Binance Research – The Future of Bitcoin: DeFi, Mar 2025

The document explores the development and future of Bitcoin in the context of decentralized finance (DeFi), focusing on the concept of Bitcoin DeFi (BTCFi).

The role of Bitcoin is expanding from a mere store of value to a broader DeFi ecosystem. BTCFi represents a significant untapped opportunity, as only about 0.79% of BTC is used in DeFi. Infrastructure is a bottleneck for BTCFi growth, requiring the development of second-layer solutions (L2). The Bitcoin network's security model faces long-term challenges, and BTCFi could help sustain miner incentives. Adoption barriers include cultural resistance, technical hurdles, and regulatory uncertainty. Institutional interest and liquidity require new incentive mechanisms. A key factor is cross-chain compatibility to attract users and liquidity.