As the decentralized finance (DeFi) ecosystem evolves, Bitcoin is poised to take center stage in 2025. Industry leaders predict Bitcoin-native DeFi will thrive as institutional adoption surges and advanced protocols drive market growth. With Bitcoin staking alone presenting a total addressable market worth hundreds of billions, the year could redefine how Bitcoin integrates with DeFi.
The Rising Demand for Bitcoin Staking
The current total value locked (TVL) in Bitcoin staking stands at approximately $5.5 billion, according to Staking Rewards. Experts believe this figure could grow exponentially. Matt Hougan, head of research at Bitwise, highlights the strong demand for Bitcoin yields:
“Even a 3% yield on Bitcoin is attractive compared to other options,” Hougan noted.
Hougan estimates the Bitcoin staking market represents a $200 billion opportunity, while broader Bitcoin DeFi TVL could see a 300x increase, as noted by Alexei Zamyatin, CEO of Build on Bitcoin.
Institutional Momentum Accelerates
Bitcoin’s price surge in 2024, surpassing $100,000 for the first time, catalyzed institutional interest. Spot Bitcoin exchange-traded funds (ETFs) attracted over $100 billion in investment, sparking a renewed focus on the crypto sector.
Dean Tribble, CEO of layer-1 network Agoric, emphasized the ripple effects of Bitcoin’s all-time high:
“This milestone will reinvigorate the entire crypto sector in 2025.”
Protocols like Babylon, a Bitcoin layer-2 (L2) scaling network, and EigenLayer, an Ethereum-based restaking protocol, are gaining traction with institutions. Together, they have amassed TVLs of over $20 billion, according to DefiLlama.
Staked BTC ETFs Gain Traction
The potential introduction of staked BTC ETFs in Europe has further fueled institutional interest. In November, asset manager Valour launched a Bitcoin-staking ETF offering an annual percentage rate (APR) exceeding 5.65%. While the U.S. has yet to permit Bitcoin staking ETFs, their adoption in Europe signals a growing trend.
Maturing DeFi Ecosystem
Bitcoin’s DeFi ecosystem is diversifying, supported by liquid staking tokens (LSTs) that represent claims on staked BTC. With $2.5 billion in TVL as of December 2024, Bitcoin LSTs enable advanced DeFi use cases such as lending, derivatives, and novel yield strategies.
Platforms like RSK, Merlin, and Stacks have pioneered Bitcoin-native DeFi, offering lending protocols, decentralized exchanges, and even derivatives like Surf. Jacob Phillips, co-founder of Bitcoin staking protocol Lombard, envisions Bitcoin’s DeFi ecosystem establishing a new financial benchmark:
“The Bitcoin staking rate will surpass the U.S. Treasury bill rate, becoming the risk-free standard for DeFi lending and borrowing.”
The year 2025 holds immense potential for Bitcoin DeFi as the ecosystem matures and institutional adoption deepens. From staking and innovative protocols to ETF integration, Bitcoin is set to redefine DeFi, positioning itself as the backbone of the global financial system.
