- Bitcoin’s DeFi activity has soared after its TVL hit an ATH and reversed BNB Chain’s.
- This increase comes amid demands for a reconsideration of the Babylon Bitcoin staking protocol.
Bitcoin [BTC] has recorded a surge in decentralized finance (DeFi) activity, with Total Value Locked (TVL) rising to a record high of $6.9 billion per year. DeFiLlama. This growth has led to Bitcoin surpassing the BNB Chain to become the fourth largest blockchain by this metric.
Bitcoin DeFi activity began to rise in late October as demand for BTC yields grew. DeFiLlama showed that the TVL was less than $1 billion as of October 21, indicating that it has increased more than six times in less than two months.
Source: DeFiLlama
The rising TVL is not only a result of the price increase of BTC, but also an increase in the number of coins locked on the network. These assets have increased from 34,980 BTC to 66,040 BTC at the time of writing.
So what’s driving the boom in DeFi activity on the blockchain?
Increasing demand for revival
The main factor behind the rising statistic is the Babylon staking platform. This platform accounts for $5.6 billion of the total TVL on Bitcoin.
According to the Babylon staking dashboard, 128,000 stakers have locked more than 54,000 BTC on the platform, showing rising demand for Bitcoin yield.
Source: Babylon
According to DeFiLlama, the amount of BTC staked on this platform has also increased by 151% in seven days.
This wave has pushed Babylon to the top of the leaderboard as the largest Bitcoin DeFi project. The growth has also surpassed the Lightning Network, which ranks a distant fifth with a TVL of $530 million, highlighting a shift in BTC’s use case from payments to DeFi.
Despite this growth, Bitcoin’s TVL still pales in comparison to Ethereum’s $88 billion. The largest strike protocol on Ethereum [ETH]Lido, also has $38 billion in TVL.
However, after the reversal of BNB Chain, Bitcoin is now on the verge of a reversal Tron [TRX]of which the TVL amounted to $8.08 billion.
Impact on Bitcoin price?
Bitcoin was trading at $104,240 at the time of writing, having gained 1.67% in 24 hours. The king coin hit a new all-time high of $106,488 on December 16. This came amid surging demand from institutions after US-listed bitcoin exchange-traded funds (ETFs) posted inflows of $2.17 billion last week.
Rising DeFi activity could spur new demand for BTC, which could in turn push up prices. Additionally, staking could reduce selling activity on the coin as traders try to generate returns.
DeFi activity soars to 2022 highs
Bitcoin isn’t the only blockchain with DeFi activity on the rise. The TVL for all protocols increased to $154 billion, the highest level since May 2022.
Read Bitcoin’s [BTC] Price forecast 2024-25
Ethereum has added more than $24 billion to its TVL in just one month Solanas TVL has grown by more than $1 billion. At the same time, DeFi tokens such as AAVE [AAVE)] have outperformed most altcoins.
This rise could give Bitcoin’s TVL more gains and a significant rally for the king coin.