In a bold assertion at the Token2049 conference in Dubai, Alexei Zamyatin, co-founder of the Bitcoin layer-2 project Build on Bitcoin, predicted a seismic shift in the decentralized finance (DeFi) landscape. Zamyatin suggested that the first DeFi firm to launch a user-friendly suite of products on Bitcoin could potentially capture a market of 300 million users, eclipsing the reach of existing DeFi services on Ethereum and Solana. “The advantage of Bitcoin DeFi is that the market is much bigger,” he stated, emphasizing the vast retail user base poised for integration.
Bitcoin’s Untapped Potential
Bitcoin, traditionally seen as a store of value, is now being eyed for its potential to underpin a burgeoning DeFi ecosystem. Zamyatin highlighted that Bitcoin’s appeal lies not only in its security but also in the massive user base waiting to be tapped. The Build on Bitcoin initiative aims to leverage this by offering a hybrid layer-2 solution that marries Bitcoin’s security with Ethereum’s DeFi capabilities through BitVM—a platform designed to process Turing-complete Bitcoin contracts.
The growing interest in Bitcoin-backed DeFi products is driven by two key factors: yield generation and stablecoin demand. As institutions increasingly acquire Bitcoin, they seek ways to generate returns on their holdings. Zamyatin pointed out, “Bitcoin yield is becoming a very hot and highly sought-after thing,” noting the skyrocketing demand for Bitcoin-backed stablecoins, which are seen as superior collateral.
Challenges and Opportunities
However, this ambition comes with its set of challenges. The lack of human talent and developmental tools on Bitcoin, compared to Ethereum, poses a hurdle. Zamyatin argued that Bitcoin-native bridges are essential for expanding DeFi on the platform, despite the associated risks. Bridging solutions have been controversial due to security breaches, often stemming from poor private key management rather than inherent smart contract vulnerabilities.
Zamyatin acknowledged the competition in the retail market but noted institutional hesitancy in using blockchain bridges, which facilitate value transfer between incompatible blockchains. Despite efforts to enhance security by increasing bridge signers, institutions remain wary due to the anonymity of transaction signers. This reticence has led them to prefer established custodians like BitGo and Coinbase Custody.
Bridging the Gap
Historically, Bitcoin’s role in DeFi has been limited, overshadowed by Ethereum’s dominance, with a total value locked (TVL) of $54.6 billion compared to Bitcoin’s modest share. Yet, projects like the Babylon Protocol are making strides, commanding nearly 80% of Bitcoin’s DeFi value locked with $4.64 billion. This indicates a growing trust and interest in Bitcoin staking as a viable DeFi use case.
The road ahead for Bitcoin DeFi is fraught with uncertainty. The industry must address security concerns and build confidence among institutional players. As Zamyatin mused, the potential to tokenize Bitcoin ETFs and offer DeFi yields could revolutionize institutional engagement with Bitcoin-backed DeFi products.
Looking Forward
While Zamyatin’s vision is ambitious, it reflects a broader trend of innovation within the crypto space. The question remains whether Bitcoin can transcend its traditional role and become a cornerstone of the DeFi ecosystem. As the landscape evolves, the potential for Bitcoin DeFi to outpace Ethereum and Solana hinges on overcoming existing challenges and capturing the interest of its vast user base.
In the ever-dynamic world of cryptocurrencies, the race to establish a robust Bitcoin-based DeFi ecosystem is just beginning. The success of this endeavor will depend on technological advancements, security enhancements, and the ability to attract both retail and institutional users. As the market continues to mature, the promise of Bitcoin DeFi remains tantalizing yet uncertain, raising questions about the trajectory of this nascent field.
Source
This article is based on: Bitcoin DeFi will have 300M users, beating Ethereum and Solana: Exec
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
