The first Bitcoin (BTC) decentralized finance (DeFi) company to launch a user-friendly suite of products will “win the entire market”

Alex Zamyatin, the co-founder of the Bitcoin layer 2 Build on Bitcoin, told Cointelegraph at TOKEN2049 in Dubai that “the advantage of Bitcoin DeFi is that the market is much bigger”

The first decentralized finance (DeFi) company to launch a user-friendly suite of products on Bitcoin will “win the entire market” of the blockchain’s 300 million users, one crypto founder says.

Alexei Zamyatin, the co-founder of the Bitcoin layer 2 Build on Bitcoin, told TOKEN2049 in Dubai that “the advantage of Bitcoin DeFi is that the market is much bigger, you have a much bigger retail user base that you can tap into.”

Zamyatin said the 300 million Bitcoin users would mean DeFi services on the blockchain would “outgrow everything we've seen so far in Ethereum and Solana.”

Build on Bitcoin is one of the firms looking to win market share, offering a hybrid layer 2 solution that combines Bitcoin’s security with Ethereum DeFi capabilities via BitVM, a platform that processes Turing-complete Bitcoin contracts.

Zamyatin argued that Bitcoin-native bridges are necessary for DeFi on Bitcoin as the blockchain’s security is strong, but it lacks the human talent, tools and network effects of Ethereum.

Zamyatin said Bitcoin (BTC) yield and stablecoin products are driving strong demand for Bitcoin-based DeFi.

Demand for Bitcoin-backed stablecoins is also skyrocketing because Bitcoin is the “best collateral,” Zamyatin added.

What if we tokenized the Bitcoin ETF so institutions could get access to DeFi yields? pic.twitter.com/2HCpwbCZDS

Bitcoin's strengths are well-known among crypto enthusiasts. However, Zamyatin believes that institutions are still holding back due to concerns about bridges and the lack of integration with products in the DeFi ecosystem.

"We need to create a seamless and trusted bridge for institutions to enter the Bitcoin DeFi space," he said.

Bitcoin (BTC) staking has become the main DeFi use case outside of payments, which involves Bitcoin holders locking their coins in self-custodial vaults or extractable one-time signatures to earn staking rewards on proof-of-stake blockchains like Ethereum.

The Babylon Protocol is currently leading this market with $4.64 billion worth of value locked, representing nearly 80% of all value locked on Bitcoin, DefiLlama data shows.

Bitcoin's DeFi TVL is still a fraction of the $54.6 billion worth of value locked on Ethereum.

Bridging solutions a controversial topic

Zamyatin acknowledged the numerous hacks on blockchain bridges, but argued most of those incidents resulted from teams failing to manage their private keys, rather than from smart contract vulnerabilities.

While competition in the retail market is wide open, Zamyatin noted that many institutions still hesitate to use bridges, that allow users to move value between incompatible blockchains.

Related: Bitcoin NFTs, layer-2 and restaking hype ‘completely gone’

Efforts have been made to increase the number of bridge signers from five to 50 in some cases, Zamyatin noted.

However, institutions have been reluctant to adopt these solutions because they often don’t know who’s signing the transactions.

For example, the Ren Protocol’s RenBTC operates via a decentralized network of nodes called Darknodes, which sign transactions to lock BTC and mint RenBTC to use on other chains.

However, institutions continue to avoid these protocols due to the degree of anonymity involved and instead opt to use trusted custodians like BitGo and Coinbase Custody for such activities.