DeFi on Bitcoin isn’t just a theory anymore. Despite setbacks, momentum is building around unlocking Bitcoin’s potential beyond digital gold.

But let’s be honest: nobody’s really paying attention. And that’s understandable. Because until recently, it’s been kind of a mess.

While Ethereum built a massive DeFi economy, Bitcoin sat on the sidelines with more than $1,5 trillion in liquidity locked in cold storage. No DeFi smart contracts, lack of decentralised wrappers/bridges (wBTC), and BTC identity as digital gold have limited the growth of an ecosystem around the orange coin. But something’s changing.

With a wave of new protocols launching on and around Bitcoin, we’re seeing the foundations of a real BTC-native DeFi stack. Names like Babylon, Lombard, SatLayer, and Solv Protocol are leading in terms of tech and TVL, each addressing different parts of the DeFi lego.

Babylon: Bitcoin’s Staking Layer

@babylonlabs_io"">@babylonlabs_io can be visualised similarly to the Ethereum Beacon Chain. But for Bitcoin. It’s a native Bitcoin staking protocol, and with over $5B in TVL, it’s the first of its kind.

What makes Babylon special is that it lets users stake their BTC directly on the Bitcoin mainnet. No bridging, no wrapping. Coins stay where they are, in a non-custodial way.

But Babylon isn’t only staking for the sake of it. Its main innovation is expanding Bitcoin’s security to other blockchains, whether they are EVM chains, rollups, or appchains.

Bitcoin holders can now help secure networks by locking their coins and, in return, earn rewards from the same chains they are securing.

Lombard: Liquid Staking for Bitcoin

It’s the Lido of Bitcoin. Babylon handles the staking; Lombard makes it composable.

So,@Lombard_Finance""> @Lombard_Finance, with its $1.9B in Bitcoin-related TVL, builds on top of Babylon. It allows users to stake BTC via Babylon and receive LBTC, a liquid staking token that represents the staked position.

In fact, the BTC staked through Babylon remains locked on the BTC network, as we said before. So they are “useless”, if not for the consensus mechanism that validates other networks. They cannot be used in DeFi. This is what Lombard is for. Now users can receive the liquid version of staked BTC (LBTC) and start trading, borrowing, farming, and all the other things that degens like doing.

Lombard earns yield by delegating BTC to Babylon validators, who in turn secure external networks and earn rewards, as we previously said. These rewards are shared back with LBTC holders. In simple terms, the more chains Babylon validates, the greater the yield for stakers.

Lombard is active across multiple ecosystems like Sonic, Sui, and Base, and protocols like Aave, Pendle, and Ether.Fi and Corn, showcasing its composability. It also played a major role in the Boyco Berachain liquidity campaign, helping bootstrap early TVL.

SatLayer: The EigenLayer of Bitcoin

As spoilered in the title,@satlayer""> @satlayer can be imagined as Eigen Layer built on top of Babylon.

Although being the one in this list with the least TVL, only at $340M, it introduces a new restaking model. While Babylon locks BTC to secure external networks at the consensus layer, SatLayer lets users restake LBTC to secure the application layer.

This opens up a market for yield sourced directly from secured apps, like for instance, an oracle paying restakers to ensure data integrity, or a rollup paying restakers to ensure transaction validity, or a bridge paying to avoid slashing or fraud.

SatLayer supports restaking on both EVM and Sui networks.

See the whole picture now?

• Babylon serves as a base layer, providing consensus for networks
• Lombard functions as liquid staking, unlocking the locked Babylon BTC
• SatLayer offers restaking, delivering economic security to the application layer.

Are similarities to Ethereum, Lido, and Eigen Layer starting to appear?

Still, keep in mind that both Lombard and SatLayer currently depend on Babylon. While the opposite is not true.

And SatLayer doesn’t necessarily depend on Lombard, although right now it is the only solution it leverages, given its decentralised nature.

Solv Protocol: BTC Reserve and DeFi Vaults

@SolvProtocol"">@SolvProtocol, with $524.27M in TVL in the BTC ecosystem, utilises a different approach.

Like Lombard, it offers liquid staking for BTC, but without being settled on Babylon, and with a focus on building its own Bitcoin Reserve Strategy and other DeFi products.

Indeed, the SolvBTC token is a liquid representation of their BTC reserve strategy, where users deposit wrapped versions of BTC, then Solv converts majority of these into native BTC via institutional routes and stores them through centralised custodials.

While Solv doesn’t depend on Babylon, it benefits from Babylon-related assets like LBTC. In turn, it provides more composability thanks to its DeFI Vaults.

Final Thoughts

DeFi on Bitcoin is no longer just a fever dream. With new protocols and improved liquidity, we may be witnessing a new era where Bitcoin has decentralised yield.

This is not about wrapping BTC on Ethereum anymore. It’s about unlocking native BTC DeFi.

And with more projects like Botanix and others launching EVM-compatible Bitcoin chains, the composability and potential value of these layers could take off. Billions of idle BTC could soon become active collateral, helping validate networks, securing apps, and earning real yield.

Institutions are coming for Bitcoin. And they like the yield.

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