The Silent Boom of DeFi on Bitcoin

Jan 10, 2024

Bitcoin has transcended its foundational role as a digital store of value and medium of exchange, which has paved the way for groundbreaking DeFi applications.

An increase in total value locked (TVL) in Bitcoin DeFi protocols from USD $65m in March 2021 to over USD $300m in December 2023 — a period when the TVL in all other major DeFi ecosystems drastically fell — showcases the powerhouse of Bitcoin DeFi.

Why is nobody talking about this?

In this article, you’ll discover why DeFi innovation on Bitcoin is flying under the radar and explore cutting-edge projects behind the burgeoning building on Bitcoin.

Understanding DeFi and Its Growth

The principles of DeFi are rooted in transparency, inclusivity, and accessibility. It dismantles the traditional barriers of finance: geographical limitations, high barriers of entry, and lack of availability.

From lending and borrowing platforms to automated market makers and decentralized insurance, the spectrum of services offered within DeFi is continually expanding.

DeFi continues to evolve, having grown from a niche concept to a multi-billion dollar industry in just a few years. As new projects bring innovation to traditional finance, DeFi is being recognized by more users and investors as a legitimate contender to the traditional system.

This recognition is shown by the growing number of institutional investors and traditional finance entities exploring and integrating DeFi solutions into their offerings.

DeFi’s current course points towards a future where decentralized finance is an integral part of the global financial ecosystem. And the world's most robust decentralized network, Bitcoin, is playing an important role.

Why is DeFi Booming on Bitcoin?

Unparalleled Security

Bitcoin's blockchain is renowned for its security, as it has never been successfully hacked, thanks to its decentralized network of miners and robust cryptographic techniques. Applications built on Bitcoin’s foundation are thus inherently safe and trustworthy.

Global Reach and Liquidity

Bitcoin is the most well-known and adopted cryptocurrency. Building on the network allows projects to tap into its vast global user base, ensuring higher liquidity and widespread adoption.

Decentralization and Censorship Resistance

Bitcoin's decentralized nature ensures that DeFi platforms built on it are resistant to censorship, government interventions, and centralized control. This ensures a truly open and global financial system.

Economic Viability

With a market capitalization exceeding $500 billion, Bitcoin is the most economically viable blockchain. Its scarcity, coupled with increasing demand since its inception, ensures a sense of financial security for those building on it.

Why Bitcoin DeFi is Flying Under the Radar

Despite the advancements of DeFi on Bitcoin, there remains a lack of hype around it. Apart from a brief flurry around ordinals in early 2023, there has been almost no widespread media discussion of Bitcoin’s DeFi ecosystem.

Focus on Ethereum

One primary reason for this lack of attention is the dominant focus on Ethereum and other newer blockchain platforms in the DeFi conversation. Ethereum, with its early implementation of smart contracts, has been at the forefront of the DeFi movement. This has led to the idea that DeFi is an Ethereum-only innovation, sidelining the developments on the Bitcoin network.


Bitcoin’s longstanding reputation as a digital gold and a store of value has overshadowed its potential in hosting DeFi applications. The narrative around Bitcoin is still strongly associated with its value and stability, leaving its evolution into the DeFi space to be somewhat overlooked.

Building During the Bear Market

Much of the Bitcoin DeFi boom has occurred during the bear market. While the mainstream sentiment on cryptocurrencies was generally negative, the DeFi ecosystem on Bitcoin experienced substantial growth and development.

The low-profile nature of this development phase meant many of these advancements went unnoticed by the broader public. Without the usual hype that accompanies bullish markets, DeFi on Bitcoin quietly surged ahead, strengthening its foundations and preparing for a future when market sentiment turns.

Projects Building DeFi on Bitcoin

Stacks (STX)

Based on the Clarity programming language, which is designed to be secure, predictable, and compatible with Bitcoin, it bridges the gap between Bitcoin's robust security and the growing utility of decentralized applications.

Its native token, STX, was the first SEC-approved token in 2019, marking a significant milestone in regulatory acceptance for the crypto industry.

DeFiChain (DFI)

DeFiChain stands as the world's largest DeFi blockchain within the Bitcoin ecosystem, boasting a total value locked (TVL) of over $180 million.

Built as a software fork on the Bitcoin blockchain using Merkle roots, DeFiChain acts as a sidechain to Bitcoin that guarantees fast, transparent, and decentralized financial services.

Its unique xVM design also facilitates the integration of multiple virtual machines, enabling developers to create decentralized applications that can interact with multiple blockchains.

Stacks and DeFiChain represent two pioneering approaches to harnessing Bitcoin's strengths for DeFi applications. Both projects are contributing significantly to the expansion of the DeFi ecosystem on Bitcoin, paving the way for further innovations.

As the technology and adoption of these platforms evolve, they are likely to play increasingly important roles in the broader landscape of decentralized finance.

If you’re interested in getting in before these projects take off, you can purchase an optimized bundle of DFI and STX through the Bitcoin Builders bundle on Bake.

DISCLAIMER: Please note that the information on this blog and in any articles posted on this blog is for general information only and should not be relied upon as financial advice. Cake Pte. Ltd., Bake, UAB, and its affiliates (the “Cake Group”) are not licensed financial advisers. You may wish to approach your own independent financial advisor before making any decision to buy, sell or hold any product and/or digital assets mentioned in this blog.

Any views, opinions, references, assertions of fact and/or other statements are not necessarily the views held by the Cake Group. The Cake Group disclaims any liability whatsoever that may arise out of or in connection with such statements. Always do your own research before investing in any financial assets and consult a qualified financial advisor if necessary.



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