New programming features that could be added to Bitcoin could help the leading crypto asset offset Ethereum’s early advantage in being able to deploy decentralized finance (defi) on layer one (L1), says Tycho Onnasch, co-founder of Zest Protocol. Onnasch believes that once enough Bitcoin layer two solutions (L2) are deployed and trusted by users, the Bitcoin DeFi ecosystem will rival Ethereum’s, and possibly even surpass it.

The world has realized that BTC is an incredible store of value asset. However, the Bitcoin network (rails) on which the asset resides can do more — and this use of the Bitcoin network, in turn, is necessary to maintain Bitcoin as a store of value. Bitcoin can only be a store of value if a large decentralized network of miners continues to protect it. With each Bitcoin halving, the incentive to mine Bitcoin purely for the protocol reward weakens. This reward needs to be replaced with transaction fees. Bitcoin maxis always believe that payments will incur these fees. However, a new wave of builders have risen up to use the Bitcoin network as a decentralized global computer for a range of other use cases — whether it’s NFTs, defi, or something else. Defi is BTC’s most critical application. A store of value needs to be used financially to be useful to its holders. If they cannot buy, sell, borrow, lend or pledge the asset, then the asset cannot succeed as a store of value. Centering financial activity around Bitcoin as an on-chain asset is critical to its further development and adoption as a global reserve asset.