DeFi protocols are set to transform the first cryptocurrency from a passive store of value into an active financial instrument, according to participants at the Bitcoin 2025 conference. This was reported by Cointelegraph.
In their view, this will enable the asset to challenge the traditional financial system. Developers believe bitcoin is “too significant to remain merely digital gold.”
“BTCFi is about creating a trustless financial system around digital gold. [Bitcoin] should become an active tool, not just a store,” explained Jacob Phillips, co-founder of Lombard Finance, to the publication.
Adrian Eidelman, Chief Product Officer at RootstockLabs, stated that second-layer solutions will form the foundation for smart contracts and financial applications.
“There is no better place than bitcoin to create a new financial system,” believes Adrian Eidelman, Chief Product Officer at RootstockLabs.
He added that sidechains and cross-chain bridges enhance the network’s functionality without compromising its security.
Core Principles Remain Unchanged
Vaulta CEO Yves La Rose described self-custody as “the foundation of DeFi on bitcoin.”
Unchained co-founder Joseph Kelly referred to collaborative asset custody as an alternative to traditional intermediaries. He explained that in their multisig vaults, clients hold two out of three keys, granting them full control over their funds.
Bitlayer co-founder Charlie Hu added that to ensure transaction security and finality, the base layer of bitcoin must be used, rather than relying solely on sidechains.
Eidelman views DeFi protocols as a tool for expanding economic empowerment, particularly in regions with high inflation.
“We see this in Argentina, where people use stablecoins to escape the devaluation of the local currency. But bitcoin serves as the collateral for everything, and this drives a new type of adoption,” he said.
Back in June, the BTCFi project Elastos launched the BTCD stablecoin, backed by the first cryptocurrency.