- Bitcoin DeFi TVL Soared 600% in Q1 2024 and Could Rise Even Higher in 2025
- Babylon leads with $5.5 billion in locked BTC as demand for BTC yields increases
Bitcoin [BTC] DeFi TVL (total value locked) rose nearly 600% in the first quarter of 2024, with experts now predicting more growth in 2025, ahead of the main L2 launches. In fact, rRecent data from DeFiLlama indicated that an all-time high of over 70,000 BTC (worth $6.68 billion) has been committed to the DeFi ecosystem.
Source: DeFiLlama
This was a sharp increase from around 13,000 BTC locked in October, underscoring a vibrant DeFi ecosystem. Hence the question: what is driving the BTC renaissance and what is the future in 2025?
Babylon Leads BTC DeFi
From a protocol ranking perspective, Babylon, the newest platform on the network, dominated with over 90% of the BTC DeFi TVL. It had $5.5 billion in TVL, underscoring the enormous investor confidence in the protocol.
In fact, Babylon’s TVL rose nearly 150% last month as investors rushed to stake their BTC for returns.
Source: DeFiLlama
Lombard and SolvBTC ranked second and third respectively and were all staking protocols. This illustrates that the popular revival story in Ethereum has spread to the Bitcoin ecosystem.
However, top executives within the DeFi space expect more growth in 2025.
According to Fisher Yu, CTO of Babylon, the protocol plans to merge BTC and the altcoin universe to reap the benefits of liquidity and security through the upcoming Babylon L2 launch. He said,
“Our Phase-1 launch indicated that the Bitcoin universe and the mainstream universe are ready to embrace the altcoin universe. This includes both retail strikers and institutional strikers. This indicates a potential consensus as we enter the altcoin universe.”
Source: Babylon (high acceptance of staking by small to large BTC holders)
In fact, more institutional DeFi lenders are gearing up to offer BTC derivatives as collateral this year.
Sidney Powell, CEO of DeFi lender Maple Finance, recently told the media that BTC could become the “key collateral” for DeFi systems. He said,
“As Bitcoin continues to gain acceptance into the institutional DeFi lending markets, it is poised to establish itself as a premier collateral asset within decentralized financial ecosystems.”
At the time, Powell cited BTC’s high liquidity and low counterparty risk for his forecasts.
That being said, many scale solutions such as the Lightning Network and Stacks have already planned upgrades to fuel this BTC DeFi renaissance.