In an ambitious stride towards redefining Bitcoin’s utility in decentralized finance (DeFi), Bitlayer and the Sui blockchain have joined forces to introduce Peg-BTC (YBTC) to the market. Announced today, May 15, 2025, this collaboration leverages Bitlayer’s BitVM bridge to integrate Bitcoin seamlessly into the Sui ecosystem, expanding its functionality beyond a mere store of value.
Bridging Bitcoin and DeFi
At the heart of this initiative is the BitVM bridge, a pivotal technology enabling Bitcoin holders to transfer their BTC into the Sui network. Once there, the bridged Peg-BTC can be utilized within Sui’s thriving DeFi landscape to generate yields. “Bitcoin’s dominance as a store of value is unmatched,” Charlie Hu, co-founder of Bitlayer, remarked. “But its utility in DeFi remains untapped. By integrating Bitcoin’s liquidity into Sui’s ecosystem, Peg-BTC (YBTC) empowers users to earn yield while maintaining direct exposure to BTC’s value—a paradigm shift for BTCFi.”
This development isn’t just about broadening Bitcoin’s horizons but also about enhancing the DeFi capabilities of the Sui blockchain. As a Layer 1 blockchain, Sui is designed for speed and cost-effectiveness, attributes that are crucial in a vibrant DeFi environment. Currently, Sui hosts 49 projects with over $2 billion in crypto deposits, according to DeFiLlama, positioning it as a formidable player in the DeFi sector.
The Significance of BitcoinFi
The concept of BitcoinFi—allowing Bitcoin users to earn yields through DeFi—was a hot topic at the Token2049 conference in Dubai, with industry giants like Franklin Templeton endorsing the idea. As detailed in Franklin Templeton Backs Bitcoin DeFi Push, Citing ‘New Utility’ for Investors, this trend is gaining traction among institutional investors. The integration of Peg-BTC into Sui’s ecosystem aligns with this trend, offering users an array of opportunities such as staking Peg-BTC to earn interest, lending it for yields, or using it as collateral for loans. Moreover, Peg-BTC can be traded on decentralized exchanges within Sui, enabling users to swap and provide liquidity for trading fees.
Adeniyi Abiodun, Co-Founder and CPO at Mysten Labs, the company behind Sui, emphasized their comprehensive strategy for BitcoinFi. “Sui is taking a holistic approach by onboarding a full stack of infrastructure and BTCfi asset options into the ecosystem,” Abiodun stated. “Key integrations, such as the BitVM bridge with Bitlayer, are transforming the experience for Bitcoin holders by enabling them to earn, engage with DeFi, and put their assets to work on Sui.”
A Future Shaped by Integration
This integration is part of a larger trend that sees Bitcoin moving beyond its traditional role. As of today, Bitcoin assets account for over 10% of the total value locked in the Sui ecosystem, with more than 587 BTC having entered DeFi since February. This shift raises intriguing questions about Bitcoin’s future role in finance—will it continue to be merely a store of value, or will it evolve into a dynamic component of the DeFi world? As noted in Bitcoin DeFi will have 300M users, beating Ethereum and Solana: Exec, the potential for Bitcoin DeFi to surpass other blockchain ecosystems is significant.
The introduction of Peg-BTC into Sui’s ecosystem could very well mark a turning point. By activating Bitcoin’s utility on a secure, high-performance chain like Sui, users are encouraged to explore new possibilities. Yet, as with all financial innovations, the long-term implications remain to be seen. Will this trend continue to gain momentum, or will it face unforeseen challenges? Only time will tell, but for now, the bridge between Bitcoin and DeFi appears to be firmly established and ready for traffic.
Source
This article is based on: Bitcoin Backed Token YBTC Comes to Sui as Bitlayer Integrates Its BitVM Bridge to Sui Network
Further Reading
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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.
