Bitcoin DeFi TVL will top Ethereum’s within 2 years: Core DAO contributor

The total amount of capital being put to use in Bitcoin-based decentralized finance (DeFi) protocols could eclipse that of the Ethereum network within the next two years, says a Bitcoin DeFi developer. 

Branden Sedo, an initial contributor at Bitcoin sidechain Core DAO told Cointelegraph at Korea Blockchain Week that the trillion dollars in capital currently held in the Bitcoin ecosystem will gradually begin its way on-chain, eventually flipping that of the Ethereum network. 

“If you look at Bitcoin, there's over a trillion dollars sitting there,” he said.

Assuming that Bitcoin will continue to increase in value and attract further sums of institutional capital through exchange-traded products (ETPs), Sedo said it wouldn’t be too hard to imagine that a lot of this would end up being put to use in Bitcoin sidechains and other Bitcoin-based DeFi applications. 

“You could feasibly see a lot of that capital coming on chain — especially with the solutions like trustless bridges and roll-ups that are coming out.”

“It's a no-brainer to bring some of that liquidity on-chain and bring about more opportunities for Bitcoin,” he added. 

Brendan Sedo at Korea Blockchain Week. Source: Cointelegraph

The approval of spot Bitcoin ETFs earlier this year launched Bitcoin scalability into the spotlight, stirring a groundswell in development activity and market enthusiasm for Bitcoin sidechains including Core, Bitlayer, and Stacks.

The flippening will require change from Bitcoiners

However, Sedo said if Bitcoin’s DeFi TVL is to flip Ethereum’s, a larger number of Bitcoiners will need to get comfortable with the idea of putting their Bitcoin to work, a sentiment that was marred by the collapse of platforms like BlockFi and Celsius in 2022. 

After losing Bitcoin in the collapse, many Bitcoiners became loudly and avowedly opposed to any yield-bearing avenues for Bitcoin — refusing to do anything other than HODL their Bitcoin on a cold wallet. 

“A lot of people have lost Bitcoin. I've lost Bitcoin. It’s not fun to lose Bitcoin. It fucking sucks. So there's lots of understandable skepticism with these new things that come out.”

However, Sedo says he’s already begun to notice a change in the attitude of many Bitcoiners around using their Bitcoin, particularly when it comes to non-custodial DeFi applications. 

After returning from the Bitcoin 2024 conference in Nashville, where the “vibe was very builder-centric,” Sedo said the general attitude was one of wonder at the “explosion of what’s possible” on the Bitcoin network.

Sedo said he was “very confident” in Core’s staking approach due to it being completely noncustodial and said Core’s bridge — which allows users to bridge stablecoins and native CORE tokens — is powered by LayerZero, one of the only major bridging protocols in the crypto space that hasn’t fallen prey to a major exploit. 

When using Core Chain, users time lock their Bitcoin — so they don't have to worry about custody or handing over private keys — in return for a 3% yield paid out in CORE tokens which are then used for gas and governance on the network.

Core recently flipped Bitlayer to become the largest Bitcoin sidechain, boasting $314.4 million in TVL and 5,541 BTC — worth $321 million at current prices — staked on its network.

At the time of publication, Core accounts for 26.4% of the total TVL across all Bitcoin sidechains, per DeFiLlama data. 

CORE stands as the largest Bitcoin sidechain in terms of TVL. Source: DeFiLlama

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