Bitcoin DeFi Set to Surpass Ethereum in TVL by 2026, Says Core DAO Developer

Bitcoin DeFi Growth Could Eclipse Ethereum’s TVL in Two Years

Bitcoin DeFi – The total capital locked in Bitcoin-based decentralized finance (DeFi) protocols could surpass that of the Ethereum network within the next two years, according to Branden Sedo, a contributor at Bitcoin sidechain Core DAO. Sedo shared his insights during Korea Blockchain Week, predicting that Bitcoin’s growing ecosystem will soon attract significant institutional capital, potentially overtaking Ethereum in total value locked (TVL).

Bitcoin’s Trillion-Dollar Market to Fuel DeFi Growth

Sedo emphasized that there is currently over $1 trillion of capital in the Bitcoin ecosystem that could eventually find its way into Bitcoin-based DeFi applications. He explained that with the rise of exchange-traded products (ETPs) and the increasing institutional adoption of Bitcoin, it’s only a matter of time before more of this capital is put to use in Bitcoin sidechains and other DeFi solutions.

“If you look at Bitcoin, there’s over a trillion dollars sitting there,” Sedo said. He believes that with the implementation of trustless bridges and roll-up solutions, moving a significant portion of this capital on-chain is inevitable.

Sedo further added, “It’s a no-brainer to bring some of that liquidity on-chain and bring about more opportunities for Bitcoin.”

Bitcoin Sidechains: A Growing Ecosystem

The recent approval of spot Bitcoin ETFs has spurred rapid development and increased attention on Bitcoin scalability solutions. Sidechains like Core, Bitlayer, and Stacks have emerged as key players in this space, driving innovation and expanding the possibilities for Bitcoin-based DeFi.

Sedo highlighted the success of Core Chain, which recently surpassed Bitlayer to become the largest Bitcoin sidechain. As of the time of writing, Core Chain boasts $314.4 million in total value locked (TVL), with 5,541 BTC—worth $321 million—staked on its network, according to data from DeFiLlama.

Currently, Core accounts for 26.4% of the total TVL across all Bitcoin sidechains, underscoring its growing dominance in the sector.

The Shift in Attitudes Among Bitcoiners

One of the key challenges for Bitcoin DeFi’s growth lies in the mindset of Bitcoin holders. Many Bitcoiners, having experienced losses during the collapse of platforms like BlockFi and Celsius in 2022, have been hesitant to use their Bitcoin for yield-bearing purposes. Instead, they prefer to hold their Bitcoin in cold storage, often refusing to engage with DeFi solutions.

Sedo acknowledged this sentiment, sharing his own experience: “A lot of people have lost Bitcoin. I’ve lost Bitcoin. It’s not fun to lose Bitcoin. It fucking sucks. So there’s a lot of understandable skepticism with these new things that come out.”

However, he also noted a noticeable shift in the attitudes of some Bitcoiners, particularly those attending recent industry events like Bitcoin 2024 in Nashville. He described the atmosphere as “builder-centric” and characterized by excitement over the expanding potential of the Bitcoin network.

Sedo expressed confidence in Core’s non-custodial staking model, which allows users to time-lock their Bitcoin without handing over private keys, in exchange for a 3% yield paid in CORE tokens. These tokens are used for gas and governance within the Core network. Additionally, Core’s bridge, powered by LayerZero, facilitates the bridging of stablecoins and CORE tokens, and has remained secure, unlike other bridging protocols that have suffered major exploits.

The Flippening: Will Bitcoin DeFi Surpass Ethereum?

Despite Bitcoin’s potential for growth in the DeFi space, Sedo emphasized that achieving TVL parity with Ethereum will require more Bitcoiners to embrace the idea of putting their Bitcoin to work. Many Bitcoin enthusiasts still see HODLing as the safest strategy, but as trust in non-custodial solutions grows, this mindset may change.

Looking forward, Sedo remains optimistic about the future of Bitcoin DeFi. He pointed to the increasing adoption of Bitcoin-based DeFi solutions and the rising interest from both developers and users as indicators of a shift in the ecosystem.

“We’re seeing an explosion of what’s possible on the Bitcoin network,” he said, reflecting on the growing development activity and the heightened enthusiasm surrounding Bitcoin sidechains.

FAQ for Bitcoin DeFi vs. Ethereum TVL Growth