Bitcoin DeFi Ecosystem Explodes 20x in 2024 as Developers Double Down on Yield Protocols

Bitcoin DeFi TVL Soars 20x as Yield Apps Push Network Beyond “Digital Gold”

Bitcoin’s DeFi ecosystem is rapidly expanding, with the total value locked (TVL) in native protocols surging from $307 million in early 2024 to $6.36 billion by mid-2025, according to a new report from Arch Network shared with CoinDesk. The 20x growth is being driven by rising demand for yield-generating applications, BTC-backed stablecoins, and institutional capital.

The findings, based on surveys from 125 developers, investors, and users across Asia and Africa, signal a shift in perception: Bitcoin is no longer seen solely as a passive store of value but increasingly as a productive asset.

Lending and borrowing protocols are leading the way, cited by 59% of respondents. BTC-backed stablecoins followed at 41%, with decentralized exchanges (32%) and tokenized real-world assets (29%) rounding out top use cases.

Still, concerns persist. Thirty-six percent of users said they store their BTC offline due to low trust in DeFi platforms, while 60% pointed to smart contract exploits as the biggest security threat.

“Bitcoin’s future lies in unlocking liquidity,” said Arch Network CEO Matt Mudano. “We’re seeing the early stages of that shift.”

Builders are divided: 44% say Bitcoin’s security makes it the ideal base layer, but 43% cite limited smart contract capabilities as a major roadblock. Challenges around tooling, documentation, and interoperability remain.

As a result, many teams are building across multiple chains — 63% on Ethereum, 47% on Solana, and 44% on Base — though nearly half plan to migrate fully to Bitcoin over time. New infrastructure like ArchVM, a Bitcoin-native virtual machine enabling smart contracts without bridges, is helping accelerate that shift.

To scale, respondents emphasized the need for improved developer tooling (45%), broader Layer 2 adoption (43%), and stronger liquidity. Security remains paramount — with most builders unwilling to deploy without hardened bridges and full on-chain transparency.

“If even a small share of Bitcoin’s $2 trillion market cap gets deployed productively,” said DPI Capital’s Shahan Khoshafian, “the upside for Bitcoin DeFi is enormous.”

Like Ethereum in 2019, Bitcoin DeFi is still early — but the trajectory is clear: BTC is no longer just held. It’s being used.