The Bitcoin DeFi ecosystem is rising significantly with its Total Value Locked (TVL) that has been rising more than 200% in the last month according to data from DeFillama.
This huge increase in TVL and users is caused by innovations on the network that is also predicted to be one of the narratives that leads to the predicted 2025 bull market.
Bitcoin DeFi Ecosystem
According to DeFillama, currently Bitcoin is sitting in the 6th spot in terms of Total Value Locked which is the amount of money locked in the blockchain through multiple protocols on it.
It is currently standing behind Solana that has also been rising since a couple of months due to airdrops, updates and new projects developed on it.
Even though it is still relatively low, Bitcoin’s current TVL is an accomplishment because of how Bitcoin has evolved throughout the year, from only being a place for people to receive and send money to now being host of multiple protocols with the help of its layer two blockchains.
According to DeFillama, the increase of TVL in The Bitcoin Blockchain is caused by several protocols. But, there are two protocols that seem to stand out because of having more than hundreds of millions of US Dollars in their TVL or overall transactions that they processed.
The two protocols are Merlins Seal and Lightning Network. Lightning Network is already commonly known among crypto investors, especially since the adoption of the technology by Elsalvador, a Country in South America.
Through The Lightning Network, people have been able to pay and transact real products in their everyday lives using Bitcoin. Adoption rate itself has not decreased until today, probably because of the reelection of its president, Nayib Bukele, that legalised the technology to be used in the country.
Lightning Network provided a layer two solution for Bitcoin so that people can send and receive Bitcoin faster with cheaper fees. This is needed because Bitcoin is still arguably slow and expensive compared to other chains in this era.
So it is not shocking that because of Lightning Network, people have been able to transact with Bitcoin, reaching an overall processed transaction of around $238.08 Million according to its Total Value Locked data from DeFillama.
But Lightning Network is only the second highest contributor to Bitcoin’s overall TVL, because the number one spot is filled by Merlin Chain.
Merlin Chain is a new project that has just been established in June 2023, but has now been successfully running and has become a home to multiple DApps and protocols.
Right now it has close to $600 Million in TVL because they are launching a campaign where investors can lock their Bitcoin to participate in their governance token launch, $MERL.
They are doing a similar mechanism to Initial Farm Offering, where investors can lock a crypto in order to be allocated a reward or allocation of the launched token from the project itself.
Just in 4 days since the token launch event started, they have already managed to accumulate 11,420 BTC on the Marine Seal platform.
This is an example of how innovations on the blockchain can increase the blockchain activity, because this is an accomplishment that not many blockchains can do.
Aside from its own ecosystem, Bitcoin has been getting a lot of help, especially from Stacks, a layer two blockchain that is designed to solely help smart contracts and DApp deployment on the Bitcoin Blockchain.
Stacks’s main focus is to accommodate transactions on the Bitcoin network so that all the transaction can be processed faster and cheaper than using the Bitcoin Blockchain, but all of the transaction data will still be stored on the Bitcoin Blockchain.
As of right now, Stacks itself has managed to contribute more than $60 Million in TVL indirectly towards the Bitcoin Blockchain through their protocols, especially through ALEX and Arkadiko.
DeFillama did not count in those TVL because users have the option to use Bitcoin as well as Stacks to process the transaction on those platforms.
Since DeFillama cannot precisely differentiate the transactions, it is counted under the blockchain where the app was deployed in, which was the Stacks Blockchain, considering Bitcoin cannot host DApps.
These two DApps are different from the contributors of the direct Bitcoin ecosystem, because Merlin Chain and Lightning Network are blockchain protocols, while ALEX and Arkadiko are Decentralised Applications or DApps.
But all of it contributes to the growing activity on the Bitcoin Blockchain so overall, Bitcoin is currently being used in high volume which creates a perception that the Blockchain is still alive and not being overshadowed by more popular chains.
If this trend continues, then Bitcoin DeFi can be one of the biggest narrative heading into the 2025 predicted Bull Run. So investors need to keep an eye out on Bitcoin if they want to capitalise on the trend.