Bitcoin DeFi grows 20x – Is BTC becoming the next yield powerhouse?

Key Points

1. Bitcoin's DeFi ecosystem grew from $307 million in January 2024 to $7 billion by mid-2025, fueled by Layer 2 solutions and protocols like Runes.

2. Ethereum still leads with a $130 billion DeFi market, but Bitcoin is gaining traction with innovations like BitVM and native staking solutions like Babylon.

3. Layer 2 networks such as Rootstock and Babylon are expanding Bitcoin's functionality, enabling EVM compatibility and native BTC staking without wrapping.

4. New protocols like Runes and BitVM are reducing reliance on wrapped Bitcoin (wBTC) and introducing decentralized solutions, though with new risks like centralized sequencers.

5. Regulatory frameworks for Bitcoin DeFi remain uncertain, with the SEC and CFTC in the US and MiCA in Europe, while Hong Kong and Singapore develop their own rules.

6. Venture capital investment in crypto reached $16.5 billion in 2025, with significant funding directed toward Bitcoin-focused projects.

7. Bitcoin's brand and liquidity position it as a potential challenger to Ethereum's DeFi dominance, with the goal of unlocking a $2 trillion market.