Ethereum and other innovative contract systems have been ahead of DeFi for a long time. But now Bitcoin is making a strong entry. Bitcoin is the safest and most valuable blockchain. As BTCFi (Bitcoin DeFi) gains popularity, the whole crypto space is changing considerably. DefiLlama says that BTCFi protocols were worth $307 million in January 2024 and $6.6 billion in February 2025, a 2,050% rise. Bitcoin’s yield-earning possibilities, decentralized trading, and tokenization are all factors that have led to this growth. The latest addition of USDT to the Lightning Network strengthens Bitcoin’s role in the DeFi ecosystem and opens new liquidity channels.
How to Get Bitcoin Yield
HODL has always been Bitcoiners’ mindset, but BTCFi lets them make an idle income while maintaining control of their assets.
Bitcoin restacking is one of the most hopeful strategies. People who own BTC lock their assets in smart contracts to protect other networks and get paid for it. Babylon is the most popular BTCFi protocol, with $5.4 billion in TVL, and it makes restaking easier by using safe cryptographic ways.
Bitcoin Trading on Decentralized Exchanges
Most decentralized exchanges (DEXs) use wrapped Bitcoin, but some sites now let you trade Bitcoin directly without central authority.
The most well-known is THORChain (RUNE), which uses the Threshold Signature Scheme (TSS) to make it easy to move Bitcoin between blockchains. Stacks-based Stackswap and peer-to-peer platform Bisq are two others new BTCFi DEXs. Bisq uses multi-signature escrow to make sure that deals are safe.
Putting assets on Bitcoin as tokens
With new methods, Bitcoin can issue tokens, which was not in its original plan.
On Bitcoin, the Ordinals protocol lets people make fungible (BTC-20) and non-fungible (NFT) coins. However, Bitcoin layer-2 options like RGB, Liquid, and Taproot Assets offer a more scalable way to do things.
When Tether (USDT) joined the Lightning Network on January 30, 2025, it was a big deal that changed the game. Since $150 billion in USDT is worth more than $1 trillion a month, this change could increase Bitcoin’s transactions and liquidity.
Conclusion
Even though there are worries about the higher transaction fees, BTCFi has a lot of promises. Restaking, lending, decentralized trade, and tokenizing assets are all becoming more popular. This means that Bitcoin’s DeFi ecosystem will grow very quickly. As BTCFi grows, it could change how money works and open new chances for Bitcoin owners worldwide.
