Key Takeaways:
BTCFi ecosystem attracted $175 million in VC funding across 32 deals in H1 2025.
Q1 led with $130M, but Q2 saw a 66% drop to $44M.
Funding is shifting toward consumer-facing DeFi, custody, and yield-generating applications.
Bitcoin TVL surged 22x in 2024, driven by Runes protocol and native staking innovations.
BTCFi is becoming a convergence point for TradFi and DeFi, according to Maestro and JPMorgan’s Kinexys.
Bitcoin’s decentralized finance (DeFi) sector is gaining traction with venture capital investors, as more firms look beyond Ethereum and toward Bitcoin’s growing yield-generating potential.
According to a new report by Bitcoin DeFi infrastructure firm Maestro, the BTCFi ecosystem secured $175 million in VC funding during the first half of 2025 across 32 investment rounds. The majority of capital is now flowing into consumer-facing DeFi, custody, and demand-driven products, signaling a pivot from infrastructure to real-world utility.
“Capital is pivoting toward usability and demand-driven products, while infrastructure bets mature in the background,” the report stated.
VC Momentum Slows in Q2 but Consumer Apps Lead
Despite a strong first quarter, which saw $130 million raised, the second quarter cooled, with just $44 million secured across 12 deals — a 66% decline quarter-over-quarter.
However, the funding mix reflects a maturing ecosystem. Of the 32 total rounds, 20 were focused on DeFi protocols, custody solutions, or consumer apps, according to Maestro.
BTCFi: A New Phase for Bitcoin as a Productive Asset
BTCFi — a term that refers to DeFi protocols built on the Bitcoin network — is positioning Bitcoin as more than a static store of value. Key advances such as the Runes protocol and Babylon’s Bitcoin-native staking have helped Bitcoin evolve into a yield-bearing, programmable financial network.
“For the first time since 2009, the critical pieces for on-chain financial apps on Bitcoin are in place — spanning exchanges, lending, and stablecoins,” said Marvin Bertin, co-founder and CEO of Maestro.
“Bitcoin is evolving from a static reserve asset into a dynamic, productive financial network.”
TradFi and DeFi Lines Blur on Bitcoin
The convergence between traditional finance (TradFi) and Bitcoin-based DeFi is accelerating. Nelli Zaltsman, head of blockchain payments innovation at JPMorgan’s Kinexys, said that collaboration between the two sectors is dissolving the artificial boundaries faster than anticipated.
“Improved infrastructure and collaboration will make the line between TradFi and DeFi blur faster than many expected,” Zaltsman noted.
BTCFi TVL Surged 22x in 2024
Bitcoin’s DeFi momentum began building in 2024 following the Bitcoin halving and the launch of the Runes protocol, the first fungible token standard on Bitcoin. These innovations enabled new financial primitives like staking, lending, and asset issuance on Bitcoin's base layer.
According to DefiLlama, total value locked (TVL) in BTCFi surged by more than 2,000% in 2024, as adoption spiked and tokenized Bitcoin-based protocols gained traction.
With $175 million in VC inflows and an expanding stack of on-chain tools, BTCFi is emerging as a major pillar of Bitcoin's next growth cycle. As Bitcoin transforms into a yield-generating, DeFi-enabled network, investors and builders alike are repositioning to capture the upside — from consumer apps to institutional-grade custody and staking platforms, according to Cointelegraph.
