Decentralized finance (DeFi) will turn Bitcoin from a passive store of value into an asset that can challenge traditional finance, prominent figures in the Bitcoin space say.

At the Bitcoin 2025 conference in Las Vegas, speakers shared a conviction that Bitcoin’s infrastructure will power the next generation of DeFi applications in the network’s next chapter, echoing the calls of early builders who envisioned a parallel financial system to fiat currency. 

The conference featured DeFi projects like the Liquid Network, which was joined by emerging Bitcoin DeFi companies looking to expand the decentralized “tech set” in the Bitcoin ecosystem. 

It had a broad consensus that Bitcoin is the bedrock of finance, and its rising DeFi movement is advocating for the expanded use of Bitcoin's infrastructure.

Developers pioneering the next phase of Bitcoin DeFi

At the heart of the expanding Bitcoin DeFi movement is a fundamental premise that Bitcoin is too big and important to remain passive. 

Jacob Phillips, co-founder of Lombard Finance — a liquid staking protocol — told Cointelegraph, “Bitcoin DeFi is about building a trustless, permissionless financial system around Bitcoin, turning it into an active financial instrument, not just a vault.” Lombard’s LBTC supports this shift by enabling users to stake Bitcoin on the Babylon blockchain for yield while using the token in DeFi applications like lending and trading on platforms outside of the Bitcoin network. 

Meanwhile, Adrián Eidelman, product director at RootstockLabs, championed Bitcoin’s layer 2 (L2) as the foundation for smart contracts and financial inclusivity. “There’s no other blockchain, no other place better than Bitcoin to be the foundation of a new financial system,” he told Cointelegraph. Rootstock’s merged mining hit an all-time high in Q1 2025, which shows the growth in sidechains and federated bridges that can extend Bitcoin’s functionality without compromising its core security.

Charlie Hu, co-founder of Bitlayer, underscored the need for finality and self-sovereignty. Hu outlined the importance of using the Bitcoin base layer for finality and security and not relying on sidechains, he told Cointelegraph, outlining a path that fortifies Bitcoin’s base layer with new DeFi infrastructure.

Security, sovereignty and real-world impact

Blockstream CEO Adam Back noted the possibility of Bitcoin DeFi solutions to provide yields, telling Cointelegraph, “Once you have a Bitcoin layer 2, you can stake your Bitcoin and have instant Bitcoin yield. This is completely different from an ETF,” drawing a line in the sand between traditional finance and trustless protocols. 

Back claimed that Bitcoin-native applications will offer better borrowing rates and liquidity, outcompeting even TradFi options because “the most liquid markets will be onchain, and so the best borrowing rates, for example, will be onchain.” 

He explained that Bitcoin DeFi’s decentralized design incentivizes users to adopt trustless systems through self-custody tools like hardware wallets and layer-2 staking yields, which offer lower fees and greater privacy compared to custodial exchanges. These features empower users to control their assets directly, upholding Bitcoin’s ethos of self-sovereignty, censorship resistance and privacy.

Yves La Rose, CEO of Vaulta, echoed this ethos of self-custody. “Self-custody is the bedrock of Bitcoin DeFi,” he said, emphasizing how user control remains non-negotiable even as developers build new financial layers. 

Joseph Kelly, co-founder and CEO of Unchained, which started as a collaborative custody multisignature company and now offers digital financial products, doubled down on this, describing collaborative custody as the antidote to the rent-seeking intermediaries of legacy finance: “Clients hold two of the three keys in our multisig vaults, ensuring they have unilateral control to move funds at any time.”

Rich Rines, an initial contributor at Core DAO, framed this moment as a convergence of robust security and DeFi experimentation. “Bitcoin is a store of value today, but the next wave is utility,” he told Cointelegraph.

RootstockLabs’ Eidelman sees Bitcoin DeFi as a tool for economic empowerment, especially in regions plagued by inflation and capital controls. “We’re seeing it in places like Argentina, where people use dollar-backed stablecoins to escape local currency erosion. But the collateral behind everything is Bitcoin, and that’s driving a new kind of adoption,” he said.

From the speakers on stage to those forging new bridges, it is a conviction that Bitcoin is more than digital gold.