The Bitcoin decentralized finance (BTCFi) sector saw a 2,000% increase in the total value locked (TVL) in 2024, rising from $307 million to $6.5 billion.
Bitcoin’s decentralized finance (BTCFi) sector clocked a remarkable growth in 2024, fueled by the surge in BTC price BTC $83 800 24h volatility: 1.3% Market cap: $1.66 T Vol. 24h: $27.07 B as well as the Bitcoin halving event in April. This sector, which brings DeFi functionalities to the Bitcoin blockchain, witnessed a 2000% surge in the total value locked (TVL) as per the data from DeFiLlama.
The Bitcoin DeFi market started 2024 with a meager $307 million in TVL. However, by the end of the year, this value soared to an impressive $6.5 billion. This 22-fold increase highlights the rapid development of BTCFi infrastructure and growing investor confidence in Bitcoin’s role in decentralized finance.
Who Dominated the Bitcoin DeFi TVL?
Binance Research stated that the 2000% surge in the Bitcoin DeFi TVL marked a “breakout year for the sector”. This growth comes following major advancements in Bitcoin staking and restaking. However, looking into further details, it seems that the growth remains largely concentrated. For e.g. the Bitcoin staking and restaking platform Babylon along accounted for a massive 80% of the total TVL locked in BTCFi. Speaking on the matter, Binance Research noted:
“The first phase of their mainnet was launched in August 2024, and their stage 2 testnet in Jan 2025. Given this is a major BTC DeFi dApp and in the process of launching, many users have likely been deploying capital here to use it and potentially qualify for an airdrop.”
Babylon emerged as a major milestone for Bitcoin-based DeFi, pioneering Bitcoin-native staking for the first time in the cryptocurrency’s history. The total value locked (TVL) for Babylon saw a 222% increase in just two months, rising from $1.61 billion on October 22 to over $5.2 billion by December 31, 2024.
This shows that the 2024 halving event has proved to be a major catalyst for developing DeFi capabilities on the Bitcoin network.
How Bitcoin ETFs Contributed to the Rise in Its DeFi Sector?
The spot Bitcoin exchange-traded funds (ETFs) debuted last year in January 2024, which witnessed strong demand and added significant momentum to the Bitcoin price throughout 2024. This, in a way, contributed to a greater Bitcoin movement as per Binance Research.
The approval of spot Bitcoin ETFs in the US attracted massive institutional demand leading to a 121% BTC price surge last year. Binance Research highlighted that Bitcoin’s soaring valuation and increasing popularity have attracted more capital into Bitcoin-native DeFi applications.
“This, alongside the growth of the crypto markets and progress in technologies and applications, means that users have been deploying more capital into Bitcoin applications,” the report reads.
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