Bitcoin was always designed to be held.
But over time, the question has shifted from “Why hold BTC?” to “What else can I do with it?”
We’re seeing that answer unfold with BTCfi, ie Bitcoin-powered DeFi.
Let’s break down what’s changing, why it matters now, and where this ecosystem is headed.
Bitcoin’s Role Is Evolving
Bitcoin isn’t just a “store of value” anymore.
Institutional adoption has hit new highs:
- Governments are proposing national Bitcoin reserves
- Public companies now hold over 688,000 BTC
- BTC-focused ETFs crossed $100B in AUM
In short, the world isn’t just watching Bitcoin; it’s accumulating it. But the question remains: what happens after you accumulate BTC?
That’s where BTCFi comes in.
What Is BTCFi?
BTCFi stands for Bitcoin-powered DeFi – an emerging ecosystem that brings DeFi functionality to Bitcoin holders.
Instead of passively holding BTC, users can:
• Earn with their Bitcoin
• Borrow against it
• Trade it without giving up self-custody
This wasn’t possible earlier. Bitcoin wasn’t built for complex smart contracts. But a new design space is opening up thanks to innovations like Taproot, Bitcoin L2s, and sidechains.
BTCFi is about putting BTC to work, without compromising its core principles.
Why Now?
Before BTCFi, interacting with DeFi meant wrapping BTC (like wBTC on Ethereum), using bridges, and trusting third-party custodians.
These workarounds diluted Bitcoin’s trust-minimised design.
But now, with Bitcoin-native protocols, users can deploy BTC in DeFi without leaving the Bitcoin ecosystem.
And the growth has been explosive:
• $307M → $6.5B+ in TVL across BTCFi in 2024
• Babylon attracted over $5B in BTC deposits in Q4 of 2024 alone
• 63,000+ BTC active in BTCFi by early 2025
Despite this momentum, over 99% of BTC remains idle. There’s still massive room to grow.
The Missing Piece: Fragmentation
You’ve got:
- wBTC on Ethereum
- BTCB on BNB Chain
- sBTC on Stacks
- M-BTC on Merlin
…just to name a few.
Each version of BTC lives in its own silo. Moving liquidity between them means clunky experiences, custodial risk, and trust assumptions that Bitcoin never signed up for.
It’s not just inefficient. It breaks the Bitcoin ethos.
And we’re only getting started.
There’s a whole new category coming up: Bitcoin-secured networks. With Babylon, proof-of-stake chains can tap into Bitcoin’s security by allowing users to stake BTC to secure networks.
In return, these networks pay rewards in their native tokens. It’s a cleaner way to bootstrap trust and reduce inflation at the same time.
As more of these Bitcoin-aligned networks go live, we’ll see an explosion of BTC-backed assets and tokens entering the ecosystem.
But here’s the catch – most of them won’t get listed on centralised exchanges right away.
Users will need a place to trade all of this. wBTC, sBTC, Babylon-native tokens, BTC-aligned assets across chains.
That’s where Persistence DEX will come in eventually.
Intent-Based Swaps
One of the solutions? Cross-chain swaps.
Instead of bridging tokens manually, users simply state what they want to do – say, swap BTCB for sBTC or provide liquidity somewhere.
The backend handles the rest:
Routing. Conversions. Execution. All abstracted away.
This makes BTCFi:
• Simpler to use
• Safer (less reliance on risky bridges)
• More connected across chains
In short: better UX, better security, and a more composable Bitcoin ecosystem.
Final Thoughts
BTCFi is redefining what it means to be a Bitcoin holder.
It’s not just about HODLing anymore. It’s about doing more with Bitcoin.
With mature infrastructure, growing liquidity, and cross-chain intent-based execution, BTCFi is poised to evolve fast, surpassing every major DeFi ecosystem.
About Persistence One
Persistence One is building the BTCFi Liquidity Hub, enabling fast, near-zero-slippage swaps for BTC, BTC-variants, and LSTs on Persistence DEX.
BTCFi’s rapid growth has created multiple BTC-related assets, making fragmentation a big challenge. Persistence One will provide a single liquidity hub, simplifying value transfer across the Bitcoin ecosystem.
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