According to Alexei Zamyatin, the competition for capturing the DeFi market share on Bitcoin is intensifying, with the blockchain’s 300 million users potentially surpassing Ethereum’s DeFi ecosystem.
According to one crypto founder, many believe the first decentralized finance (DeFi) company to launch a user-friendly product suite on Bitcoin will “capture the entire market” of the blockchain’s 300 million users.
It was stated by Alexei Zamyatin, co-founder of the Bitcoin layer 2 Build on Bitcoin, at Token2049 in Dubai that “the advantage of Bitcoin DeFi is that the market is much bigger, with a significantly larger retail user base available to tap into.”
“It’s not easy to convert it, but if you manage to win in Bitcoin DeFi, you win the entire market.”
Zamyatin stated that the 300 million Bitcoin users would drive DeFi services on the blockchain to “outgrow everything seen so far in Ethereum and Solana.”
Build on Bitcoin is seeking market share by offering a hybrid layer 2 solution that combines Bitcoin’s security with Ethereum DeFi capabilities using BitVM, a platform that processes Turing-complete Bitcoin contracts.
Zamyatin argued that Bitcoin-native bridges are essential for DeFi on Bitcoin, since the blockchain offers strong security but lacks Ethereum’s human talent, tools, and network effects.
A Zamyatin stated that Bitcoin yield and stablecoin products are driving strong demand for Bitcoin-based DeFi.
A lot of institutions that are buying Bitcoin now usually have to find yield on the assets they hold. So Bitcoin yield is becoming a very hot and highly sought-after thing.
Zamyatin added that demand for Bitcoin-backed stablecoins is soaring because many consider Bitcoin the “best collateral.”
Bitcoin staking now serves as the primary DeFi use case beyond payments, with Bitcoin holders locking their coins in self-custodial vaults or using extractable one-time signatures to earn staking rewards on proof-of-stake blockchains like Ethereum.
Bridging Solutions Spark Heated Debate
The market is currently being led by the Babylon Protocol, with $4.64 billion in value locked, accounting for nearly 80% of the total value locked on Bitcoin, according to DefiLlama data.
Bitcoin’s DeFi total value locked (TVL) remains a small portion of the $54.6 billion in value locked on Ethereum.
Zamyatin acknowledged that teams had caused numerous blockchain bridge hacks by failing to manage their private keys, rather than exposing vulnerabilities in smart contracts.
While the retail market remains open to competition, Zamyatin noted that many institutions still hesitate to use bridges that enable users to transfer value between incompatible blockchains.
Zamyatin noted that in some cases, teams have increased the number of bridge signers from five to 50.
Observers have noted that institutions remain reluctant to adopt these solutions because they are uncertain about who is signing the transactions.
For example, a decentralized network of nodes called Darknodes operates the Ren Protocol’s RenBTC by signing transactions that lock BTC and mint RenBTC for use on other chains.
However, institutions continue to avoid these protocols because of the high level of anonymity, preferring to use trusted custodians like BitGo and Coinbase Custody for such activities.
