DeFi: The Next Evolutionary Step for Bitcoin, Transforming it into a Dynamic Financial Asset

According to participants at the Bitcoin 2025 conference, DeFi protocols will transform the original cryptocurrency from a passive savings tool into an active financial instrument. This was reported by Cointelegraph.

They believe this will enable the asset to challenge the traditional financial system. Developers consider Bitcoin «too important to remain merely digital gold.»

“BTCFi is about establishing a trustless financial system around digital gold. [Bitcoin] should evolve into an active tool rather than just a store of value,” explained Jacob Phillips, co-founder of Lombard Finance, to the publication.

Adrian Eidelman, the product director at Rootstock Labs, stated that second-layer solutions will form the foundation for smart contracts and financial applications.

“There is no better place than Bitcoin to develop a new financial system,” asserted Adrian Eidelman, product director at Rootstock Labs.

He further noted that sidechains and cross-chain bridges enhance the network’s functionality while maintaining its security.

Ive La Rose, CEO of Vaulta, referred to self-custody as “the foundation of DeFi on Bitcoin.”

Joseph Kelly, co-founder of Unchained, characterized collaborative asset management as an alternative to traditional intermediaries. He explained that in their multisig wallets, clients retain two out of three keys, granting them complete control over their funds.

Charlie Hu, co-founder of Bitlayer, emphasized the importance of utilizing Bitcoin’s base layer for transaction security and finality, rather than relying solely on sidechains.

Eidelman views DeFi protocols as a means to enhance economic rights and opportunities, particularly in high-inflation regions.

“We see this in Argentina, where people are using stablecoins to shield themselves from the devaluation of the local currency. However, Bitcoin serves as the underlying collateral, which encourages a new level of adoption,” he remarked.

To recall, on June 18, the BTCFi project from Elastos launched a stablecoin, BTCD, that is backed by the original cryptocurrency.