Bitcoin’s DeFi Activity Surges

Bitcoin’s DeFi activity has surged after Total Value Locked (TVL) hit an all-time high and flipped that of BNB Chain.

Overview

Bitcoin (BTC) has recorded a notable increase in decentralized finance (DeFi) activity, with its Total Value Locked (TVL) reaching $6.9 billion, surpassing BNB Chain to become the fourth-largest blockchain by this metric. This activity began to rise in late October as demand for BTC yield grew. On October 21, BTC’s TVL was under $1 billion, indicating it has increased by more than six times in less than two months.

The rise in TVL is attributed not only to BTC price appreciation but also to an increase in locked coins. The number of assets locked on the network rose from 34,980 BTC to 66,040 BTC at the latest update.

Rising Demand for Restaking

The primary driver behind the increasing metric is the Babylon staking platform, which accounts for $5.6 billion of Bitcoin’s total TVL. According to the Babylon staking dashboard, 128,000 stakers have locked over 54,000 BTC, indicating a growing demand for Bitcoin yield. The amount of BTC staked on Babylon has risen by 151% in just seven days. This surge has made Babylon the largest Bitcoin DeFi project, surpassing the Lightning Network, which ranks fifth with a $530 million TVL, indicating a shift in BTC’s use from payments to DeFi.

Despite this growth, Bitcoin’s TVL remains significantly lower than Ethereum’s $88 billion, with Lido, the largest staking protocol on Ethereum, holding $38 billion in TVL. However, after surpassing BNB Chain, Bitcoin is near flipping Tron (TRX), whose TVL stands at $8.08 billion.

Impact on Bitcoin Price

As of the latest updates, Bitcoin traded at $104,240, reflecting a 1.67% gain over 24 hours. The cryptocurrency reached a record high of $106,488 on December 16, amid rising institutional demand following the entry of US-listed Bitcoin exchange-traded funds (ETFs) that saw $2.17 billion in inflows last week.

The increasing DeFi activity could generate additional demand for BTC, potentially driving prices higher. Furthermore, staking may reduce selling pressure as traders seek to earn yield.

DeFi Activity Soars to 2022 Highs

Bitcoin is not the only blockchain experiencing rising DeFi activity; the total TVL across all protocols has surged to $154 billion, the highest level since May 2022. Ethereum added over $24 billion to its TVL in just a month, and Solana’s TVL grew by over $1 billion. DeFi tokens like AAVE have also outperformed most altcoins, paving the way for further gains in the Bitcoin TVL and potentially significant rallies for the cryptocurrency.