- Bitcoin DeFi apps could unlock billions in inactive funds, says Binance’s latest research report.
- Holders may use Bitcoin as collateral or for yield in decentralized finance platforms soon.
A recent analysis by Binance highlights that decentralized finance (DeFi) applications may soon enable Bitcoin holders to generate additional returns on their assets. The report outlines how Bitcoin, traditionally viewed as a long-term store of value, could see increased utility through DeFi platforms, potentially unlocking billions in currently inactive funds.
Bitcoin was initially designed as a peer-to-peer payment system. Over time, it evolved into a “digital gold” narrative, with many investors holding it as a hedge against inflation.
Approximately 0.79% of Bitcoin’s total supply is currently used in DeFi, a figure Binance describes as a “large untapped opportunity.” The report suggests that broader adoption of DeFi protocols could improve Bitcoin’s capital efficiency by allowing holders to use their assets for collateralized loans, yield-generating loans, or structured financial products.
DeFi platforms, which replicate traditional financial services like lending and borrowing via blockchain technology, are predominantly built on networks like Ethereum. Bitcoin’s integration into this space has been limited but is expected to grow as developers create compatible applications.
Regulatory shifts, such as the removal of the SEC’s Staff Accounting Bulletin No. 121 under the Trump administration, may further encourage this trend. Binance argues that Bitcoin’s expanding infrastructure, including Layer-2 solutions, could make it more functional, akin to how gold and treasuries are utilized in conventional markets.
However, challenges persist. DeFi remains a high-risk sector, with frequent security breaches and scams resulting in substantial losses. Bitcoin holders, who prioritize security and long-term value retention, may hesitate to engage with experimental platforms.
Binance concludes that if ongoing projects successfully address these concerns, Bitcoin-centric DeFi (BTCFi) could become a prominent sector. Leveraging Bitcoin’s established security and decentralized architecture, BTCFi might offer holders new ways to deploy their assets while maintaining the cryptocurrency’s core appeal as a stable store of value.
