At the Bitcoin 2025 conference, industry leaders and innovators gathered to discuss the future of decentralized finance (DeFi) on the Bitcoin network. Conversations focused on the ways in which Bitcoin-based DeFi solutions have the real potential to disrupt and usurp traditional financial systems altogether. One of our key priorities was making Bitcoin more useful, secure and self-sovereign. We did this with novel layer 2 implementations, sidechains and cross chain operations, and collaborative custody paradigms.
The conference displayed the way in which Bitcoin is changing. It has the ability to transform from a passive store of value into an active financial tool. This transformation is expected to bring new opportunities for users to earn yields, access liquid markets, and escape the pitfalls of traditional finance.
Enhancing Bitcoin's Utility with DeFi Solutions
Adam Back, one of the Bitcoin communities leading luminaries, recently mentioned how Bitcoin DeFi solutions could offer competitive yields. He noted that the continued development of Bitcoin layer 2 solutions will be central in unlocking these opportunities, turning first to the lightning network.
"Once you have a Bitcoin layer 2, you can stake your Bitcoin and have instant Bitcoin yield. This is completely different from an ETF," - Adam Back
Back further encouraged the idea that on-chain markets would yield more efficient borrowing rates. This benefit would make Bitcoin’s increasing adoption in DeFi applications even more appealing.
Charlie Hu emphasized the importance of finality and self-sovereignty in Bitcoin DeFi, advocating for the use of the Bitcoin base layer for security. Hu recommended an approach that strengthens Bitcoin’s base layer with complementary DeFi infrastructure. Much like stars twinkling in the night sky, the increased development of sidechains and federated bridges can broaden Bitcoin’s functionality without jeopardizing its security blanket. Rootstock’s merged mining reached an all-time high during Q1 2025.
Self-Custody and Collaborative Custody
Yves La Rose, CEO of Vaulta, resonated with the spirit of self-custody in Bitcoin DeFi.
"Self-custody is the bedrock of Bitcoin DeFi," - Yves La Rose
Joseph Kelly called collaborative custody the solution to the rent-seeking middlemen of old-school finance. Unchained provides a suite of digital financial products, including robust, collaborative custody multisignature services.
"Clients hold two of the three keys in our multisig vaults, ensuring they have unilateral control to move funds at any time." - Joseph Kelly
Kelly further touched on the developing role of Bitcoin in the current financial landscape.
"Bitcoin is a store of value today, but the next wave is utility." - Joseph Kelly
Bitcoin as an Active Financial Instrument
Jacob Phillips, co-founder of Lombard Finance, on developing a liquid staking protocol. He believes that Bitcoin DeFi can turn Bitcoin from a passive store of value into an asset that challenges traditional finance.
Users are flocking to dollar-backed stablecoins in countries such as Argentina to avoid the depreciation of their local currency.
"Bitcoin DeFi is about building a trustless, permissionless financial system around Bitcoin, turning it into an active financial instrument, not just a vault." - Jacob Phillips
