According to a joint study by CMC Research and Footprint Analytics, Bitcoin 's role in the decentralized finance (DeFi) space is undergoing a fundamental change. As we all know, Bitcoin has always been known as a good cryptocurrency, due to infrastructure problems such as the lack of support for smart contracts. However, the innovative technologies of platforms such as Rootstock and Taproot allow Bitcoin to support the creation of decentralized exchanges and smart contracts, which has fundamentally changed Bitcoin's role in the DeFi space, from a single payment tool to a major player in the DeFi ecosystem. The report emphasizes that Taproot reduces Bitcoin's transaction fees and memory usage by compressing complex transactions on the Bitcoin network into a single hash through Merklized Alternative Script Trees (MAST). Although Taproot itself is not a DeFi solution, Taproot's upgrade enhances the Bitcoin network's smart contract capabilities, making it easier to implement complex transactions, laying the foundation for its future DeFi development. As of September 2024, the total locked value (TVL) of DeFi projects based on the Bitcoin network is $1.07 billion, a 5.7-fold increase from January. Although the Ethereum network still dominates the DeFi field, Bitcoin is becoming a competitor that cannot be ignored by the Ethereum network. The report shows that despite a series of challenges such as scalability and transaction speed, Bitcoin's security and decentralized nature make it a strong competitor in the DeFi market. Researchers pointed out that "Bitcoin's super-secure framework forms the foundation of the BTCFi ecosystem," which ensures that all developments are consistent with Bitcoin's core values. Innovations such as the second layer (L2) solutions of the Bitcoin network (such as the Lightning Network) and sidechains (such as Core and Merlin Chain) are helping Bitcoin handle DeFi activities while taking into account Bitcoin's security and decentralization. Data from CMC Research and Footprint show that Core is the leading DeFi platform based on the Bitcoin network, accounting for 27.6% of the TVL of all L2 solutions on the Bitcoin network. Other important platforms include Rootstock, Merlin Chain, and Sovryn, among others, providing BTC holders with the opportunity to participate in DeFi activities such as lending and liquidity mining. Wrapped assets like WBTC also allow Bitcoin holders to access Ethereum's larger DeFi ecosystem, even as native Bitcoin DeFi continues to expand. Researchers are optimistic about Bitcoin's future in the DeFi space, expecting further growth as technical barriers are resolved and the regulatory environment develops. Technological innovations like DLCs and improved interoperability with Ethereum are key to expanding the Bitcoin network's share of the DeFi market. Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.
