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The first decentralized finance (DeFi) company to launch a user-friendly suite of products on Bitcoin will “win the entire market” of the blockchain’s 300 million users, one crypto founder says.

Alexei Zamyatin, the co-founder of the Bitcoin layer 2 Build on Bitcoin, told Cointelegraph at TOKEN2049 in Dubai that “the advantage of Bitcoin DeFi is that the market is much bigger, you have a much bigger retail user base that you can tap into.”

“It’s not easy to convert it, but if you manage to win in Bitcoin DeFi, you win the entire market.”

Zamyatin said the 300 million Bitcoin users would mean DeFi services on the blockchain would “outgrow everything we've seen so far in Ethereum and Solana.” 

Build on Bitcoin is one of the firms looking to win market share, offering a hybrid layer 2 solution that combines Bitcoin’s security with Ethereum DeFi capabilities via BitVM, a platform that processes Turing-complete Bitcoin contracts.

Zamyatin argued that Bitcoin-native bridges are necessary for DeFi on Bitcoin as the blockchain’s security is strong, but it lacks the human talent, tools and network effects of Ethereum. 

Alexei Zamyatin speaking with Cointelegraph’s Ezra Reguerra at Token2049. Source: Cointelegraph

Zamyatin said Bitcoin (BTC) yield and stablecoin products are driving strong demand for Bitcoin-based DeFi.

“A lot of institutions that are buying Bitcoin now usually have to find yield on the assets they hold. So Bitcoin yield is becoming a very hot and highly sought-after thing.”

Demand for Bitcoin-backed stablecoins is also skyrocketing because Bitcoin is the “best collateral,” Zamyatin added.

What if we tokenized the Bitcoin ETF so institutions could get access to DeFi yields? pic.twitter.com/2HCpwbCZDS

— alexei (@alexeiZamyatin) April 10, 2025

Bitcoin staking has become the main DeFi use case outside of payments, which involves Bitcoin holders locking their coins in self-custodial vaults or extractable one-time signatures to earn staking rewards on proof-of-stake blockchains like Ethereum.

The Babylon Protocol is currently leading this market with $4.64 billion worth of value locked, representing nearly 80% of all value locked on Bitcoin, DefiLlama data shows.

Bitcoin’s DeFi TVL is still a fraction of the $54.6 billion worth of value locked on Ethereum.

Bridging solutions a controversial topic

Zamyatin acknowledged the numerous hacks on blockchain bridges, but argued most of those incidents resulted from teams failing to manage their private keys, rather than from smart contract vulnerabilities.

While competition in the retail market is wide open, Zamyatin noted that many institutions still hesitate to use bridges, that allow users to move value between incompatible blockchains.

Efforts have been made to increase the number of bridge signers from five to 50 in some cases, Zamyatin noted.

However, institutions have been reluctant to adopt these solutions because they often don’t know who’s signing the transactions.

For example, the Ren Protocol’s RenBTC operates via a decentralized network of nodes called Darknodes, which sign transactions to lock BTC and mint RenBTC to use on other chains. 

However, institutions continue to avoid these protocols due to the degree of anonymity involved and instead opt to use trusted custodians like BitGo and Coinbase Custody for such activities.

Magazine: ZK-proofs unlock trillions in Bitcoin for DeFi — BitcoinOS and Starknet

Additional reporting by Ezra Reguerra.