The race to dominate decentralized finance (DeFi) is heating up, and Bitcoin is emerging as a serious contender. According to Alexei Zamyatin, co-founder of Build on Bitcoin, the first platform to launch a successful and user-friendly suite of DeFi tools on Bitcoin stands to capture a massive user base of over 300 million people.
Speaking at Token2049 in Dubai, Zamyatin emphasized that while Ethereum and Solana have been at the forefront of DeFi so far, the Bitcoin DeFi ecosystem offers an untapped opportunity thanks to its superior retail user base, security, and long-standing trust.
“The advantage of Bitcoin DeFi is that the market is much bigger, you have a much bigger retail user base that you can tap into,” said Zamyatin in an interview with Cointelegraph.
Why Bitcoin’s 300 Million Users Matter
Currently, Bitcoin has a global user base estimated at over 300 million, surpassing the combined active users of Ethereum and Solana. Yet, the Bitcoin DeFi ecosystem remains in its early stages, with far fewer tools and platforms compared to Ethereum’s mature DeFi landscape.
Zamyatin argues that once intuitive DeFi interfaces are successfully built for Bitcoin, the platform will attract an overwhelming share of global users looking for decentralized finance tools that offer yield, lending, stablecoins, and staking, all with the security of the Bitcoin network.
“It’s not easy to convert it, but if you manage to win in Bitcoin DeFi, you win the entire market,” Zamyatin added.
Build on Bitcoin: Combining Bitcoin Security with DeFi Utility
Zamyatin’s company, Build on Bitcoin, is positioning itself as a pioneer in this new era of decentralized finance. Their solution involves a hybrid Layer-2 architecture that uses BitVM, a virtual machine that enables Turing-complete smart contracts on Bitcoin.
This innovative approach allows developers to bring Ethereum-like DeFi capabilities to the Bitcoin DeFi ecosystem, without compromising the base layer’s security. The solution is designed to onboard developers and institutions seeking more secure alternatives to existing blockchain networks.
Still, challenges remain, most notably in bridging talent gaps, lacking development tools, and building network effects that Ethereum currently enjoys.
Institutional Demand is Fueling Bitcoin DeFi Interest
Zamyatin highlighted a major catalyst driving the rise of the Bitcoin DeFi ecosystem: institutional demand for yield. With more hedge funds, asset managers, and family offices now holding Bitcoin, the need for financial products that offer yield, borrowing, and stablecoin minting is rising rapidly.
“A lot of institutions that are buying Bitcoin now usually have to find yield on the assets they hold,” said Zamyatin. “So Bitcoin yield is becoming a very hot and highly sought-after thing.”
Alongside yield, demand for Bitcoin-backed stablecoins is increasing. Zamyatin called Bitcoin the “best collateral in crypto,” which is driving new financial products that utilize Bitcoin’s liquidity for stablecoin issuance.
Staking and Yield: The New Face of Bitcoin DeFi
Although staking has traditionally been associated with proof-of-stake chains like Ethereum, new protocols are adapting similar mechanisms to Bitcoin DeFi ecosystem tools.
For example, users can now lock their Bitcoin into self-custodial vaults or use extractable signatures to earn yield in DeFi protocols. The Babylon Protocol currently leads this space, with $4.64 billion in total value locked (TVL), nearly 80% of all DeFi activity on Bitcoin, according to DefiLlama.
Despite this growth, Bitcoin’s DeFi TVL is still dwarfed by Ethereum’s, which boasts $54.6 billion in locked value. However, the Bitcoin DeFi ecosystem is expanding rapidly and
Bridging Remains a Critical and Controversial Issue
No DeFi discussion is complete without addressing bridges, the tools that allow users to move assets across incompatible blockchains.
Zamyatin acknowledged that blockchain bridges remain controversial due to past security breaches. He clarified that many hacks stem from poor private key management rather than smart contract flaws. Still, the trust issue persists—especially among institutions.
“Institutions are hesitant because they don’t know who’s signing the transactions,” he noted.
Take the Ren Protocol, for instance. It operates through a decentralized group of nodes called Darknodes, which lock BTC and mint RenBTC on other chains. Despite its decentralization, RenBTC has struggled to gain widespread institutional trust due to signer anonymity.
Efforts to improve bridge transparency are underway, with some protocols increasing the number of signers from 5 to as many as 50. But even so, the institutional preference is still to work with regulated custodians like BitGo and Coinbase Custody for cross-chain operations.
Ethereum vs. Bitcoin DeFi: Can Bitcoin Really Catch Up?
While Ethereum remains the undisputed leader in DeFi, boasting a mature infrastructure, thousands of developers, and a vast ecosystem, Bitcoin’s DeFi landscape is starting to carve out its own promising path. Bitcoin brings major advantages to the table, including a massive user base of over 300 million, strong institutional backing, and unmatched security and decentralization.
Meanwhile, Ethereum holds its edge with a well-established DeFi framework, a thriving developer community, and broad support for dApps and smart contracts. Ultimately, the race may come down to execution. If initiatives like Build on Bitcoin succeed in delivering seamless, secure, and scalable DeFi solutions, Bitcoin’s DeFi ecosystem has the potential not just to catch up, but possibly to surpass Ethereum in user adoption.
Conclusion: Bitcoin DeFi Is No Longer a Fantasy, It’s the Next Frontier
The evolving narrative around DeFi is shifting. No longer is Ethereum the only home for decentralized financial innovation. The Bitcoin DeFi ecosystem is emerging as a powerful alternative, especially for retail users and institutions that value Bitcoin’s long-term credibility and security.
With 300 million potential users, rising institutional demand for yield, and innovations in smart contract compatibility, the race to build the dominant Bitcoin DeFi platform is officially underway.
Glossary
Bitcoin DeFi Ecosystem: A network of decentralized finance tools and protocols built on or connected to the Bitcoin blockchain.
Layer-2 Solution: A secondary framework built on top of a blockchain to improve scalability and speed.
BitVM: A virtual machine that enables smart contracts on the Bitcoin network.
Total Value Locked (TVL): The total amount of assets held in DeFi protocols.
Bridge: A protocol allowing the transfer of digital assets across different blockchains.
FAQs
What is the Bitcoin DeFi ecosystem?
It refers to decentralized finance applications and protocols built on or integrated with the Bitcoin blockchain, enabling activities like lending, staking, and stablecoins.
Can Bitcoin DeFi surpass Ethereum?
With over 300 million users and rising institutional interest, it’s possible—but it will depend on infrastructure, adoption, and innovation.
Is Bitcoin yield the same as staking?
No. Yield can come from various DeFi tools such as lending or liquidity provision. Staking generally involves locking tokens to support a network.
Why are institutions hesitant about blockchain bridges?
Due to past security breaches and lack of transparency about who signs cross-chain transactions.
References
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