Key Points
- Bitcoin decentralized finance (BTCFi) is gaining traction and could rival Ethereum’s DeFi innovations.
- MerlinSwap, a Bitcoin-native DeFi platform, raised $480 million in its initial DEX offering, reflecting demand for Bitcoin DeFi applications.
Bitcoin’s decentralized finance (BTCFi) is an emerging trend that aims to bring DeFi capabilities to the pioneer blockchain network. If the current adoption rate persists, BTCFi might parallel the innovation of DeFi based on Ethereum in the future.
Nash Lee’s Perspective
Nash Lee, co-founder of MerlinSwap, believes that the market is looking for expansive platforms that can handle increasing volumes and expectations. He sees DeFi as the only sector with the potential to capitalize on this trend, offering a sustainable ecosystem for Bitcoin’s evolving use cases. This situation paves the way for Bitcoin DeFi to possibly match or even surpass the innovation and complexity seen in Ethereum’s DeFi ecosystem.
MerlinSwap’s Success
Demonstrating investor demand for Bitcoin-native DeFi applications, decentralized exchange MerlinSwap raised 6,599 Bitcoin (BTC) worth $480 million during its initial DEX offering (IDO) on April 5. The IDO attracted over 52,000 participants. This record IDO reflects the market’s demand and confidence in Bitcoin-native DeFi applications, according to Lee.
MerlinSwap is built on the Bitcoin layer-2 network Merlin Chain. It exceeded the $100 million in total value locked (TVL) on April 4. This indicates a significant shift towards recognizing Bitcoin’s untapped potential in the DeFi space, highlighting a widespread demand for innovative, decentralized financial solutions based on the world’s first cryptocurrency.
Bitcoin Ordinals and BTCFi
BTCFi came into existence following the introduction of the BRC-20 token standard, which allowed the creation of nonfungible tokens (NFTs) on the Bitcoin blockchain for the first time. Bitcoin-native NFTs, also known as Ordinals, are inscribed directly on satoshis (sats), providing them with a permanent home on the Bitcoin network.
The emergence of Bitcoin layer-2s is another significant component of BTCFi, which will eventually provide more use cases for Bitcoin. Lee stated that before the advent of layer-2 solutions, Bitcoin native assets lacked practical applications, limiting BTC’s role largely to that of digital gold. The emergence of Bitcoin layer-2 technologies has been a game-changer, unlocking a vast array of utilities for BTC assets.
