BTCFi TVL jumps 22x to $7B, but trust remains an issue

Bitcoin-based decentralized concern (DeFi), often referred to arsenic BTCFi, is experiencing important maturation but inactive faces challenges.

According to DefiLlama data, Bitcoin-based (BTC) DeFi protocols’ full worth locked (TVL) went from $304.66 cardinal connected Jan. 1, 2024, to $6.5 cardinal by Dec. 31, 2024. As of publication, DefiLlama information shows that BTCFi has a TVL of $7.05 billion.

This translates to an summation of much than 22 times. A study shared by Bitcoin astute declaration furniture Arch Network suggests that “this surge was fueled by caller protocol launches, emerging token standards, organization inflows, a large terms rally pushing BTC to an all-time high, and the emergence of liquid restaking.”

The survey results released successful the study amusement that contempt immoderate solutions already connected the market, 36% of the respondents bash not prosecute with BTCFi owed to a deficiency of trust. One-quarter debar interactions with BTCFi owed to hazard and fearfulness of losses. Most (60%) presumption astute declaration exploits arsenic the apical information risk.

BTCFi TVL chart. Source: DefiLlama

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The survey comprised a comparatively tiny illustration size of 125 respondents. It included builders, investors and aboriginal users, with information from VoltFi,  DPI Capital,  Arkova,  Ordbit and different Bitcoin-based DeFi teams.

BTCFi development’s hardships

Developing connected Bitcoin is inactive perceived arsenic harder than processing connected altcoins similar Ethereum. According to the survey results, 44% of the users who chose BTCFi were motivated by its purported information and decentralization.

Still, 43% argued that Bitcoin’s constricted smart-contract enactment is the biggest situation of gathering connected the protocol. About 45% of the respondents said amended infrastructure was needed to standard BTCFi, 43% pointed to wider Bitcoin layer-2 adoption for scalability and 34% cited liquidity.

Related: Bitcoin DeFi surge whitethorn boost BTC request and adoption — Binance

How BTCFi experts usage Bitcoin

Among respondents, 36% clasp their Bitcoin successful acold storage. Furthermore, 33% of the radical commercialized connected centralized exchanges and 31% usage Bitcoin for payments.

About 29% of users utilize Bitcoin arsenic collateral successful DeFi protocols, and 22% span their Bitcoin to different blockchains arsenic wrapped tokens. Wrapped Bitcoin is simply a tokenized mentation of BTC representing a autochthonal Bitcoin deposit successful custody.

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