“Only Bitcoin never lets you down.”

The 16-year history of the crypto industry is one where Bitcoin’s value has been continually reinterpreted, propelling the industry to new heights. Throughout four market cycles so far, each round has seen critics claim that Bitcoin lacks innovation and cannot represent the cutting edge of the industry. At the same time, there have been predictions of new technologies that would replace or even surpass Bitcoin. Yet, after each cycle, Bitcoin, with its restrained, focused, and simple yet profound core principles, has inspired new products and models, crushing the icy barriers of conservatism and skepticism, and expanding the territory of crypto with firm and impactful force. Bitcoin continues to lead the industry and market trends.

The reason Bitcoin has remained resilient over time is that it carries the value proposition of “digital hard money,” has the strongest global consensus, and is actively participating in the global financial system. As such, in an industry that relentlessly pursues extreme innovation, Bitcoin remains the most stable and influential “mainstay.”

Now, Bitcoin’s wave of innovation is entering a new phase of acceleration. The financialization revolution driven by Bitcoin is quietly taking shape. The rise of Bitcoin Finance (BTCFi) marks a new trend where Bitcoin is evolving from a passive store of value to a deeper financial application. Solv, positioned at the forefront of this trend, is working to drive Bitcoin Finance toward becoming a trillion-dollar decentralized financial infrastructure, empowering a broader user base and ecosystem development.

Tracing the Evolution of Bitcoin Finance: From the Margins to the Mainstream

The rise of BTCFi has not been an overnight success but rather has unfolded through three key evolutionary stages, gradually moving from the periphery to mainstream discourse.

The First Wave: Early Exploration of Bitcoin’s Integration with TradFi (2013–Present)

In September 2013, Digital Currency Group (DCG) launched the Grayscale Bitcoin Trust (GBTC). At its core, this was a service combining Bitcoin custody with securitization, aimed at connecting with the operational systems familiar to traditional financial institutions and significantly lowering the barrier to entry for investors into the BTC market. The premium/discount mechanism of GBTC and the associated arbitrage opportunities further stimulated institutional demand for BTC. The long journey from GBTC to a Bitcoin ETF illustrates the ongoing battle between regulation and innovation and marks the gradual acceptance of Bitcoin by traditional finance. This wave of practice turned BTCFi into a small narrative worth hundreds of millions of dollars by 2018, establishing a firm foothold.

The Second Wave: The Rise and Challenges of CeFi (2018–Present)

During the 2017–2018 bull market, centralized platforms such as exchanges rapidly emerged, and the financial needs of early BTC holders—especially miners—played a crucial role in this development. Not only did major exchanges engage in a variety of BTCFi businesses, but professional BTCFi service platforms like PayPal, Matrixport, and Genesis also began to appear. These platforms provided services like collateralized lending and hedging, catering to the needs of miners and institutions and accelerating the financialization of BTC. Although the 2022 CeFi crisis severely impacted the CeFi landscape, it also led to deep reflection within the industry, reinforcing risk management and regulatory compliance. This crisis ultimately pushed BTCFi into a mid-sized market valued at hundreds of billions of dollars.

The Third Wave: DeFi Innovation and Potential (2020–Present)

The “DeFi Summer” of 2020 was one of the most significant events in the crypto industry after Bitcoin and Ethereum. DeFi introduced a new paradigm for creating and operating financial services, opening up immense possibilities. Due to the functional limitations of Bitcoin’s scripting language, most of the complex DeFi protocols were developed on smart contract blockchains like Ethereum. However, due to Bitcoin’s immense scale, the DeFi community has long been dedicated to bringing BTC’s value into the DeFi ecosystem. This effort led to the creation of Bitcoin-wrapped services like WBTC and renBTC. DeFi’s higher transparency, easier operation, and richer yield opportunities attracted many users. The composability of DeFi also brought new possibilities for BTCFi, such as decentralized lending based on BTC and derivative trading, among other innovative applications.

By 2024, the practices of these three waves of BTCFi have overlapped and resonated with each other. With significant favorable changes in the external environment, BTCFi experienced explosive growth, becoming a multi-hundred-billion-dollar market.

The Explosive Growth of BTCFi: The Convergence of Three Forces

The explosive growth of BTCFi in 2024 is essentially the result of the overlapping resonance of the TradFi, CeFi, and DeFi waves. This growth is not accidental; it is the culmination of long-term evolution in multiple fields. Behind this surge are multiple driving forces, including market demand, technological innovation, and ecosystem expansion.

First, the Expansion Drivers of DeFi.

In 2023, the crypto market rebounded from the lows of 2022, injecting new vitality into the entire industry. As the core force behind crypto innovation, the DeFi community naturally aimed to quickly restore the growth momentum that was hindered by the market crash. However, by this stage, the major resources and scenarios within the Ethereum ecosystem had already been fully developed, and the DeFi community was urgently seeking new growth directions. Faced with greater liquidity demands and a more diverse asset base, Bitcoin’s (BTC) value began to be re-recognized. As the largest cryptocurrency by market capitalization, Bitcoin boasts an unparalleled asset scale and market foundation. Its transparent, censorship-resistant nature aligns perfectly with the core principles of DeFi, making it a natural pivot for the next phase of DeFi expansion.

Financial innovation around BTC began to accelerate. From early Bitcoin-wrapped assets like WBTC and renBTC to decentralized lending integrated with Layer 2 scaling solutions, and from BTC-based staking and liquidity pools, the use cases for Bitcoin in DeFi gradually expanded. Meanwhile, innovations such as BRC20, BRC420, and other on-chain trends have also attracted significant attention, as users seek to integrate Bitcoin’s value more efficiently into these emerging fields. This market demand has driven the continuous expansion of BTC in the DeFi space, laying a solid foundation for its rapid growth.

Furthermore, DeFi’s advantages in transparency and efficiency have further amplified the appeal of BTCFi (Bitcoin-based DeFi). Users not only gain access to more convenient and flexible financial services, but also enjoy high-yield opportunities related to BTC in a decentralized manner. The composability between DeFi protocols has opened up greater innovation spaces, allowing developers to create new derivative trading, lending protocols, and yield optimization tools based on BTC. These innovations, layered and resonating together, provide an ongoing source of momentum for the explosive growth of BTCFi.

Second, the Demand for Activating CeFi Assets.

Centralized Finance (CeFi) platforms have played a key role in the rise of BTCFi, with their unique user bases and platform advantages providing strong support for Bitcoin’s financialization. Exchanges and professional financial service platforms have activated their dormant assets and innovated financial products, which allowed BTCFi to grow rapidly in the CeFi sector.

Firstly, CeFi platforms have introduced Wrapped BTC (such as Binance’s BTCB and Coinbase’s wrapped BTC products), bringing Bitcoin into more application scenarios. These Wrapped BTC assets made Bitcoin more liquid and usable within other blockchain ecosystems, thus activating a large amount of dormant assets on CeFi platforms. This mechanism not only improved Bitcoin’s utilization but also provided users with more investment choices and yield opportunities, effectively boosting user participation and platform engagement.

Secondly, CeFi platforms have been continuously exploring new BTC financial products and services to meet the growing market demand. From the earliest BTC-backed lending services to more complex derivative trading, yield optimization products, and structured financial plans, CeFi platforms are constantly enriching their service offerings to provide tailored BTC financial solutions for both individual and institutional investors. These products cater to the diversified needs of miners, long-term holders, and institutional investors, while also lowering the participation threshold for ordinary users.

At the same time, CeFi platforms’ improvements in compliance and risk management have further strengthened their appeal to users. Especially after the market crisis of 2022, the industry’s focus on transparency and security has significantly increased. CeFi platforms have regained users’ trust through stricter audits and sound operations, laying a solid foundation for the long-term development of their BTCFi businesses.

Through asset activation and innovative products, CeFi platforms have successfully taken Bitcoin’s financial applications to new heights, contributing significantly to the explosive growth of BTCFi.

Third, the Rapid Advancement of TradFi.

Traditional Finance (TradFi) has played the role of a pioneer and major driver in the development of BTCFi. From the approval of Bitcoin ETFs to MicroStrategy’s large-scale Bitcoin holdings, the ongoing efforts by traditional financial institutions and companies have provided strong backing for the financialization of Bitcoin and attracted more institutional investors into the market.

The successful approval of the 2024 Bitcoin ETF is a milestone event. The launch of the ETF has significantly lowered the barrier for traditional institutions and individual investors to access Bitcoin, enabling more investors to incorporate Bitcoin into their portfolios in a compliant, secure, and convenient way. This has not only brought more liquidity into the market but has also enhanced the recognition of Bitcoin as an asset class, further solidifying its position in the global financial system. The success of the ETF has also laid the groundwork for the development of BTCFi, such as promoting the launch of more BTC-based financial products (such as options, futures, and fixed-income products).

Among these developments, MicroStrategy’s example has sparked corporate interest in Bitcoin as an asset. Since 2020, MicroStrategy has adopted Bitcoin as its strategic reserve asset, boosting the company’s asset returns and drawing widespread market attention with this decision. MicroStrategy’s success story has inspired other traditional companies to follow suit, bringing more capital into the Bitcoin market. This corporate-level participation has injected new energy into the market expansion and innovation of BTCFi.

Looking ahead, the possibility of Bitcoin being incorporated into national strategic reserve assets further expands the market’s imagination. If global economic giants like the United States formally include Bitcoin in their strategic reserves, it would not only ignite market enthusiasm but could also fundamentally change Bitcoin’s global positioning, driving its transformation from “digital gold” to a “global strategic asset.” This shift would open up entirely new development paths for BTCFi, attracting a broader range of institutional investors and spurring more complex and diverse financial service innovations.

In 2024, these three forces—DeFi, CeFi, and TradFi—will converge and resonate, pushing BTCFi to a scale of hundreds of billions of dollars. So, what will the next phase of BTCFi look like?

Reinterpreting Solv: The Key Bridge Connecting the Three Forces of BTCFi

Founded in 2020, Solv Protocol initially focused on infrastructure innovations for digital bonds and on-chain funds. However, with the rapid rise of BTCFi, Solv has gradually evolved into one of the important players in the BTCFi space, working alongside numerous partners to build an open and progressively maturing decentralized Bitcoin financial network.

The core philosophy of Solv is “connection.”

We believe that the future of BTCFi relies not on the breakthroughs of any single project but on the deep integration and resonance of the three forces—TradFi, CeFi, and DeFi. Solv’s vision is to be one of the driving forces behind this trend, facilitating collaboration and integration between ecosystems through an open cooperation model and continuous financial infrastructure innovation. Solv aims to create a more secure, convenient, and transparent BTCFi infrastructure for users, enabling everyone to easily participate in the BTCFi wave.

Solv does not aim to be an isolated entity but rather a bridge.

Solv recognizes that the rapid development of BTCFi comes from the overlapping resonance of TradFi, DeFi, and CeFi. However, this resonance, due to the presence of significant damping factors, has not yet fully realized its potential. These issues include:

• TradFi provides strong financial support and a global perspective but has challenges in smoothly integrating with decentralized ecosystems;
• DeFi is highly innovative and open but presents technical and cognitive barriers for ordinary users;
• CeFi excels in user experience but still needs continuous improvement in transparency and trust mechanisms.

Therefore, the key to success lies in how to enhance this resonance effect and enable these three forces to complement each other. To this end, Solv’s goal is to build bridges between these forces, eliminate barriers, and create a seamlessly connected ecosystem that unlocks the full potential of BTCFi.

To achieve this, Solv has formulated a clear “three-step” strategy aimed at gradually strengthening the DeFi foundation, integrating CeFi forces, and ultimately connecting TradFi, in order to create a fully comprehensive BTCFi ecosystem.

Step 1: Strengthen Innovation and Optimize Experience with DeFi as the Foundation

DeFi is the cornerstone of Solv’s rise and the main battleground for BTCFi innovation. As the Bitcoin Layer 2 ecosystem exploded and Bitcoin inscriptions (e.g., ordinals) became popular, the forms of yield in the DeFi Bitcoin financial space became diverse but somewhat disordered. Solv was one of the pioneers in proposing the concept of staking abstraction layers, which unify and standardize the complex and varied on-chain Bitcoin asset yields. Solv has created a standardized staking and Liquid Staking Token (LST) asset model, providing users with a one-stop, diversified yield channel and a simple and easy-to-understand operation experience. Currently, Solv has partnered with Babylon, Ethena, Core DAO, and Jupiter to launch four different LST products. These not only tokenize staking and re-staking yields but also successfully tokenize trading strategy yields and funding rate yields, further enriching users’ yield options.

The core appeal and greatest advantage of DeFi lies in its open ecosystem and the composability of protocols. Centered around the core asset, SolvBTC, Solv has built an extensive ecosystem covering 15 major public chains and more than 50 DeFi protocols, nearly encompassing all the high-quality yield sources on-chain. As of now, Solv’s Bitcoin reserves exceed 25,000 BTC, making it one of the largest Bitcoin reserves on-chain.

Step 2: Integrating CeFi, Expanding User Base, and Simplifying Processes

CeFi platforms play a significant role in the BTCFi ecosystem, particularly in attracting mainstream users, and they hold irreplaceable advantages in this area. Contrary to common belief, Solv sees CeFi not as a “transitional” model in crypto, but as a mainstream business model that will continue to evolve and remain relevant in the long term. The reason lies in the increasing complexity and specialization of crypto asset creation, management, and trading, which requires professional divisions of labor. As the industry continues to scale, there will inevitably be a need for specialized intermediaries to help ordinary users simplify operations, share responsibilities, and manage risks. In the BTCFi space, many Bitcoin holders actually prefer CeFi services. As a result, Solv has a long-term strategy to connect with CeFi.

Solv is currently forming strategic partnerships with top CEX platforms like Binance, OKX, and Bybit, integrating SolvBTC and its LST products to simplify the process of Bitcoin staking and cross-chain liquidity. Users can directly complete Bitcoin wrapping, staking, and cross-chain asset management on a familiar interface, without the need for complex on-chain interactions.

Moreover, Solv will collaborate with these platforms to launch exclusive BTCFi products and services, such as BTC-based yield enhancement plans and staking reward programs. This will help more users easily enjoy the benefits of DeFi while also driving the natural transition of CeFi users to DeFi users, ultimately expanding the adoption of the entire BTCFi ecosystem.

Step 3: Connecting TradFi and Unlocking Bitcoin’s Potential in the Real-World Economy

Solv will further promote the tokenization of BTC ETFs and actively collaborate with more traditional financial institutions to bridge the gap between TradFi and DeFi.

By bringing traditional assets, such as BTC ETFs, into the on-chain ecosystem as programmable digital assets, Bitcoin will no longer be just a “reserve asset,” but will become a key hub driving liquidity across markets. This step not only provides traditional investors with more flexible asset allocation tools, but also injects deeper liquidity and capital efficiency into the DeFi ecosystem, helping Bitcoin become a core asset in the global financial system.

Driving BTCFi to Become a Trillion-Dollar Industry

Our three-step strategy is not only Solv’s growth path but also a long-term vision for the future. We firmly believe that only by connecting TradFi, DeFi, and CeFi, while continuously focusing on technological innovation and an excellent user experience, can we truly build an open, efficient, and sustainable BTCFi ecosystem.

The realization of this vision requires the joint efforts of the entire industry and Solv’s ongoing self-breakthroughs. In the future, we look forward to collaborating with more ecosystem partners to drive the development of BTCFi, bringing the value of Bitcoin to every user, and growing BTCFi into a trillion-dollar industry.

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