The total value locked (TVL) of Bitcoin [BTC] DeFi witnessed an impressive surge of close to 600% in the first quarter of 2024, leading experts to anticipate further growth in 2025 with upcoming L2 launches. Recent data from DeFiLlama revealed a new all-time high of over 70k BTC (equivalent to $6.68 billion) locked within the DeFi ecosystem.
This remarkable increase from approximately 13k BTC locked in October highlights a thriving DeFi environment. This prompts the question of what is fueling the revival of BTC and what lies ahead in 2025.
Domination of Babylon in BTC DeFi
From the perspective of protocol rankings, Babylon, the latest staking platform in the network, emerged as the front-runner, accounting for over 90% of the BTC DeFi TVL, totaling $5.5 billion. This underscores the substantial investor confidence in the protocol.
Babylon experienced a staggering 150% surge in TVL in the past month as investors eagerly staked their BTC to earn yields. Meanwhile, Lombard and SolvBTC secured the second and third positions, respectively, as prominent staking protocols, indicating the growing popularity of restaking practices in the Bitcoin ecosystem.
Foremost figures in the DeFi sector anticipate further expansion in 2025. According to Fisher Yu, the Chief Technology Officer of Babylon, the protocol intends to combine BTC with the altcoin universe to leverage liquidity and security benefits through the upcoming Babylon L2 launch. Yu stated,
“Our Phase-1 launch indicated the readiness of the Bitcoin universe and the general market to embrace the altcoin universe, including both retail and institutional stakers. This demonstrates a potential consensus towards entering the altcoin sphere.”
Moreover, several institutional DeFi lending companies are preparing to introduce BTC derivatives as collateral this year. Sidney Powell, the Chief Executive Officer of Maple Finance, recently expressed his belief that BTC could evolve into the ‘primary collateral asset’ for DeFi systems. Powell commented,
“With Bitcoin progressively integrated into institutional DeFi lending sectors, it is on track to position itself as a leading collateral asset within decentralized financial frameworks.”
Powell cited the high liquidity and minimal counterparty risk of BTC as the driving forces behind his forecasts. Meanwhile, various scaling solutions like the Lightning Network and Stacks have proposed upgrades aimed at fostering the renaissance of BTC DeFi.