Bitcoin, also known as decentralized finance (DeFi) or BTCFi, is a groundbreaking concept that aims to bring DeFi capabilities to the world’s original blockchain network. According to Nash Lee, co-founder of MerlinSwap, if the current adoption rate continues, BTCFi has the potential to rival Ethereum-based DeFi in terms of innovation.
This viewpoint is supported by the recent success of MerlinSwap, a decentralized exchange (DEX) built on the Bitcoin layer-2 network Merlin Chain. During its initial DEX offering (IDO) on April 5, MerlinSwap raised an impressive 6,599 Bitcoin (BTC) worth $480 million. The IDO attracted over 52,000 participants, demonstrating the strong demand and confidence in Bitcoin-native DeFi applications.
MerlinSwap’s achievement of surpassing $100 million in total value locked (TVL) on April 4 further illustrates the market’s interest in Bitcoin-native DeFi applications.
The concept of BTCFi originated after the introduction of the BRC-20 token standard, which allowed for the creation of nonfungible tokens (NFTs) on the Bitcoin blockchain for the first time. These Bitcoin-native NFTs, known as Ordinals, are directly inscribed on satoshis (sats), ensuring their permanent presence on the Bitcoin network. In contrast, most NFT collections store their images and metadata on centralized servers, making them vulnerable to potential attacks.
The popularity of Bitcoin-native NFTs is evident as the network has already surpassed 64.1 million Ordinals inscriptions within a relatively short timeframe of less than one and a half years since the first Ordinal was inscribed in December 2022, according to Dune.
Aside from Ordinals, the emergence of Bitcoin layer-2s is another crucial aspect of BTCFi that will expand the utility of Bitcoin. As Lee highlights, this development will ultimately lead to more use cases for Bitcoin.
Considering the historical data, there are optimistic predictions for Bitcoin’s future. Some experts forecast a price target of $435,000 for Bitcoin by its 2028 halving.
Overall, BTCFi is an exciting concept that has the potential to revolutionize the world of decentralized finance by leveraging the capabilities of the original blockchain network, Bitcoin. With the success of projects like MerlinSwap and the growing interest in Bitcoin-native NFTs, the future of BTCFi looks promising.