Bitcoin’s DeFi sector will see significant advancements in 2025, driven by innovations in liquid staking and decentralized borrowing. Introduction of Bitcoin L2 Babylon aims to enhance Bitcoin staking involvement. Investors foresee greater adoption as more BTC is locked in staking protocols, aiming to unlock liquidity without selling the coin.

Institutions will incorporate Bitcoin derivatives as collateral for lending, reinforcing BTC’s role in decentralized finance. Enhanced user experiences with DeFi protocols will make them more accessible, fostering further adoption. Projects like Granite allow BTC holders to take loans on their Bitcoin assets without selling, creating opportunities for wider DeFi interactions.