Top BTCFi Projects 2025

What is BTCFi?

BTCFi, short for Bitcoin Finance, represents the convergence of Bitcoin's unmatched security with the dynamic world of decentralized finance (DeFi). Unlike traditional finance where intermediaries control your assets, BTCFi enables trustless bitcoin swaps, non-custodial bitcoin bridge solutions, and sophisticated financial applications that maintain Bitcoin's core principles of self-sovereignty and decentralization.

BTCFi is an ecosystem of decentralized finance applications built on Bitcoin. Since its inception in 2009, Bitcoin has paved the way for an entirely new asset class and established itself as the largest cryptocurrency with a market capitalization now exceeding 2 trillion dollars. However, the vast majority of bitcoin remains idle in cold storage, unproductive and underutilized.

The BTCFi ecosystem addresses a fundamental challenge: how to unlock Bitcoin's trillion-dollar liquidity while preserving its security model. Traditional approaches required wrapping Bitcoin or using centralized custodians, but new innovations are creating fast bitcoin bridge technologies and cross chain swap mechanisms that maintain Bitcoin's trustless nature.

Key characteristics of BTCFi include:

  • Trustless Cross Chain Bridge Technology: Enabling seamless decentralized asset movement between Bitcoin and other blockchains
  • Non-custodial Solutions: Users maintain full control over their Bitcoin at all times
  • Enhanced Programmability: Smart contract capabilities while preserving Bitcoin's security

BTCFi is transforming Bitcoin from an asset limited to being a store of value into an active participant in decentralized finance, increasing Bitcoin's overall utility and attractiveness as an asset class.

The sector has experienced explosive growth, with Bitcoin's DeFi total value locked reaching over $6.3 billion as of July 2025, as per Defillama.

While this figure still trails Ethereum's DeFi TVL of over $60 billion, Bitcoin has become the third-largest blockchain network in terms of DeFi activity after Ethereum and Solana.

Leading BTCFi Projects

The following projects represent the most innovative teams building Bitcoin Defi experiences. These projects are listed alphabetically, not in order of importance, as each addresses unique aspects of the BTCFi ecosystem.

Alpen Labs

Focus: Zero-Knowledge Bitcoin Rollup Infrastructure

Alpen Labs has emerged as one of the most technically sophisticated teams in the BTCFi space, focusing on scaling Bitcoin through zero-knowledge proofs. Founded by accomplished researchers who have been working to scale and extend Bitcoin using zk-SNARKs since 2022, they represent one of the most impressive and principled teams in the space.

Key Innovation: Strata - A zkEVM rollup on Bitcoin with a hybrid optimistic-ZK bridge architecture

The team's approach to Bitcoin scaling represents a fundamental shift in how developers think about Bitcoin's programmability. 

Business Metrics:

  • Funding: $19 million raised over two rounds, latest round led by CyberFund
  • Development Stage: Strata Devnet has been live and open-source for several months
  • Market Position: Positioned as Bitcoin's leading execution layer with strong institutional backing

Arch Network

Focus: Decentralized Applications on Bitcoin 

Arch Network is a bitcoin-native application platform that introduces smart contract functionality directly into Bitcoin through a novel architecture. It leverages a Rust-based zero-knowledge virtual machine, known as the ArchVM, along with a decentralized verifier network, collectively referred to as the Arch Network. The ArchVM is inspired by SVM (Single Virtual Machine) and is designed for parallel execution, incorporating zero-knowledge proofs (ZKPs) for transaction verification.

Key Innovation: Bitcoin Virtual Machine implementation for advanced dApp development

The project's approach focuses on creating a more programmable Bitcoin environment while maintaining the security guarantees of the Bitcoin base layer.

Business Metrics:

  • Funding: $20 million raised in total, latest round led by Pantera Capital. 
  • Market Position: Emerging Bitcoin L2 focused on VM implementation
  • Technical Focus: Bitcoin Virtual Machine and smart contract functionality

Babylon

Focus: Bitcoin Staking and Security Sharing Protocol

Babylon has emerged as the dominant force in Bitcoin staking, revolutionizing how Bitcoin can be used to secure other blockchain networks. The protocol represents the largest Bitcoin staking solution in the ecosystem and has achieved remarkable growth since its launch.

Key Innovation: Trustless and self-custodial Bitcoin staking protocol enabling BTC holders to stake on PoS chains

Babylon's approach eliminates the need for third-party custody or wrapping services, allowing Bitcoin holders to maintain full control while earning staking rewards.

Business Metrics:

  • TVL: $4.97 billion (ranking second among all restaking protocols, trailing only EigenLayer)
  • Bitcoin Staked: Over 44,630 BTC representing 0.2% of total Bitcoin supply
  • Funding: $70 million Series A led by Paradigm (May 2024)
  • Market Position: Bitcoin's largest staking protocol with over 80% of BTCFi TVL

Botanix

Focus: Ethereum Virtual Machine Compatibility on Bitcoin

Botanix has positioned itself as the bridge between Bitcoin and Ethereum ecosystems, successfully launching its mainnet in July 2025 with significant performance improvements. The mainnet represents a major milestone in bringing Ethereum-equivalent utility to the Bitcoin ecosystem.

Key Innovation: Spiderchain - EVM-compatible Layer 2 with Bitcoin settlement and decentralized governance

Business Metrics:

  • Mainnet Launch: July 1, 2025 
  • Funding: $11.5 million raised with participation from Polychain Capital and UTXO Management
  • Transaction Costs: Average fees around $0.02
  • Block Time: 5-second block times (down from Bitcoin's 10 minutes)

Core DAO

Focus: Bitcoin-Powered Layer 1 Blockchain 

Core DAO has established itself as the leading Bitcoin sidechain, achieving remarkable growth throughout 2024 and positioning itself as a key player in the BTCFi ecosystem. The project combines Bitcoin's security with smart contract functionality.

Key Innovation: Satoshi Plus consensus mechanism enabling non-custodial Bitcoin staking

Core's approach allows Bitcoin holders to stake their BTC without moving it from the Bitcoin blockchain, providing native yield while maintaining Bitcoin's security guarantees.

Business Metrics:

  • TVL: 5179 BTC or $576 million at current market price. 
  • Market Position: Bitcoin sidechain

Citrea

Focus: Bitcoin's First ZK Rollup

Citrea represents a breakthrough in Bitcoin scaling technology, offering the first true rollup solution that uses Bitcoin for both data availability and settlement. The project has gained significant attention for its innovative approach to Bitcoin programmability.

Key Innovation: BitVM-based trust-minimized two-way peg with zero-knowledge proofs

The project's technical architecture addresses fundamental limitations in existing Bitcoin scaling solutions by enabling the first universal trust-minimized two-way peg on Bitcoin.

Business Metrics:

  • Funding: $16.7 million in two rounds, latest one led by Founders Fund and Erik Voorhees
  • Development Stage: Testnet live with bridge deployments
  • Market Position: First rollup to enhance Bitcoin blockspace with zero-knowledge technology

Lombard

Focus: Bitcoin Liquid Staking Protocol

Lombard has emerged as a leading player in the Bitcoin liquid staking space, offering LBTC (Lombard Staked BTC) as a yield-bearing bitcoin token. The protocol has experienced explosive growth since its launch, becoming one of the most successful BTCFi projects by TVL.

Key Innovation: Universal Liquid Bitcoin Standard (LBTC) with cross-chain deployment

Lombard's LBTC represents Bitcoin staked into Babylon, allowing users to earn native yield while maintaining liquidity for DeFi activities.

Business Metrics:

  • TVL: $1.5 billion
  • Funding: $16 million seed round led by Polychain Capital, additional investment from Binance Labs (as reported by The Block)
  • Market Position: Liquid Staking for Bitcoin

Technical Challenges and Opportunities

  • Security vs. Functionality: The core goal of Bitcoin's design has always been security over functionality. This priority will continue in BTCFi, where security will always take precedence over functionality.
  • Cross-Chain Bridge Risks: Cross-chain bridge technology is crucial to the development of BTCFi; however, these bridges are inherently risky, as they have contributed to more than 40% of the total hacked value in crypto. Intent-based bridging is coming out as a long-term solution to cross-chain interoperability. 
  • Scalability Solutions: According to industry research, over 75 Bitcoin L2 projects are currently in development. However, analysts suggest that only a few will likely see widespread adoption, indicating that the market will eventually consolidate around the most technically sound and user-friendly solutions.

Conclusion

The BTCFi ecosystem represents one of the most significant developments in Bitcoin's history, transforming it from a static store of value into a dynamic foundation for decentralized finance. The projects highlighted in this article are each contributing unique innovations that collectively create a comprehensive Bitcoin DeFi ecosystem.

As we move through 2025, these projects will continue to push the boundaries of what's possible with Bitcoin. The future of BTCFi looks bright, with technological innovations like BitVM2, an improved cross-chain swap mechanism, paving the way for Bitcoin to become the foundation of a new financial system.

The key to success in this rapidly evolving space will be maintaining Bitcoin's core principles of security, decentralization, and trustlessness while enabling the sophisticated financial applications that users demand. The projects covered in this article are well-positioned to lead this transformation, each bringing unique strengths to the broader BTCFi ecosystem.

Garden contributes to this ecosystem by providing trustless intent-based access to native Bitcoin, working with protocols like Alpen Labs, Botanix, Core, Arch, and Citrea to enable seamless cross-chain swap functionality that maintains Bitcoin's security model while expanding its utility.