Will 2025 Be a Boom Year for Bitcoin DeFi?

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The year 2025 is poised to witness a significant boom in Bitcoin DeFi, as major institutions increasingly embrace Bitcoin and the Bitcoin DeFi ecosystem continues to evolve.

1. The Massive Potential of Bitcoin Staking

The Bitcoin staking market is showing immense growth potential. By the end of 2024, the total value locked (TVL) reached $6.55 billion, according to data from DeFiLlama.

Matt Hougan, Head of Research at Bitwise, stated:

The market has all the right conditions for Bitcoin staking to take off. Even a modest 3% yield is compelling compared to traditional investment channels.

Hougan predicts the market could grow to $200 billion.

Alexei Zamyatin, co-founder and CEO of Build on Bitcoin, offered an even bolder forecast, suggesting Bitcoin DeFi TVL could expand 300-fold in the near future.

We’ve engaged with numerous investors and large funds—all of them are eager to leverage their Bitcoin for returns

He shared.

2. Institutional and Government-Driven Investment

The year 2024 marked a historic milestone as Bitcoin surpassed the $100,000 threshold, drawing over $100 billion into Bitcoin ETFs.

Dean Tribble, CEO of Agoric Network, commented:

This record-breaking price will attract more institutions and regulators, driving further momentum for the entire crypto industry in 2025.

Protocols like Babylon (Bitcoin network staking) and EigenLayer (restaking on Ethereum using WBTC) are leading the trend, with TVLs of $5 billion and $15 billion, respectively. Additionally, the launch of Bitcoin staking ETFs in Europe, offering an attractive 5.65% APR, is creating new opportunities for institutional investors.

3. A Maturing DeFi Ecosystem

Liquid staking tokens (LSTs) for Bitcoin are gaining traction, with TVL hitting $2.5 billion. Layer-2 platforms like RSK, Merlin, and Stacks have established comprehensive DeFi ecosystems offering a wide range of services, from decentralized trading to lending.

Jacob Phillips, co-founder of Lombard, highlighted:

We’ll see an evolution from simple strategies like earning yields on held Bitcoin to more complex transactions such as options trading. Bitcoin staking yields could become the new benchmark for the market, potentially replacing U.S. Treasury bonds in the lending and borrowing landscape of DeFi.