Bitcoin's fundamental security is propelling a new frontier: DeFi systems that prioritize self-sovereignty, security, and real-world financial inclusion.
According to significant figures in the Bitcoin industry, decentralized finance (DeFi) will transform Bitcoin from a passive store of value into an asset that can compete with traditional finance.
Echoing the calls of early builders who envisioned an alternative financial system to fiat currency, speakers at the Bitcoin 2025 conference in Las Vegas expressed their belief that the architecture of Bitcoin will power the next generation of DeFi apps in the network's next chapter.
Emerging Bitcoin DeFi businesses hoping to broaden the decentralized "tech set" in the Bitcoin ecosystem joined the conference, which showcased DeFi projects including the Liquid Network.
There was widespread agreement that Bitcoin is the foundation of finance, and the growing DeFi movement is pushing for more use of the platform.
Developers are pioneering the next phase of Bitcoin DeFi
At the heart of the growing Bitcoin DeFi movement is the fundamental belief that Bitcoin is too large and significant to be ignored.
Jacob Phillips, co-founder of Lombard Finance, a liquid staking protocol, told Cointelegraph that Bitcoin DeFi is about creating a trustless, permissionless financial system around Bitcoin, transforming it into an active financial instrument rather than just a vault. Lombard's LBTC facilitates this change by allowing users to stake Bitcoin on the Babylon blockchain for yield while also using the token in DeFi applications such as lending and trading on platforms other than the Bitcoin network.
In the meantime, RootstockLabs' product director Adrián Eidelman promoted Bitcoin's layer 2 (L2) as the basis for financial inclusion and smart contracts. He told Cointelegraph that Bitcoin is the best blockchain to serve as the cornerstone of a new financial system. In Q1 2025, Rootstock's merged mining reached an all-time high, demonstrating the rise of federated bridges and sidechains that can increase Bitcoin's functionality without jeopardizing its fundamental security.
Bitlayer co-founder Charlie Hu emphasized the importance of self-sovereignty and finality. In an interview with Cointelegraph, Hu discussed the significance of utilizing the Bitcoin base layer for security and finality rather than depending on sidechains. He also described a strategy that strengthens the base layer of Bitcoin with new DeFi infrastructure.
Security, sovereignty, and real-world implications
Blockstream CEO Adam Back mentioned the potential for Bitcoin DeFi solutions to give dividends, telling Cointelegraph, "Once you have a Bitcoin layer 2, you can stake your Bitcoin and get instant Bitcoin yield." This is not the same as an ETF," establishing a distinction between traditional finance and trustless protocols.
Back said that Bitcoin-native applications will provide higher borrowing rates and liquidity, outperforming even TradFi choices, because "the most liquid markets will be on-chain, and thus the best borrowing rates will be on-chain."
Because self-custody mechanisms like hardware wallets and layer-2 staking payouts offer lower fees and more privacy than custodial exchanges, he noted, Bitcoin DeFi's decentralized nature encourages consumers to use trustless platforms. These characteristics support Bitcoin's principles of privacy, censorship resistance, and self-sovereignty by giving users direct control over their assets.
Vaulta CEO Yves La Rose shared this self-custody philosophy. He stated that self-custody is the cornerstone of Bitcoin DeFi, highlighting the fact that user control is unassailable even when developers create new financial layers.
Rich Rines, an early contributor to Core DAO, described this period as a convergence of strong security and DeFi experimentation. "Bitcoin is currently a store of money, but the next wave will be utility," he told Cointelegraph.
RootstockLabs' Eidelman sees Bitcoin DeFi as a vehicle for economic empowerment, particularly in areas beset by inflation and capital constraints. "We're seeing it in areas like Argentina, where individuals utilize dollar-backed stablecoins to avoid local currency depreciation. "But the collateral for everything is Bitcoin, which is creating a new type of adoption," he said.
