain activity in the second half of the year and solves past issues like transaction delays during peak demand.

Current Usage and Future Vision of Merlin Wizard

Jeff: Right now, the Merlin Wizard mainly acts as an AI customer service tool, helping users catch up on updates like BTC staking details. Some users engage with it daily, mostly for support. Our goal is for the Wizard to evolve into a cross-chain, multi-protocol service hub. We’re building multi-chain functionality and integrating SDKs like Particle to enable token deposits from various chains. Soon, the Wizard will offer AI-powered cross-chain token analytics, showing top traded tokens, holder changes, and transaction activity across chains like Solana and BNB. This advanced feature is close but depends on market activity picking up.

Upcoming BTCFi Vault Launch and Network UpgradeJeff: That’s all for this week. We’re waiting for the BTCFi vault announcement tomorrow. The network will likely undergo maintenance Thursday or Friday for about a day as we upgrade from version 9 to 12 in steps, 9 to 10, 10 to 11, then 11 to 12. The process should take under 24 hours and be smooth, so users may not immediately notice the change. These are the main events for the week.

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