The amount of “Bitcoin At Work,” or the Total Value Locked (TVL), a measurement of the amount of BTC locked in Decentralized Finance (DeFi), has exploded over the past year.
More than 210,000 BTC (1% of the 21 million BTC supply cap) are now locked in various forms on other blockchains like Ethereum—a figure worth over $11.5 billion at current USD prices.
Up more than 300% BTC from my previous article, Can You Have Your Bitcoin And Eat It Too?, on this topic last September, it is clear that former HODLers are becoming more comfortable actually using their Bitcoin.
This figure doesn’t include any of the centralized organizations and platforms which conduct or facilitate Bitcoin financial services. Those centralized versions have also seen explosive growth: BlockFi, one such crypto lending firm, recently raised $350M at a $3B valuation.
Locking these coins allow Bitcoin holders to generate yield, leverage their Bitcoin as collateral, or utilize their Bitcoin in various smart contracts. Slowly, attitudes towards Bitcoin may be shifting from a digital pet rock to a form of pristine collateral.
Many “Maximalist” leaning Bitcoiners will be quick to point out the potential downsides associated with using Bitcoin at all, and each locked bitcoin solution has a unique risk and privacy profile. The most popular of these solutions involve custodial “wrapping” of BTC; others use decentralized or hybrid models which attempt to secure the on-chain Bitcoin solely using open source protocols.
It is always important to research any financial instrument or organization before use, and this article is in no way a recommendation of any specific products or services.