Cryptocurrency
Reading Time: 2 minutes
- Bitcoin DeFi TVL has increased by over 22x between January 2024 and now
- The TVL rose from slightly above $300 million at the start of 2024 to over $7 billion as of the time of writing
- The rise is attributed to the launch of new Bitcoin-powered DeFi protocols
The total value locked (TVL) in DeFi protocols on the Bitcoin blockchain skyrocketed by 22x between January 1, 202,4, and December 31, 2024. The TVL increased from a meagre $300 million to a whopping $6.5 billion within 12 months, with data from DeFiLlama indicating that the TVL now stands at slightly above $7 billion. Crypto industry experts attributed the rise in TVL to the launch of new Bitcoin-based DeFi platforms, institutional funds, and stablecoins, signaling an appetite for Bitcoin-powered DeFi.
Cryptocurrency BTC Price and Liquid Restaking Also Fan the Fire
According to Bitcoin smart contract platform Arch Network, Bitcoin DeFi TVL is also being boosted by an increase in BTC’s price and the dawn of liquid restaking on the network. Arch Network CEO Matt Mudano noted that Bitcoin’s strength lies in “unlocking its liquidity” and not being a passive store of value.
The smart contract platform also surveyed 125 Bitcoin developers, users, and investors across different continents. The survey unearthed that DeFi platforms are the best way to unlock Bitcoin’s usage and adoption. Next on the list are stablecoins, DEXs, and tokenized real-world assets.
Despite the positive sentiments on Bitcoin’s ability, 36% of respondents said they don’t trust the current breed of Bitcoin DeFi platforms and have yet to interact with these platforms. Smart contract security concerns are also among the reasons why some BTC holders are yet to embrace DeFi protocols on the network.
Cryptocurrency Bitcoin Developers Aren’t Happy
The Bitcoin DeFi TVL could be higher if the blockchain had all the resources developers need. According to developers, Bitcoin’s smart contract capabilities, tooling, and composability are limited. These restrictions have compelled them to also launch their products on other chains.
The rise in Bitcoin DeFi TVL comes as blockchain-focused projects like Magic Eden and YZi Labs, formerly Binance Labs, increase their interaction with Bitcoin DeFi through partnerships and investments.
With Bitcoin DeFi gaining momentum, it remains to be seen whether Bitcoin layer 2s will help address the concerns of DeFi users and developers.
