Thomas Daniels
Bitcoin’s foundational security is fueling the next frontier of decentralized finance (DeFi), with industry leaders predicting that it may soon rival traditional finance (TradFi) by delivering financial inclusion, self-sovereignty, and real-world utility.
At the Bitcoin 2025 conference in Las Vegas, a prevailing consensus emerged: Bitcoin’s evolution into a platform for DeFi is not only feasible but inevitable. This marks a pivotal shift from Bitcoin’s long-standing role as a passive store of value to a dynamic financial instrument capable of challenging centralized financial institutions.
The conference showcased a broad spectrum of DeFi projects, including the Liquid Network and numerous emerging Bitcoin-native DeFi startups. These innovators aim to build a decentralized financial architecture on top of Bitcoin’s robust infrastructure, reflecting the early vision of a parallel financial system independent of fiat currency.
Developers Drive Bitcoin DeFi Expansion
Central to the Bitcoin DeFi movement is the belief that Bitcoin’s scale and importance demand active utilization. Jacob Phillips, co-founder of Lombard Finance, emphasized this shift in an interview with Cointelegraph, stating, “Bitcoin DeFi is about building a trustless, permissionless financial system around Bitcoin, turning it into an active financial instrument, not just a vault.” Lombard’s LBTC token enables Bitcoin staking on the Babylon blockchain, generating yield while allowing users to engage in DeFi activities such as lending and trading across non-Bitcoin platforms.
Adrián Eidelman, co-founder and CTO of RootstockLabs, highlighted Bitcoin’s Layer 2 (L2) capabilities as the foundation for smart contracts and financial inclusion. “There’s no other blockchain better positioned than Bitcoin to underpin a new financial system,” Eidelman asserted. Rootstock’s merged mining operations reached an all-time high in Q1 2025, demonstrating the growing adoption of sidechains and federated bridges that extend Bitcoin’s functionality while maintaining its security.
Charlie Hu, co-founder of Bitlayer, underscored the necessity of finality and self-sovereignty. Advocating for L2 solutions that build directly atop Bitcoin’s base layer, Hu outlined a development path that preserves Bitcoin’s security while expanding its DeFi capabilities.
Security, Sovereignty, and Disruption
Blockstream CEO Adam Back outlined the distinctive advantages of Bitcoin-native DeFi over traditional finance. “Once you have a Bitcoin layer 2, you can stake your Bitcoin and have instant Bitcoin yield. This is completely different from an ETF,” Back noted, emphasizing the superior borrowing rates, liquidity, and privacy offered by on-chain solutions compared to centralized financial products.
Back further argued that Bitcoin’s decentralized architecture enables users to leverage self-custody tools such as hardware wallets and L2 staking, thereby lowering fees and enhancing privacy relative to custodial exchanges. This model embodies Bitcoin’s core principles of censorship resistance, privacy, and financial sovereignty.
Yves La Rose, CEO of Vaulta, reinforced the primacy of self-custody in the Bitcoin DeFi ecosystem. “Self-custody is the bedrock of Bitcoin DeFi,” he affirmed, highlighting that user control remains paramount even as the DeFi landscape evolves.
Joseph Kelly, co-founder and CEO of Unchained, positioned collaborative custody as a direct countermeasure to the rent-seeking intermediaries of legacy finance. “Clients hold two of the three keys in our multisig vaults, ensuring they have unilateral control to move funds at any time,” Kelly explained.
Rich Rines, an early contributor at Core DAO, described the current phase of Bitcoin DeFi as the convergence of robust security with experimental financial innovation. “Bitcoin is a store of value today, but the next wave is utility,” he said.
Eidelman further pointed to Bitcoin DeFi’s growing role in offering economic empowerment, particularly in markets suffering from inflation and capital controls. “We’re seeing it in places like Argentina, where people use dollar-backed stablecoins to escape local currency erosion. But the collateral behind everything is Bitcoin, and that’s driving a new kind of adoption,” he concluded.
From conference panels to blockchain labs, industry leaders are united in their vision: Bitcoin is evolving beyond digital gold, forging the infrastructure of a decentralized financial future.
