Tuesday, February 11, 2025

Bitcoin DeFi is Booming: Insights from Developers on the Rise

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Originally published on: June 24, 2024

Over the past year, Bitcoin’s DeFi ecosystem has experienced significant growth with the introduction of new features like Ordinals, Runes, and BRC-20 tokens. Despite market corrections, developers remain optimistic about the future of this blooming ecosystem.

According to Ryan Chow, co-founder of SolvBTC, the development of Bitcoin DeFi is currently hindered by the lack of base yield and fragmented liquidity. SolvBTC is addressing this challenge by creating Liquid Yield Tokens that allow Bitcoin holders to earn income from DeFi, similar to liquid staking tokens on Ethereum. With $1.3 billion in TVL and 292,000 users, SolvBTC is making waves in the Bitcoin DeFi space.

By leveraging Bitcoin as collateral to borrow stablecoins, users can earn a competitive APY of approximately 15% through SolvBTC’s Ethena Vault. In addition to stable base yield, SolvBTC is integrating rich DeFi opportunities for users to explore across multiple networks.

Another player in the Bitcoin DeFi market is the Master Yield Market, a protocol that consolidates yield-bearing assets within the Bitcoin ecosystem. Users can purchase Bitcoin yield assets sourced from blockchain-native DeFi protocols using Tether, Ethereum, and wrapped Bitcoin.

Meanwhile, developers like Sunny Fung from MetaID are focusing on enhancing Bitcoin’s capacity to improve its DeFi performance. By introducing concepts like Unified UTXO Chain and Unified Bitcoin Address, MetaID aims to solve Bitcoin’s congestion issues and unlock the potential of layer-2 networks that are compatible with Bitcoin.

Despite its limitations, Bitcoin remains a strong candidate for Web3 applications due to its consensus, decentralization, security, and on-chain data storage capabilities. As the Bitcoin DeFi ecosystem continues to grow, developers are innovating to overcome challenges and create a thriving decentralized financial landscape.

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