Core DAO contributor Brendan Sedo believes that Bitcoin’s decentralized finance (DeFi) could surpass Ethereum’s TVL within 2 years. With the emergence of solutions like trustless bridges and rollups, a large portion of the $1 trillion held in Bitcoin could enter the DeFi ecosystem.
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One of the most discussed topics regarding the development of the Bitcoin blockchain is that of scalability solutions, which could allow it to serve a larger number of users. Indeed, the Bitcoin blockchain, as it stands, cannot manage several billion users simultaneously.
Various infrastructures have been put in place, such as the Lightning Network, often criticized by those who do not use it, but which is used daily. Other solutions in development could offer more transactions at a lower cost, while allowing more programmability, including smart contracts similar to those of Ethereum.
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These solutions have sparked much discussion and are widely criticized because of the compromises made by these new infrastructures.
However, Bitcoin Core DAO sidechain contributor Brendan Sedo expressed his enthusiasm for these different solutions when speaking to Cointelegraph at Korea Blockchain Week:
“If you look at Bitcoin, there’s over $1 trillion stored there. […] You could reasonably expect a lot of this capital to end up on another blockchain — especially with solutions like trustless bridges and rollups emerging. […] It is clear that we need to bring some of this liquidity to another blockchain and thus create more opportunities for Bitcoin.”
Currently, Bitcoin's market cap surpasses $1.1 trillion, and various innovations are underwaysuch as BitVM, which could enable the creation of rollups on the market-leading blockchain.
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Can Decentralized Finance Really Be Built on Bitcoin?
Core is the Bitcoin sidechain with the largest total value locked (TVL), exceeding $307 million, ahead of infrastructures like Rootstock or Stacks (STX).
However, These infrastructures do not benefit from the security of BitcoinThey operate mostly on proof-of-stake (PoS) and depend on a handful of actors or cryptocurrency holders, often with dubious and centralized tokenomics.
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Considering that the TVL of these infrastructures is based on Bitcoin, we could also include Bitcoin spot ETFs, a centralized economic infrastructure with over $17 billion worth of BTC under management, making it the infrastructure with the 2nd largest TVL after Ethereum.
To be precise, Only infrastructures where Bitcoins are actually stored without a trusted third party can be considered a Bitcoin overlay. To date, only the Lightning Network fits this definition.
Beyond the Lightning Network, infrastructures like RGB that rely on client-side validation could also provide near-infinite programmability and scalability.
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Sources: Cointelegraph, DefiLlama
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First lured by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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