Opinion by: Brendon Sedo, Core DAO initial contributor
Bitcoins are outgrowing all other forms of currency “digital gold” narrative. Storytelling primary driver of this shift Bitcoin DeFi, or BTCfi (Bitcoin Deficit) is a new concept that goes beyond simple store of value applications.
Bitcoin will be available in 2024.BTC( ) has become a yield-producing asset that is the core of decentralized financial ecosystems based on Ethereum. In 2025, the flame of innovative Bitcoin sidechains will be able to grow.
In order to use Bitcoin as an asset of value, it was necessary to make significant modifications to the base layer. This is a major reason why they failed. Bitcoin layer 1, which is the first level of security, does not allow for many changes. This leaves most Bitcoiners to do little more than hodl. Bitcoin has been underutilized, both as a currency and network.
Bitcoin sidechains provide the ideal solution, as they scale Bitcoin’s functionality without affecting the base layer. BTCfi will grow at a rapid pace thanks to these protocols. BTC surpassing $100,000The constituting over 60% of the total crypto market shareThe first step in a brand new regulatory environment is to become a member of the. “pro-crypto” US Government Regime
Bitcoin Scaling, A Productive Asset
Per Hal Finney “Bitcoin itself cannot scale to have every single financial transaction […] included in the blockchain.” In his opinion, this is why he believes there should be a second level of payments.
Finney’s plea for action was ignored by the blockchain community, which instead prioritized innovations that isolate Bitcoin. Previously, blockchains like Ethereum were the only ones to offer innovations. Now they are also available on Bitcoin. SidechainsRollups and scaling solutions provide more options to holders that want Ethereum’s utility, while staying aligned with Bitcoin. BTCfi is a platform where users can get access to a variety of revenue-generating tools like lending, derivatives, and staking.
This revolution is still in its infancy. By November 2024, only 0.8% is used to support DeFi. according Galaxy Digital. Bitcoin has a market capitalization of approximately $2 trillion. Less than $7 billion is the total. comprises BTCfi TVL.
Although this might seem uninspiring, it highlights the enormous opportunity still remaining. Bitcoin L2 scaled up 7 times between 2021 and November 2024.
Recent: Bitcoin DeFi TVL up 2,000% amid bumper 2024 for BTC price, adoption
In addition to institutional products, such as Exchange-Traded Funds (ETFs), it is responsible for a large share of the new liquidity entering BTC.
Galaxy Digital says that the total market size of the BTCfi sector and its sidechains will reach $44-47 billion in 2030, even with a 0.25% annual growth of the Bitcoin supply. Bitcoiners, however, know that this is only a conservative estimation and can be further accelerated by increasing BTC’s price or more Bitcoin DeFi usage.
Galaxy Digital says that investors have begun to see the potential in Bitcoin sidechains. They’ve invested more than $447 million. Around $174 Million was invested by VCs in Q3 of 2024. The investment set the scene for a more explosive growth rate in 2025. The funding of early stage projects is essential to ensure successful launches, innovation, choice for users and value.
Bitcoin-native platforms will allow users to access productive Bitcoin use cases, removing the need for intermediaries or smart contract systems that do not support Bitcoin. The sacrifices made in the past to increase the usefulness of Bitcoin will not be necessary anymore. This can be a significant value unlocker for BTC owners and the Bitcoin network.
Bitcoin Yields
The most popular way to increase Bitcoin yields, and to support other uses of Bitcoin has been by bridging the Turing-compliant Ethereum Virtual Machine (EVM). Wrapped Bitcoin is a good example.WBTCThe market for Ethereum exceeds $10 billion. WBTC has been a good solution for many Bitcoin users, but others prefer to not entrust their money with custodians or use chains such as Ethereum that do not adhere to Bitcoin’s principles of consensus or even support the network.
BTCfi – defined by Bitcoin aligned and Bitcoin powered infrastructure – is a solution that both WBTC-users and Bitcoin purists alike can take advantage of. They can also enjoy the EVM’s sophistication while getting closer to Bitcoin. Bitcoiners who adhere to principles can benefit from more BTC options if their sidechains are aligned with base networks.
WBTC and other Ethereum-native derivatives are not available for Bitcoin holders. BTC yield-bearing derivatives, on sidechains aligned with Bitcoin are 100x better than Ethereum-native solutions like WBTC. They offer Bitcoin holders self-custody as well as previously unobtainable yield sources.
BTCfi is a much better option. It is not only compared with where we are now but also to EVM or SVM-based DEFi. This shift is already underway and will continue through 2025. The only thing needed is to be consistent and follow the correct approach when it comes to product and development pipelines.
BTCfi’s path is simple: deliver use cases that are product-market-fit to Bitcoin users on platforms powered by Bitcoin. The Bitcoin community will be able to generate even more value with this approach. There will ultimately be a positive spiral of Bitcoin adoption.
In 2024, the institutional camp dominated headlines. It’s now time for native and onchain to deliver.
Opinion by: Brendon Sedo, Core DAO initial contributor.
The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.
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Source: cointelegraph.com
