Core Contradiction: Bitcoin's $1.3 Trillion Market Cap vs. DeFi Penetration Rate of Only 0.27% (Ethereum DeFi Penetration Rate 38%)

What makes BTCFi most interesting now is its 'inherent flaw'—Bitcoin was never designed with DeFi functions, leading to all current solutions resembling attaching rocket engines to antique cars. The asset issuance frenzy triggered by Ordinals is just an appetizer; the real drama is how various solutions address Bitcoin's scalability issues.

Sidechain factions like Merlin and B² Network are strong in TVL but essentially bridge BTC into EVM environments using centralized bridges, which deviates from Bitcoin's spirit. Among Layer2 solutions, Stacks is the oldest but performs poorly, while the newly launched Babylon attempts to trade staking security for trust, which is quite clever but has yet to be battle-tested.

I. Technical Route Life-and-Death Race

2. Layer2 Faction (TVL $1.1B)

  • Stacks:

    • Technology: Clarity Smart Contracts + sBTC Pegging

    • Predicament: TPS only 5-10, developer attrition rate 68%

  • BitVM:

    • Revolutionary: Bitcoin scripts achieving Turing completeness

    • Reality: Single proof cost > $300, only theoretically feasible


II. Capital Hunting Dark War

💰 Institutional Betting Map

🎯 VC Strategy Divergence

  • Short-Term Arbitrage Faction:
    Heavily supporting high TVL bridging protocols (Merlin's annual yield reaches 37%, including token release)

  • Long-Term Gambler Faction:
    Betting on theoretical solutions like BitVM (funding exceeds $60M, zero product landing)

III. User Ecosystem Tear

1. Miner Camp (Computing Power Capitalization)

  • Computing Power Staking Derivative Explosion:
    The B² protocol allows miners to stake 1TH/s computing power to lend out $230, with a default rate of only 1.2%

  • Risk Transfer Game:
    North American mining companies stake 70% of computing power to hedge against post-halving revenue decline

2. Ordinals Refugees (Speculative Migration)

  • NFT Player Transition Path: Real Earnings Comparison:

    • BRC20 Speculators Average Loss Rate: 89%

    • Merlin Early Miner APY: 215% (including token bubble)

3. Orthodoxy Fundamentalists

  1. Core Belief: 'Bitcoin should not have smart contracts'

  2. Destruction Action:

    • Threatening a 51% computing power attack on Stacks

    • Reporting Merlin to the SEC for securities issuance

IV. Failure Cases

☠️ Three Warnings

  1. Sovryn (Lending Protocol)

    • Cause of Death: Bitcoin price volatility → collateral liquidation delay → bad debt $34M

    • Autopsy reveals: liquidation bots unable to trade in time during Bitcoin congestion

  2. Algomint (Cross-Chain Bridge)

    • Cause of Death: Centralized custody loophole → hacker stole $190M

    • Key Mistake: Private keys stored on unencrypted AWS server

BADGER DAO (Yield Aggregator)

  • Cause of Death: Front-End Hijacking → User Authorization Theft → Loss of $210M

  • On-Chain Evidence: The attacker spent only 0.5 BTC in costs

V. Endgame Simulation

Winning Condition Matrix

SOLV: Asset Resurrection Technique

One Sentence to Understand:

'Turning frozen assets into liquid cash—like turning an ice sculpture into flowing water!'

Ultimate Prophecy

The essence of BTCFi is the last-ditch rescue of Bitcoin conservatism—
When miner income falls below shutdown price, when OG developers lose their voice,
Trillions of dollars in capital will drag Bitcoin into on-chain casinos,
No matter how the fundamentalists scream@幣安合約
@Solv Protocol #BTC赛道龙头Solv进军RWA