Bitcoin DeFi TVL Expected to Surpass Ethereum’s Within 2 Years

2 min read | September 05, 2024 09:52 PM AEST | By Team Kalkine Media

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Brendan Sedo, a core contributor at Bitcoin sidechain Core DAO, has projected that significant capital from the Bitcoin ecosystem is likely to flow into sidechains and decentralized finance (DeFi) applications in the near future. According to Sedo, the vast amount of capital currently held in Bitcoin could soon surpass that of the Ethereum network in terms of DeFi capital deployment.

In a discussion at Korea Blockchain Week, Sedo noted that Bitcoin’s substantial capital base—estimated to be over a trillion dollars—will likely be increasingly utilized within Bitcoin-based DeFi platforms and sidechains. He emphasized that as Bitcoin continues to grow in value and attract institutional investments through exchange-traded products (ETPs), much of this capital will be directed toward enhancing Bitcoin’s on-chain activities.

Sedo highlighted the need for this capital to significantly contribute to {Bitcoin} (BTC) DeFi landscape, particularly with advancements in trustless bridging solutions and roll-ups. He described it as an obvious step to leverage this liquidity to expand opportunities within the Bitcoin ecosystem.

The recent approval of spot Bitcoin ETFs has brought renewed attention to Bitcoin’s scalability, sparking increased development and interest in Bitcoin sidechains such as Core, Bitlayer, and Stacks. Despite the growing enthusiasm, Sedo acknowledged that for Bitcoin's DeFi total value locked (TVL) to exceed Ethereum's, a broader acceptance among Bitcoin users toward utilizing their holdings in DeFi applications will be essential. The skepticism rooted in past incidents, such as the collapses of BlockFi and Celsius, has led many Bitcoin holders to favor cold storage over yield-bearing options.

However, Sedo has observed a shift in attitudes among Bitcoin users, particularly towards non-custodial DeFi solutions. This change in perspective is evident from recent industry events, including the Bitcoin 2024 conference in Nashville, which showcased the expanding possibilities within the Bitcoin network.

Core DAO has recently achieved notable growth, surpassing Bitlayer to become the largest Bitcoin sidechain by TVL, with significant Bitcoin staked in its network. Core’s non-custodial staking model and secure bridging protocol, powered by LayerZero, reflect the increasing maturity of Bitcoin-based DeFi solutions.

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