The Rise of Bitcoin DeFi: Infrastructure Development and Market Explosion
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The Rise of Bitcoin DeFi: Infrastructure Development and Market Explosion
We are likely to see Bitcoin evolve from "digital gold" into the most important foundational asset within a multi-chain DeFi ecosystem.
Navigating Web3 tides with focused insightsAuthor: 0xResearcher
Imagine holding the world's most valuable digital asset—Bitcoin—but it's like a gold bar locked in a safe, unable to do anything except appreciate. It's like driving a Ferrari but only being allowed to circle a parking lot—exciting yet frustrating.
But this situation is changing completely. In Q3 2025, when we saw a project’s community sale achieve 1400% oversubscription, attracting 21,340 participants from 132 countries, this was no longer just a successful fundraising event—it was a microcosm of the entire Bitcoin DeFi ecosystem exploding. The data is even more telling: the BTCFi market experienced over 22x growth in 2025, with total value locked surging by more than 2000%. Behind these numbers lies the full awakening of a sleeping giant.
From Pump Fun's viral success to star projects like Linea, Monad, and Berachain announcing their TGE plans, the entire crypto market has become hyperactive, as if injected with adrenaline. And within this wave, the most fascinating story is how Bitcoin has finally “learned” to do DeFi.
For a long time, Bitcoin was like the respected elder of the crypto world—everyone revered him, but he always sat quietly in the corner, observing without joining the younger generation’s games. Ethereum was busy playing DeFi, spawning countless protocols, while Bitcoin maintained its cool stance: “I’m digital gold, and that’s all I’ll be.” But now, everything is different. Technological breakthroughs have enabled Bitcoin to finally step into the DeFi arena—and its debut move is nothing short of game-changing.
Staking Race: A Glorious Shift from 'Lying Flat' to 'Earning While Lying Down'
The success of the Babylon protocol is simply astonishing. Who could have imagined that during an open session in October 2024, 24,000 bitcoins (approximately $1.5 billion) would flood into staking within just 1 hour and 40 minutes, with the first tranche of 1,000 BTC snapped up in 74 minutes? This scene resembles concert ticket rushes—except this time, people are scrambling for the chance to invest in Bitcoin infrastructure.
Babylon’s core innovation is enabling native Bitcoin staking, meaning Bitcoin holders can now earn yield without giving up control of their assets. Simply put, it allows your Bitcoin to “go to work” while staying secure. The significance of this technical leap is akin to installing a perpetual motion engine on a gold bar—preserving value while generating returns.
Close behind, Core DAO launched its own Bitcoin staking solution, leveraging the Satoshi Plus consensus mechanism to bring Bitcoin’s security to its network. Their approach is more aggressive—directly airdropping CORE tokens to stakers, attracting significant participation from Bitcoin miners. This dual-income model of “mining + staking” gives miners, who previously relied solely on mining rewards, a new revenue stream.
Even more interesting is the flourishing liquid staking token (LST) sector. This space functions like the arsenal of Bitcoin DeFi, offering a wide array of tools. Lombard’s LBTC reached $1 billion in TVL within 92 days, becoming the first Bitcoin LST recognized by blue-chip protocols such as Aave, Spark, and EigenLayer—essentially earning a “passport” into the DeFi world.
pumpBTC takes a different path, focusing on cross-chain liquidity solutions, allowing users to deploy staked Bitcoin across multiple chains. Lorenzo Protocol aims to create a unified liquidity layer for the Bitcoin ecosystem, striving to become the central hub for all Bitcoin DeFi activities. Allo Protocol sets even higher ambitions, aiming to build a decentralized Bitcoin asset management platform where professional investors can manage portfolios for retail users.
All these protocols are tackling the same core challenge: how to let Bitcoin both “earn while lying down” and maintain liquidity. It’s like fitting wheels and an engine onto a gold bar—making it mobile and self-propelled.
Infrastructure Wars: Giving Bitcoin an 'Intelligent Brain'
If staking means Bitcoin has learned to “earn money,” then innovations at the infrastructure level are about equipping Bitcoin with an “intelligent brain.” The intensity of this technological race rivals the historic “browser wars.”
BOB (Build on Bitcoin) may be one of the most ambitious projects in this space. Using BitVM technology, they’ve achieved what seemed impossible: seamlessly combining Bitcoin’s security with Ethereum’s DeFi capabilities. BOB’s solution acts like a “translator” for Bitcoin, enabling it to understand and execute complex smart contracts while preserving its inherent security. To date, BOB has attracted over 30,000 BTC in bridged funds, establishing itself as a key gateway to Bitcoin DeFi.
Arch Labs has chosen a more direct route. They’re developing ArchVM, aiming to implement Turing-complete smart contract functionality directly at Bitcoin’s base layer. This is akin to a “brain transplant” for Bitcoin, transforming it from a simple store of value into an intelligent platform capable of running complex applications. Although technically extremely challenging, success would fundamentally redefine Bitcoin’s role.
Hemi Network’s approach is particularly clever. By embedding Bitcoin nodes directly into the Ethereum Virtual Machine, they’ve created a hybrid architecture. This design allows developers to leverage both Bitcoin’s security and Ethereum’s programmability—a bridge connecting two worlds. Hemi proudly calls itself “the largest programmable layer on Bitcoin,” which sounds boastful, but they’ve indeed achieved notable technical breakthroughs.
Amid this infrastructure battle, Lombard has taken a relatively pragmatic yet innovative path. As a protocol focused on unlocking Bitcoin liquidity, Lombard offers holders a “sweet spot” through its LBTC token—earning staking yields while freely using funds across major DeFi platforms. The success of this strategy is evident from its community sale figures: originally targeting $6.75 million, it received $94.7 million in subscription requests—an astounding 1400% oversubscription. With 21,340 participants from 132 countries rushing in, the scene resembled a massive global gathering of the Bitcoin community.
Interestingly, Lombard’s success isn’t just reflected in funding numbers, but also in its precise strategic positioning. Rather than reinventing the wheel, it focuses on being the perfect “connector”—enabling Bitcoin to seamlessly integrate into existing DeFi ecosystems. LBTC has already gained recognition from blue-chip protocols like Aave, Spark, and EigenLayer, effectively securing a “VIP pass” into the DeFi world.
Stacks takes a different route, using its unique “Proof of Transfer” consensus mechanism to “borrow” Bitcoin’s security for its smart contract platform. DeFi protocols on Stacks, such as ALEX and Arkadiko, have already amassed a solid user base, proving the viability of this technical path. Recently, Stacks launched sBTC, aiming to deliver better cross-chain Bitcoin experiences while maintaining decentralization.
Most intriguing is Rootstock (RSK), a project that’s been operating for years, providing smart contract functionality for Bitcoin via sidechain technology. Though not the newest player, RSK holds a “senior” status in the Bitcoin DeFi landscape, having provided valuable lessons for later entrants. They recently introduced a new scaling solution, aiming to improve transaction efficiency while remaining compatible with Bitcoin’s mainnet.
These infrastructure projects are like adding various “add-ons” and “plugins” to Bitcoin, finally empowering this veteran to shine in the DeFi arena. Each has its own technical roadmap and strengths, but all share the same goal: unlocking Bitcoin’s immense potential in DeFi. And judging by the explosive demand in Lombard’s community sale, the market clearly embraces this innovation.
When investors from 132 countries simultaneously say “yes” to a BTCFi project, this is no longer a regional skirmish—it’s a global referendum on Bitcoin’s future. From the auroras of Northern Europe to coconut groves near the equator, from Wall Street cafes to late-night offices in Tokyo, investors worldwide are watching one thing: the silent giant is finally about to speak.
Wall Street’s shifting attitude is particularly telling. When traditional financial giants seriously consider allocating to Bitcoin, they don’t just want to buy and hold—they seek professional financial products that generate yield, offer liquidity, and meet compliance standards. BlackRock, Fidelity, and other legacy finance titans paying attention to Bitcoin ETFs is just the beginning; next, they’ll likely pursue more sophisticated Bitcoin financial products. This is precisely where BTCFi infrastructure adds value—transforming “digital gold” into “yield-bearing gold.”
Retail investor behavior is also evolving. Long tired of merely “catching bags” in secondary markets, they now want to stand on equal footing with institutions. This demand fuels fairer, more transparent token distribution mechanisms, explaining why community sales have become so popular. When ordinary investors realize they can participate in infrastructure development from day one, their enthusiasm ignites instantly.
Yet what we’re seeing may only be the tip of the iceberg. Compared to Ethereum’s mature DeFi ecosystem, Bitcoin DeFi is still like a toddler learning to walk. The room for innovation in staking mechanisms, liquidity management, yield optimization, and risk mitigation is staggering. Moreover, as regulatory clarity gradually emerges, compliant BTCFi products will gain even greater room to grow.
Most interestingly, the competitive landscape in this sector remains far from settled—like the American Wild West during the gold rush: full of opportunities, but also significant risks. Technical paths are still being explored, business models validated, and user habits cultivated. This uncertainty presents both challenges and opportunities, allowing newcomers to potentially overtake established players.
Projects that can deliver full-stack solutions, build strong community foundations, and gain recognition from mainstream protocols are likely to emerge as the biggest winners in this “gold rush.” The key lies in finding the right balance between technological innovation, user experience, security, and compliance.
Conclusion
Looking ahead, Bitcoin may evolve from “digital gold” into the foundational asset powering a multi-chain DeFi ecosystem. Infrastructure will continue improving, interoperability between protocols will strengthen, and eventually, a complete Bitcoin financial ecosystem will take shape. At that point, BTCFi products could become as widely accepted in mainstream markets as traditional financial products are today.
When 21,340 individuals from 132 countries cast their vote of confidence in a single project, it’s no longer just an investment act—it’s a collective bet on the financial future of Bitcoin. And given the current momentum, this bet stands a good chance of delivering substantial returns. After all, when the world’s most valuable digital asset finally learns to “work for a living” and gains an “intelligent brain,” who wouldn’t want to be part of this story?
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