Bitcoin’s (BTC) significance in decentralized finance (DeFi) is expanding as it transitions from merely a store of value, according to a report by Binance Research released Thursday.

Key Points

• Bitcoin is evolving into a broader DeFi ecosystem.
• Currently, only about 0.8% of Bitcoin is utilized in DeFi.

The report outlines how Bitcoin’s integration into DeFi can enhance its capital efficiency, mainly through lending, staking, and decentralized exchanges. Binance emphasized the substantial ‘untapped opportunity’ in this area, referencing a statement from Julian Love indicating a potential market of $1 trillion.

Additionally, the report highlighted the necessity for Bitcoin to adopt layer-2 solutions, as its native programmability is lacking compared to other smart contract platforms. While strides have been made toward developing such solutions, broader adoption and liquidity incentives are needed for effective scaling. The study also cautioned about the security challenges Bitcoin might face as block rewards decrease, impacting miner incentives, ultimately influencing the long-term sustainability of Bitcoin in the DeFi space.

A detailed read can provide insights into the ongoing evolution and future prospects of Bitcoin in DeFi. Read more here.