Bitcoin in DeFi: How the Original Crypto Powers Decentralized Finance

When people think of Bitcoin, the first and most widely recognized cryptocurrency, built on a decentralized blockchain that enables peer-to-peer digital cash. Also known as BTC, it was designed to cut out banks — not to plug into them. But now, Bitcoin in DeFi is becoming a real thing. For years, Bitcoin was seen as digital gold — held, not used. DeFi, on the other hand, is all about putting money to work: lending, borrowing, earning interest, trading. So how does a coin that doesn’t natively support smart contracts fit into that world? The answer isn’t magic. It’s wrapped tokens, bridges, and real demand.

One of the biggest shifts happened when projects like Wrapped Bitcoin (WBTC), a tokenized version of Bitcoin that represents 1:1 holdings on Ethereum and other blockchains, enabling Bitcoin to interact with DeFi protocols came along. WBTC lets Bitcoin holders access DeFi apps on Ethereum without selling their BTC. That means you can lock your Bitcoin into a lending pool on Aave or supply it as liquidity on Uniswap — and earn yield. It’s not Bitcoin moving to Ethereum. It’s Bitcoin being represented there. And it’s working. Over $10 billion in Bitcoin is now locked in DeFi protocols, mostly as WBTC or similar wrapped versions. This isn’t just speculation. It’s users choosing to use their Bitcoin as capital, not just a store of value.

But Bitcoin in DeFi isn’t just about wrapped tokens. New layers like Bitcoin Layer 2s, scaling solutions built on top of Bitcoin’s main chain to enable faster, cheaper transactions and smart contract functionality are starting to change the game too. Projects like Lightning Network and Stacks are bringing programmability to Bitcoin itself — no wrapping needed. You can now lend Bitcoin directly, create decentralized loans, or even trade Bitcoin options using these newer systems. It’s slower than Ethereum, but it’s trustless and secure — the Bitcoin way.

Why does this matter now? Because DeFi is no longer just about altcoins. As traditional finance looks at crypto with more interest, Bitcoin’s role as the anchor asset makes it essential. If you want to bring real money into DeFi, you start with Bitcoin. And if you’re holding Bitcoin, you’re missing out if you’re not exploring how to use it beyond HODLing. The tools are here. The liquidity is growing. The risks? They’re real — bridge hacks, smart contract bugs, regulatory gray zones. But the potential? You’re not just holding gold anymore. You’re using it to build.

Below, you’ll find real breakdowns of DeFi protocols that use Bitcoin, exchanges that support Bitcoin-based lending, and the scams that pretend to offer Bitcoin yield — but are just trying to steal your keys. No fluff. Just what works, what doesn’t, and what you need to know before you move your Bitcoin into DeFi.