Bitcoin, also known as BTC, is making strides in the world of decentralized finance (DeFi) with the emergence of BTCFi. This new paradigm aims to bring DeFi capabilities to the original blockchain network, and if its current adoption rate continues, it has the potential to rival the innovation of Ethereum-based DeFi.
Nash Lee, co-founder of MerlinSwap, expressed his belief in the future of BTCFi. He highlighted the investor demand for Bitcoin-native DeFi applications by pointing to the successful initial DEX offering (IDO) of MerlinSwap. During its IDO on April 5, MerlinSwap raised an impressive 6,599 Bitcoin, equivalent to $480 million, with over 52,000 participants. This record-breaking IDO demonstrates the market’s demand and confidence in Bitcoin-native DeFi applications.
MerlinSwap is built on the Bitcoin layer-2 network called Merlin Chain. On April 4, it surpassed $100 million in total value locked (TVL), further indicating the growing interest in Bitcoin-native DeFi.
The introduction of the BRC-20 token standard played a crucial role in the emergence of BTCFi. This token standard enabled the creation of nonfungible tokens (NFTs) on the Bitcoin blockchain for the first time. These Bitcoin-native NFTs, also known as Ordinals, are directly inscribed on satoshis (sats), providing a permanent home on the Bitcoin network. Unlike most NFT collections, where the images and metadata are stored on centralized servers, Ordinals on Bitcoin offer enhanced security by eliminating potential vulnerabilities.
The interest in Bitcoin-native NFTs is evident as the network has already surpassed 64.1 million Ordinals inscriptions in less than a year and a half since the first Ordinal was inscribed in December 2022, according to data from Dune.
In addition to Ordinals, the emergence of Bitcoin layer-2s is another significant aspect of BTCFi. These layer-2 solutions will expand the use cases for Bitcoin, ultimately contributing to the growth and development of BTCFi.
With BTCFi gaining momentum and investor confidence, the future looks promising for Bitcoin’s role in decentralized finance.