The first DeFi company to develop a user-friendly suite of products on Bitcoin will own the market. That’s the optimistic forecast from Alexei Zamyatin, co-founder of Build on Bitcoin, who sees 300 million Next zen users worldwide as doable and on the radar. This prediction points to growing excitement about Bitcoin-based DeFi solutions. If they are able to fully realize their innovations, these improvements might eclipse Ethereum and Solana’s seeming moat. Bitcoin layer 2 protocols are attempting to both scale the chain and bring DeFi functionalities to the Bitcoin ecosystem.
Bitcoin DeFi is picking up steam. Hundreds of new protocols and projects have sprung up to address this burgeoning desire for decentralized finance directly on the Bitcoin blockchain. Zamyatin’s company, Build on Bitcoin, offers us a pioneering hybrid layer 2 solution. Through BitVM, it blends Bitcoin’s unparalleled security with the dynamic DeFi possibilities of Ethereum.
Bitcoin-native bridges are necessary for DeFi on Bitcoin, as the blockchain’s security is strong, but it lacks human talent, tools, and network effects of Ethereum. Huge coalition-building efforts have at times expanded the initial pool of bridge signers from five on the original letter to as many as 50 in some instances.
"It's not easy to convert it, but if you manage to win in Bitcoin DeFi, you win the entire market." - Alexei Zamyatin
The Babylon Protocol is leading the charge in the Bitcoin DeFi space. At $4.64 billion worth of value locked, it will represent almost 80% of all value locked on Bitcoin. Bitcoin’s DeFi TVL is still just a small percentage of the $54.6 billion worth of value locked on Ethereum.
Perhaps the most significant Bitcoin staking adoption indicator Bitcoin staking has been touted as the biggest DeFi use case beyond payments. It involves Bitcoin holders locking their coins in self-custodial vaults or extractable one-time signatures to earn staking rewards on proof-of-stake blockchains like Ethereum. With global Bitcoin yield and stablecoin products, the demand for Bitcoin-based DeFi is surging.
"A lot of institutions that are buying Bitcoin now usually have to find yield on the assets they hold. So Bitcoin yield is becoming a very hot and highly sought-after thing." - Alexei Zamyatin
Zamyatin contended that the majority of hacks on blockchain bridges were due to teams not properly keeping track of their private keys. The Ren Protocol’s RenBTC uses a decentralized network of nodes called Darknodes. These nodes bless transactions to lock BTC up and mint RenBTC, which can be used on other chains.
Build on Bitcoin features one of the many companies currently competing for Bitcoin DeFi market share. From BitcoinOS and Starknet to other privacy-focused projects, ZK-proofs are about to release trillions in dormant Bitcoins to DeFi.
DeFi services on Bitcoin would "outgrow everything we've seen so far in Ethereum and Solana" if 300 million Bitcoin users were to utilize them.
