Unlock the potential of sleeping bitcoin in Defi

Opinion by: Amitej Gajjala, co-founder and CEO of Kerneldao

Bitcoin is the main asset of the world of cryptocurrencies and even one of the 10 most precious active in the world, recognized for its role of reserve of value. However, a huge percentage of the Bitcoin supply (BTC) remains sleeping for years, which means that the cryptography market only works with a fraction of the supply in circulation each year.

This inactive bitcoin has an enormous amount of unexploited financial potential.

The main Bitcoin accounts are “value store” and “never sell”. Today’s decentralized finance tools (DEFI), however, allow yield gain by holding bitcoin and taking advantage of sleeping bitcoin, which is simply in investors’ wallets and does nothing.

Existing sleeping bitcoin is not fully used

Sleeping bitcoin has not been used for long periods, generally one or more years. According to Glassnode, at the beginning of 2025, the active offer which has not evolved in more than a year is around 62%.

This bitcoin is maintained in wallets that show no activity on the blockchain and remain inactive for various reasons. It could be intentional long -term retention strategies or even permanent loss due to the negligence or death of their users.

Let’s put aside the rest of the reasons and we focus on long -term Bitcoin maintenance strategies. The existence of this group implies that they could enter the market at any time, producing significant volatility of the price of Bitcoin. Why are we not using this bitcoin in defi at the moment?

The activation of sleeping bitcoin will make waves on the market

If large amounts of sleeping bitcoin were to reactivate immediately, this could considerably affect the cryptocurrency market, creating a notable event. These movements could considerably affect the price of Bitcoin negatively due to the potential sales pressure and influence the market with a significant increase in the offer in active circulation.

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If reactivated bitcoin is however reintegrated into productive challenge ecosystems rather than mass sold, it could provide liquidity without destabilizing the market. With this amount of active liquidity, Bitcoin would not only be a “value store” but also a productive asset with utility and application.

Let us examine the announcement of the creation of a Bitcoin strategic reserve in the United States. One of the key points of this reserve is that it will follow neutral budgetary strategies without selling the 198,000 estimated BTC held by the government. These conditions are perfect for putting this bitcoin at rest and using it in DEFI to obtain rewards. Just imagine all the gains that the United States could make using most of its Bitcoin reserves in this way, without selling.

We must explore the Bitcoin potential in defi

The integration of sleeping bitcoin in the DEFI platforms offers bitcoin and interesting decentralized financing opportunities. Bitcoin would encourage transactions and costs on the network to support minors. The total locked value (TVL) in DEFI will be enormous compared to all the liquidity that Bitcoin will add to the Defi market.

Progress such as wrapped tokens and cross-bridges have enabled Bitcoin holders to engage in flash loans, loans, punctures, re-evaluation and cultures on DEFI platforms. The current levels are however insufficient and will not be the only way to take advantage of this enormous injection of liquidity.

Since March 10, Bitcoin TVL in DEFI has been more than $ 5 billion, according to Defillama Data. This represents only 6% of TVL of all current blockchains on the market, with Ethereum the King at 52.56% with $ 48 billion. If Bitcoin became the new King of TVL in Defi, he would need to use only part of the sleeping bitcoin mentioned above.

In this scenario, Bitcoin will offer more stability to DEFI, because its holders, including institutional and long -term investors, are not inclined to sell during market slowdowns. In addition, the even activation of a small fraction of the currently inactive bitcoin could unlock billions of liquidity for decentralized financial applications.

The best way to use BTC in DEFI is replenishment

Today, replenishment is becoming an innovative and engaging way of integrating Bitcoin into DEFI while retaining its attraction as a conservative and safe investment vehicle. The appeal allows holders to set up their assets in decentralized protocols and to gain passive income while contributing to the economic security of the network.

This mechanism offers several advantages, including passive income with minimal risk and economic safety, by supporting the development of new products. It is parallel to traditional finance by offering foreseeable yields while preserving capital, which uses conventional investors more.