Author: 0xResearcher

Imagine holding the world's most valuable digital asset, Bitcoin, in your hands. But it's like a gold brick in a safe, unable to do anything except appreciate in value. It's like driving a Ferrari but only spinning in a parking lot—both exciting and frustrating.

But this situation is changing dramatically. In the third quarter of 2025, when a project's community sale achieved a 1,400% oversubscription, attracting a frenzy of 21,340 participants from 132 countries, it was more than just a successful fundraising event—it was a microcosm of the explosion of the entire Bitcoin DeFi ecosystem. The data is even more telling: the BTCFi market experienced over 22-fold growth in 2025, with total locked value surging by over 2,000%. Behind these figures lies the full awakening of a dormant giant.

From the phenomenal performance of PumpFun to the announcements of Time General Evolution (TGE) plans from star projects like Linea, Monad, and Berachain, the entire crypto market has been energized. The most interesting story in this wave is that Bitcoin has finally "learned" how to operate in DeFi.

For a long time, Bitcoin was like the revered elder of the crypto world—everyone respected it, yet it often sat in the corner, observing quietly and rarely participating in the games of the younger generation. While Ethereum was thriving in DeFi, with a constant stream of emerging protocols, Bitcoin maintained its aloof, "I'm just digital gold, nothing else" attitude. But now the situation is completely different. Technological breakthroughs have finally allowed Bitcoin to participate in the DeFi game, and its initial move has been a resounding success.

Staking Track: A Gorgeous Transformation from “Lying Flat” to “Making Money Without Making Anything”

The success of the Babylon protocol is truly astonishing. Who could have imagined that in just one hour and 40 minutes during an October 2024 launch, 24,000 Bitcoin (approximately $1.5 billion) would be staked? The first round of 1,000 Bitcoins was snapped up in just 74 minutes. This scene is reminiscent of the rush for concert tickets, except this time, the competition is for the opportunity to invest in Bitcoin infrastructure.

Babylon's core innovation lies in enabling native Bitcoin staking, meaning Bitcoin holders can finally earn returns without losing control of their assets. Simply put, this allows your Bitcoin to remain secure while also earning money. This technological breakthrough is no less significant than installing a perpetual motion machine on gold bricks—both preserving and increasing their value.

Following closely, Core DAO launched its own Bitcoin staking solution, incorporating Bitcoin's security into its network through the Satoshi Plus consensus mechanism. Their strategy was even more radical, directly airdropping CORE tokens to stakers, attracting a large number of Bitcoin miners. This dual-income model of "mining + staking" provided a new source of income for miners who previously relied solely on mining.

Even more interesting is the flourishing Liquid Staking Token (LST) market. This sector is like the "arsenal" of Bitcoin DeFi, with a wide variety of weapons. Lombard's LBTC reached $1 billion in locked-in value in 92 days, becoming the first Bitcoin LST to be recognized by blue-chip protocols such as Aave, Spark, and EigenLayer. This is equivalent to obtaining a "passport" to the DeFi world.

PumpBTC takes a different approach, focusing on cross-chain liquidity solutions, allowing users to use staked Bitcoin on multiple chains. Lorenzo Protocol focuses on providing a unified liquidity layer for the Bitcoin ecosystem, aiming to become the central hub for all Bitcoin DeFi activity. Allo Protocol is even more ambitious, aiming to build a decentralized Bitcoin asset management platform, allowing professional investors to manage Bitcoin portfolios for retail investors.

These protocols are all trying to solve the same core problem: how to make Bitcoin profitable while maintaining liquidity. It’s like adding wheels and a motor to a gold brick, allowing it to move and run on its own.

Infrastructure Wars: Giving Bitcoin a Smart Brain

If staking is how Bitcoin learns to "earn money," then innovation at the infrastructure level is giving Bitcoin an "intelligent brain." The intensity of this technological competition is no less intense than the "browser wars" of the past.

BOB (Build on Bitcoin) is arguably one of the most ambitious projects in this space. Using BitVM technology, they've achieved a seemingly impossible feat: seamlessly combining Bitcoin's security with Ethereum's DeFi capabilities. BOB's solution acts like a "translator" for Bitcoin, enabling it to understand and execute complex smart contracts while maintaining its inherent security. BOB has already attracted over 30,000 Bitcoins in bridge funding, becoming a key entry point into Bitcoin DeFi.

Arch Labs has chosen a more direct approach. They are developing ArchVM, an effort to implement Turing-complete smart contract capabilities directly at the Bitcoin base layer. This is like a "brain transplant" for Bitcoin, transforming it from a simple store of value into an intelligent platform capable of running complex applications. While the technical challenges are immense, if successful, it will fundamentally change Bitcoin's position.

Hemi Network's approach is even more ingenious. They embed Bitcoin nodes directly into the Ethereum Virtual Machine, creating a hybrid architecture. This design allows developers to leverage both the security of Bitcoin and the programmability of Ethereum, essentially building a bridge between the two worlds. Hemi calls itself "the largest programmable layer on Bitcoin," and while that might sound a bit boastful, they've achieved a number of technological breakthroughs.

In this infrastructure war, Lombard has chosen a more pragmatic yet equally innovative approach. As a protocol focused on unlocking Bitcoin liquidity, Lombard offers Bitcoin holders a sweet spot through its LBTC token—staking returns and the ability to freely use it across major DeFi protocols. The success of this strategy is evident in its community sale: originally aiming to raise $6.75 million, it ultimately received $94.7 million in subscriptions, a staggering 1,400% oversubscription. With 21,340 participants from 132 countries flocking to the event, it felt like a massive gathering of the global Bitcoin community.

Interestingly, Lombard's success is reflected not only in its fundraising figures but also in the precision of its strategic positioning. Rather than attempting to reinvent the wheel, they focus on serving as a connector—allowing Bitcoin to seamlessly integrate into the existing DeFi ecosystem. LBTC has already garnered recognition from blue-chip protocols like Aave, Spark, and EigenLayer, effectively securing a "VIP pass" to the DeFi world.

Stacks takes a different approach, leveraging its unique "Proof of Transfer" consensus mechanism to leverage Bitcoin's security for its smart contract platform. DeFi protocols on Stacks, such as ALEX and Arkadiko, have already amassed a significant user base, demonstrating the feasibility of this technological approach. Stacks also recently launched sBTC, attempting to provide a better cross-chain Bitcoin experience while maintaining decentralization.

The most interesting project is Rootstock (RSK), which has been operating for several years and provides smart contract functionality for Bitcoin through sidechain technology. While not the newest project, RSK's position in the Bitcoin DeFi space is like that of a veteran, offering valuable experience and lessons for newcomers. They also recently launched a new scaling solution, attempting to improve transaction efficiency while maintaining compatibility with the Bitcoin mainnet.

These infrastructure projects are like plug-ins and add-ons for Bitcoin, allowing this veteran to finally showcase its prowess in the DeFi landscape. Each project has its own technical approach and advantages, but the goal remains the same: to unleash Bitcoin's enormous potential in DeFi. The popularity of the Lombard community sales suggests the market is clearly excited about this innovation.

When investors from 132 countries simultaneously say "yes" to a single project, BTCFi, it's no longer a regional feud; it's a global referendum on the future of Bitcoin. From the aurora borealis of Northern Europe to the coconut groves of the equator, from the coffee shops of Wall Street to the late-night offices of Tokyo, investors around the world are watching the same thing: the silent giant is finally speaking.

Wall Street's shift in attitude is even more intriguing. When traditional financial giants begin to seriously consider investing in Bitcoin, they're looking beyond simple buy-and-hold strategies. Rather, they're looking for specialized financial products that generate income, offer liquidity, and meet regulatory compliance requirements. The initial interest in Bitcoin ETFs by traditional financial giants like BlackRock and Fidelity is just the first step; the next step is likely to be more complex Bitcoin financial products. This is the value of BTCFi's infrastructure—it elevates "digital gold" into "interest-bearing gold."

The shift in retail investor behavior is also intriguing. Tired of being forced to "buy shares" in the secondary market, they now want to be on the same page as institutional investors. This demand is driving the need for fairer and more transparent token distribution mechanisms and explains the popularity of community sales. When ordinary investors discover they can participate in the early stages of infrastructure development, their enthusiasm is ignited.

But what we're seeing now may just be the tip of the iceberg. Compared to the maturity of the Ethereum DeFi ecosystem, Bitcoin DeFi is still a toddler. In areas like staking mechanisms, liquidity management, yield optimization, and risk management, the room for innovation is staggering. Furthermore, as the regulatory environment gradually clarifies, compliant Bitcoin DeFi products will have even greater room for development.

Most interestingly, the current competitive landscape in this sector is far from settled, like the American West during the Gold Rush era—opportunities abound, but risks are also considerable. Technological approaches are still being explored, business models are still being tested, and user habits are still being cultivated. This uncertainty presents both challenges and opportunities, offering new entrants the potential to overtake competitors.

Projects that can provide full-stack solutions, build a strong community foundation, and gain recognition from mainstream protocols are likely to become the biggest winners in this "gold rush." The key lies in finding a balance between technological innovation, user experience, security, and compliance.

Conclusion

Looking ahead, we're likely to see Bitcoin evolve from "digital gold" to the most important foundational asset in the multi-chain DeFi ecosystem. As infrastructure improves and interoperability between different protocols increases, a complete Bitcoin financial ecosystem will emerge. By then, BTCFi products may be as widely accepted by the mainstream market as traditional financial products are today.

When 21,340 people from 132 countries simultaneously cast their vote of confidence in a project, it's more than just an investment—it's a collective bet on the future of Bitcoin finance. And judging by its current momentum, this bet is likely to pay off handsomely. After all, when the world's most valuable digital asset finally learns to "earn money" and even has an intelligent brain, who wouldn't want to be a part of this story?