BTCFi is a ‘huge opportunity’ to make Bitcoin a productive asset – stack

Bitcoin's decentralized finance (DeFi) makes Bitcoin (BTC) a more versatile asset with the potential to generate revenue, Andre Serrano, product and partnership manager at Stax, told Cointelegraph in an exclusive interview.

“The vision is simple: Bitcoin is a $1.2 trillion asset class with very little on-chain activity. So there is a huge opportunity for protocols and layer-2s to make Bitcoin a productive asset.

Bitcoin-native DeFi, or BTCFi, is a recent development that seeks to bring DeFi capabilities to the world's first blockchain network. At the current rate of adoption and growth, the market for Bitcoin Layer-2 networks could overtake the market for Ethereum Layer-2s, Serrano said.

“L2s just opens up the design space for what's possible with Bitcoin… In the next few years, I fully expect the Bitcoin L2s market to match and surpass Ethereum L2s.

According to data from CoinMarketCap, Serrano's predictions come earlier than expected for Bitcoin's halving, as Bitcoin was trading above the $63,500 mark as of 8:30 am UTC, marking a 7.9% weekly decline.

Demonstrating BTCFi investor interest, decentralized exchange (DEX) MerlinSwap raised $480 million in its DEX Offering (IDO) of 6,599 bitcoins launched on April 5. IDO attracted more than 52,000 participants.

Related: Bitcoin supply will run out in 9 months – Bybit

Bitcoin L2 networks are a significant part of BTCFi enabling lower transaction costs and more use cases for the world's first blockchain network. For example, L2 network stacks enable the creation of smart contracts on the Bitcoin network.

Stacks' Serrano argued that L2s are more important to Ethereum, which already comes with natural smart contract capabilities. He added that L2s are necessary to scale the Bitcoin network beyond the current transaction limit.

Some of the “low-hanging fruit” that would make bitcoin a more productive asset, he said, would include creating the ability to generate revenue around bitcoin and create lending protocols.

Other market participants are also optimistic about Bitcoin-native DeFi. At its current rate of adoption, BTCFi can match Ethereum's DeFi innovation, according to Nash Lee, founder of Merlinswap. He told Cointelegraph.

“[Market appetite] It requires broad platforms that can handle increasing volumes and expectations. DeFi stands out as the only sector with the potential to leverage this narrative, providing a sustainable ecosystem for Bitcoin's evolving use cases. This dynamic sets the stage for the innovation and sophistication of Bitcoin DeFi to match the innovation and sophistication seen in the Ethereum DeFi ecosystem.

Related: ‘China to start auction' — Will Hong Kong's Bitcoin ETFs fuel the halving rally?