- Bitcoin DeFi TVL soared 600% in Q1 2024 and could climb higher in 2025
- Babylon leads with $5.5B of locked BTC as demand for BTC yield increases
Bitcoin [BTC] DeFi TVL (total value locked) soared by nearly 600% in Q1 2024, with experts now projecting more growth in 2025 ahead of key L2 launches. In fact, recent DeFiLlama data indicated that a record high of over 70k BTC (Worth $6.68 billion) has been locked across its DeFi ecosystem.
Source: DeFiLlama
This was a sharp hike from about 13k BTC locked as of October, underscoring a vibrant DeFi ecosystem. Hence, the question – What’s driving the BTC renaissance and what’s next in 2025?
Babylon leads BTC DeFi
From a protocol ranking perspective, Babylon, the latest restaking platform on the network, dominated with over 90% of the BTC DeFi TVL. It had $5.5 billion of TVL, underscoring immense investor trust in the protocol.
In fact, Babylon’s TVL soared by nearly 150% over the past month, as investors rushed to stake their BTC for yield.
Source: DeFiLlama
Lombard and SolvBTC ranked second and third, respectively, and were all staking protocols. This illustrates that the popular restaking narrative 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 enjoy the benefits of liquidity and security through the upcoming Babylon L2 launch. He said,
“Our Phase-1 launch signalled that the Bitcoin universe and the mainstream universe is ready to embrace the altcoin universe. They comprise both retailer stakers and institutional stakers. This indicates a potential consensus in entering the altcoin universe.”
Source: Babylon (massive staking adoption from small to large BTC holders)
In fact, more institutional DeFi lending firms are gearing up to offer BTC derivatives as collateral this year.
Sidney Powell, CEO of DeFi lending firm Maple Finance, recently told the media that BTC could become the ‘premier collateral asset’ for DeFi systems. He said,
“With Bitcoin increasingly incorporated into 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 projections.
That being said, many scaling solutions such as the Lightning Network and Stacks already have planned upgrades to drive this BTC DeFi renaissance.
