Opinion by: Brendon Sedo, Core Dao Initial contributor
Bitcoin goes beyond the story of “digital gold”. The main engine of this quarter is the rise in power of Bitcoin DEFI (BTCFI), which exceeds the simple cases of use of value store.
In 2024, Bitcoin (BTC) became an asset generating native yield and the centerpiece of decentralized financial ecosystems in Ethereum style. 2025 is when this ignition can increase its flame on innovative bitcoin failures.
Most of the attempts to exploit the Bitcoin value as a productive intake required significant changes in its base layer. This is a great reason they failed. The Bitcoin 1 layer is not designed for many changes, leaving most of the bitcoinders to simply Hodl and not doing much else. The result is that Bitcoin has remained underused as a network and active.
Bitcoin Sidechains has become the perfect solution to all these problems, widening the usefulness of Bitcoin without altering or being limited by the base layer. Naturally, these protocols will be the most powerful catalyst for BTCFI’s growth, in particular with the BTC exceeding $ 100,000, constituting more than 60% of the market share of the total crypto and entering a new regulatory landscape with the first American government regime “Procrypto”.
Bitcoin scale, a productive asset
According to Hal Finney, “Bitcoin himself cannot evolve to have all financial transactions (…) included in the blockchain.” This is why there is a need for a level of secondary payment in his opinion.
For a long time, the blockchain space ignored the call for action of Finney and prioritized the innovation which isolated Bitcoin. However, innovations previously limited to channels like Ethereum are now going through the world of Bitcoin. Chess, rollers and other scaling solutions offer more options for holders who want an Ethereum style utility while remaining aligned with Bitcoin. This has prepared the field for BTCFI, where holders can access a range of income -generating solutions such as stain, loans and derivatives.
The industry is however still in the first rounds of this Bitcoin revolution. In November 2024, 0.8% of its supply in circulation was used for DEFI use cases, according to Galaxy Digital. On the market capitalization of approximately $ 2 bitcoin dollars, less than $ 7 billion include BTCFI TVL.
Although it may seem without hindering, it highlights the remaining massive opportunities. The Bitcoin L2 infrastructure evolved 7x from 2021 to November 2024.
Recent: Bitcoin DEFI TVL UP 2,000% in the middle of the 2024 bumper for the price of the BTC, adoption
Most importantly, it has represented a considerable share of new liquidity that flows into the BTC, in addition to institutional products such as the funds negotiated on the stock market (ETF).
Even if the Bitcoin offer in BTCFI platforms and failures increases by 0.25% per year, the sector will have a total addressable market of $ 44 billion to $ 47 billion by 2030, according to Galaxy Digital. However, as bitcoins know, it is a conservative estimate and would be accelerated by accelerating the action of BTC prices or even more adoption of Bitcoin DEFI.
According to Galaxy Digital, VCS, VCS, began to recognize Bitcoin potential, investing more than $ 447 million. Of this, around $ 174 million was invested in the third quarter of 2024, preparing the way for more explosive growth in 2025. More funding for early stage projects will provide more successful launches, innovations, choices for users and overall value.
Given that native Bitcoin solutions give access to productive use cases for Bitcoin, users will no longer need to count on confidence intermediaries and Bitcoin-Angostic smart contract platforms. The sacrifices necessary to extend the usefulness of Bitcoin in the past will no longer be necessary. This can unlock a substantial value for BTC holders in principle and even the Bitcoin network itself.
Gives a bitcoin for bitcoin
Until now, bridging to chains of Ethereum virtual machine (EVM) of Turing-Complete has been an essential means of facilitating yields and other cases of financial use on Bitcoin. For example, the wrapped bitcoin market (WBTC) on Ethereum exceeds $ 10 billion. Although solutions like WBTC are adapted to some, many Bitcoin holders prefer not to entrust the guards with their capital or rely on channels like Ethereum, who do not align themselves with Bitcoin consensus principles or do not support the network at all.
BTCFI, defined by the infrastructure aligned with Bitcoin and Bitcoin, is a solution from which WBTC users and Bitcoin purists can benefit. Users who are already used to the sophistication of the Ethereum intelligent contract can continue to take advantage of this EVM experience while approaching Bitcoin roots. Bitcoin users in principle can obtain more options for their BTC utility if the sidechain aligns on the basic network.
Bitcoin holders also have access to BTC derivatives superior to Ethereum native solutions like WBTC. BTC derivatives bearing the performance on the workforce aligned by Bitcoin are an improvement of 100x, offering self-care sources and not available to Bitcoin holders.
Overall, the BTCFI can be much more important. Not only compared to the place where it is now, but also with regard to the EVM and the DEFI based on SVM. Bitcoin Sidechains already leads to this quarter of work and will continue to do it throughout 2025. All that is necessary is the right approach and good consistency concerning development and product pipelines.
For BTCFI, the path is clear: provide use cases with the product market adjusted to Bitcoin holders on platforms fueled by Bitcoin. This will set the basics of the generation of more value for the Bitcoin community as a whole. And finally, there will be a positive steering wheel of the adoption of Bitcoin.
The institutional team made the headlines in 2024. Now it’s time for the native onchain camp to show its strength and deliver.
Opinion by: Brendon Sedo, Core Dao Initial contributor.
This article is for general information purposes and is not intended to be and must not be considered as legal or investment advice. The points of view, the thoughts and opinions expressed here are the only of the author and do not reflect or do not necessarily represent the opinions and opinions of Cointellegraph.
