News - Why Bitcoin DeFi Protocols Are Experiencing Remarkable Growth Amid BTC’s Surge

The surging price of Bitcoin (BTC) is exerting a significant impact on Bitcoin-focused decentralized finance (DeFi). According to data from DefiLlama, the total value locked (TVL) across Bitcoin-based DeFi protocols has skyrocketed from $304.66 million on January 1, 2024, to a staggering $7.117 billion as of press time.
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The recent upswing in Bitcoin DeFi—commonly known as BTCFi—can also be attributed to institutional inflows, the launch of new protocols, liquid restaking, Bitcoin-backed lending, yield generation, and other factors.
Institutions Pursue a BTCFi Strategy

Rena Shah, Chief Operating Officer of Bitcoin DeFi ecosystem Trust Machines, told Cryptonews that institutions are finally recognizing Bitcoin’s accelerated growth trajectory.

This shift is evident in recent activity within the Bitcoin layer-2 ecosystem Stacks, which reported that 5,000 sBTC— a 1:1 Bitcoin-backed asset enabling BTC DeFi— were bridged in just a few hours.

Shah further noted that the total loan value within the Stacks ecosystem has risen alongside Bitcoin’s price appreciation.

“When everyday users watch Bitcoin hit new all-time highs, it opens the door for a next step: Bitcoin DeFi,” Shah explained. “The builders who’ve prepared for this moment will be best positioned to introduce new users to unlocking the full potential of their Bitcoin.”

Ben Sanders, Chief Growth Officer at Rootstock Labs, shares this outlook. He told Cryptonews that in the months ahead, more crypto exchanges and consumer finance apps will likely integrate Bitcoin layers such as Rootstock to grant users access to BTCFi.

“As institutions accumulate larger Bitcoin reserves, it’s inevitable that more will seek ways to put their BTC to work on truly Bitcoin-aligned blockchains like Rootstock,” Sanders noted.

Stablecoins Fuel the Surge in Bitcoin DeFi

Sanders further noted that activity on Rootstock—Bitcoin’s DeFi layer—has surged.

“This is evident in Rootstock hitting new all-time highs for Total Value Locked and active addresses interacting with the network,” he stated.

Leading protocols such as UST0, Solv, Midas, and LayerZero have also recently integrated support for Rootstock, further accelerating the current BTCFi momentum.
Rich Evans, managing director at crypto exchange CEX.IO, told Cryptonews that he believes one of the most promising developments is the introduction of stablecoins to Bitcoin DeFi.
“Tether aimed to launch USDT on the Lightning Network via Taproot Assets, while UST0 was recently added to Rootstock,” Evans said. “Stablecoins are indeed the backbone of DeFi activity across other chains. Bitcoin has long lacked a dominant stable asset, so stablecoin expansion could be a game-changer for Bitcoin DeFi.”

This already appears to be the case. Sanders pointed out that two of the biggest use cases on Rootstock currently are Bitcoin borrowing and lending.

“We’re seeing both retail users and institutions harnessing Rootstock to generate yield from their BTC holdings, or borrow stablecoins against them. I’ve heard some incredible stories about people financing home renovations and businesses unlocking capital to expand into new markets,” he said.

Willem Schroé, CEO and co-founder of Bitcoin layer-2 Botanix Labs, told Cryptonews that Botanix is also experiencing steady growth due to these factors.

“As capital flows back into the ecosystem, we’re seeing a surge in interest around Bitcoin-native DeFi, particularly in lending, restaking, and generating yield on BTC,” Schroé said.

He added that Botanix has seen steady growth in new users and applications deploying to enable lending, decentralized exchange activity, and Bitcoin Yield.

Post time: Jul-18-2025