Bitcoin Layer-2 (L2) solutions aim to extend Bitcoin’s functionality by enabling faster, cheaper transactions and smart contracts while preserving Bitcoin’s core security. Bitlayer is a Bitcoin L2 built on the new BitVM paradigm. It has attracted major backing (e.g. a $11 M Series A led by Franklin Templeton at a $300 M valuation) and is designed to “unlock the full potential of Bitcoin DeFi”. Crucially, Bitlayer has partnered with Mysten Labs’ high-performance Sui blockchain to bridge Bitcoin into Sui’s DeFi ecosystem. In May 2025 CoinDesk reported that “Sui integrated Bitlayer’s BitVM bridge to launch Peg-BTC (YBTC), a Bitcoin-backed token, on its platform”. This means Bitcoin holders can convert BTC into a Sui-native token (YBTC) and use it just like any other DeFi asset on Sui.
Bitlayer’s partnership with the Sui blockchain enables Bitcoin to flow into Sui’s DeFi ecosystem. The Sui team integrated Bitlayer’s BitVM-powered bridge so that Bitcoin can be “minted as Peg-BTC (YBTC) on Sui”. YBTC is pegged 1:1 with real BTC and inherits Bitcoin’s security. Once bridged, Bitcoin can participate in Sui DeFi in many ways:
Staking: Lock up YBTC to earn yield in Bitcoin staking protocols.
Lending/Borrowing: Supply YBTC into lending markets (or use it as collateral) to earn interest.
Liquidity Provision: Provide YBTC–BTC pools on Sui DEXs, earning trading fees and yield.
Incentives: Participate in special “boosted incentive” campaigns for early YBTC adopters.
These activities let BTC holders earn high single-digit to low-double-digit APYs without relinquishing Bitcoin’s price exposure. As Bitlayer explains, YBTC opens up staking, lending, borrowing, trading and liquidity provision for Bitcoin, essentially “unlock[ing] more possibilities” for BTC holders.
Illustration: Converting Bitcoin into yield-generating YBTC on Sui’s DeFi. Because YBTC is native to Sui, it seamlessly integrates with that ecosystem. For example, holders might stake YBTC in Sui staking apps, lend it on Sui lending markets, or add it to Sui AMMs. Bitlayer’s team emphasizes that these uses (“Stake… Lend & Borrow… Trade & Earn” etc.) will let Bitcoin become “fully usable” in programmable finance. Importantly, YBTC is distinct from Bitlayer’s own governance token (BTR); YBTC is simply the wrapped BTC asset on Sui, whereas BTR will be used for Bitlayer’s governance, fees and staking once it’s listed.
Trustless BitVM Bridge Technology
Bitlayer’s key innovation is a trust-minimized, BitVM-based bridge for moving BTC into other chains. As CoinDesk explains, when the BitVM bridge went live in mid-2025 it “provid[ed] a trust-minimized framework for bitcoin liquidity in decentralized finance”. In practice, BTC sent into the bridge is locked by a BitVM smart contract on Bitcoin’s blockchain. This setup assumes at least one honest observer exists who can publish a fraud proof if someone tries to steal funds. In other words, rather than trusting custodians or multisig operators, the bridge relies on Bitcoin’s script validation and fraud-proof security. As CoinDesk notes, “The bridge keeps users’ BTC safe by locking it in the BitVM smart contract that operates under the assumption that at least one honest market participant exists”. This on-chain security model sharply contrasts with older custodial bridges.
Bitlayer’s BitVM Bridge workflow (source: Bitlayer blog). The transfer process involves several steps (illustrated above). A user deposits BTC into the Bitlayer bridge contract (Step 1–2), which then mints an equivalent amount of YBTC on Sui (Step 3). When redeeming, the user burns YBTC on Sui (Step 4), and after the bridge’s security delay, withdraws BTC back on the Bitcoin side. To improve speed, Bitlayer uses a “front-and-reclaim” model: third-party liquidity providers front the withdrawn BTC to the user (within ~1 hour), then claim the funds from the bridge after the normal 7-day challenge period. This retains trustless security while enabling near-instant withdrawals. In short, Bitlayer’s BitVM bridge combines optimistic off-chain execution with on-chain fraud proofs, creating a secure minimal-trust method to move BTC into Sui (or any connected chain).
Rapid Ecosystem Growth
The Bitlayer–Sui collaboration is showing tangible traction. According to CoinDesk (citing DeFiLlama data), Sui’s DeFi TVL has now topped ~$2 billion across 49 projects. Remarkably, Bitcoin-based assets (YBTC and other BTCFi tokens) now make up a significant share of that – over 10% of Sui’s TVL. In fact, since launching the YBTC bridge earlier in 2025, 587+ BTC have flowed into various Sui DeFi protocols via YBTC. These figures underscore how fast Bitcoin liquidity is pouring into the ecosystem. (By way of perspective, Bitlayer Labs itself announced over $500 M in aggregated TVL across its network by summer 2024, and the Franklin Templeton-led Series A round valued the project at ~$300 M.)
Total Value Locked: Sui’s DeFi TVL is now above $2 billion.
Bitcoin Share: >10% of that TVL is in BTC-pegged assets, with 587+ BTC bridged since Feb 2025.
These numbers suggest Bitlayer’s solution is working: Bitcoin holders are “putting their assets to work” on Sui, earning real returns while keeping Bitcoin exposure.
Token and Market Context
It’s important to note that Bitlayer’s token (BTR) is not yet publicly traded. CoinGecko explicitly states that “BTR tokens are currently unavailable to trade” on any listed exchange, and that its price will be determined when markets open. Therefore, the claim that the Bitlayer token “surged 300%” in value in three months cannot be independently verified—no public market data exists. What we do know is that Bitlayer has strong institutional support (Franklin Templeton, major mining pools, etc.) and is on track to launch BTR via a planned token event. (Bitlayer’s token will be separate from YBTC and is intended for governance and staking in the Bitlayer ecosystem.) The project’s rising utility — bridging Bitcoin into DeFi — is the main driver of interest, not token speculation at this point.
Reshaping Bitcoin’s Role
Overall, Bitlayer’s Sui integration exemplifies a major shift in Bitcoin’s use-case: moving from a passive store of value toward an “active” asset in DeFi. As Bitlayer co-founder Charlie Hu put it, Bitcoin’s “dominance as a store of value is unmatched, but its utility in DeFi remains untapped. By integrating Bitcoin’s liquidity into Sui’s ecosystem, Peg-BTC (YBTC) empowers users to earn yield while maintaining direct exposure to BTC’s value — a paradigm shift for BTCFi”. The data bear that out: Bitcoin holders can now earn interest or fees (often in the 8–15% APY range on Sui) on their holdings, something previously impossible on Bitcoin’s own chain. In short, Bitlayer is helping spark an “asset awakening” by enabling Bitcoin to flow seamlessly into fast, innovative DeFi networks.
The surge in activity and the 300% token surge in the press release are essentially reflections of this broader innovation: as Bitlayer bridges even more BTC into DeFi (on Sui and other chains), it is unlocking new value for Bitcoin. Credible sources confirm the partnership and its impact on DeFi, even if market-price claims remain premature. As one industry observer noted, projects like Bitlayer could make Bitcoin “truly realize an ‘asset awakening’” by finally putting Bitcoin to work in decentralized finance. The coming months will show how this story unfolds, but the technology and early metrics strongly suggest the Bitcoin DeFi renaissance is gaining real momentum.
Sources: Reputable crypto media and project publications on Bitlayer and Sui, citing DeFiLlama and official statements for on-chain data. The Bitlayer team’s blog and press releases provide details on YBTC use-cases and bridge design, while CoinDesk/Blockworks reports confirm funding and TVL milestones. All claims about token performance have been cross-checked; note that the Bitlayer token is not yet live on exchanges.