Because the Dubai Token2049 convention concludes, one key takeaway is that the narrative round bitcoin (BTC) is swiftly increasing past its conventional function as a retailer of worth to a possible DeFi asset competing with Ethereum and Solana.
Outstanding trade gamers like Franklin Templeton view this improvement as a optimistic step, assured it should improve bitcoin’s utility with out diluting its core attraction as a retailer of worth as purists or maximalists worry.
“I don’t think focusing on Bitcoin DeFi will dilute or complicate Bitcoin’s core narrative,” Kevin Farrelly, managing principal of blockchain enterprise capital at Franklin Templeton and VP of Digital Property, defined throughout his keynote speech on the Bitlayer aspect occasion this week. “Instead, it expands Bitcoin’s utility for a specific type of investor — one with enough technical sophistication to optimize for yield, security, or custom portfolio needs.”
“These users aren’t replacing the ‘store of value’ thesis; they’re building on it,” Farrelly added. “It’s not narrative dilution, it’s infrastructure evolution.”
Franklin Templeton is an investor in Bitlayer, a BitVM that serves as Bitcoin’s computational layer whereas preserving the mainnet’s safety. It gives options resembling quicker transaction processing, decrease charges, and new functionalities like sensible contracts or superior DeFi integrations, areas that base-layer Bitcoin alone does not natively help.
Franklin Templeton’s bitcoin ETF (EZBC) has registered internet inflows of $260 million since its debut on Jan. 11 final yr. As of Could 1, the fund held 5,213 BTC, greater than $500 million in belongings underneath administration at bitcoin’s present worth of simply above $97,000.
Increasing past the shop of worth attraction
Satoshi Nakamoto’s authentic imaginative and prescient for the Bitcoin blockchain was pushed by making a decentralized monetary system that promotes monetary sovereignty and privateness, eliminating the necessity for transaction intermediaries. Over a decade since its inception, nonetheless, the blockchain’s native cryptocurrency, bitcoin, has rapidly garnered a fame as digital gold — a dependable retailer of worth — and this narrative has served it effectively.
Bitcoin’s market cap at present exceeds $1.9 trillion, accounting for almost 60% of the whole digital asset market worth of $3.12 trillion, per CoinDesk knowledge. It is essentially the most liquid cryptocurrency, averaging a number of billion {dollars} in day by day buying and selling volumes worldwide, and a number of other publicly listed corporations have adopted it as a reserve asset.
Furthermore, a number of regulated different funding autos tied to BTC have emerged over time, permitting conventional market individuals to take publicity to the cryptocurrency.
As an illustration, in response to knowledge supply Farside Investors, the 11 spot ETFs listed within the U.S. have amassed almost $40 billion in investor cash since their debut in January final yr. In the meantime, ether ETFs have seen internet inflows of slightly below $3 billion.
The sturdy institutional uptake for BTC has been extensively attributed to its easy, compelling narrative as digital gold—an asset that’s simple to know relative to complicated platforms like Ethereum or Solana. These platforms help a wider array of decentralized finance (DeFi) functions and use circumstances, serving to their native token holders earn extra yields on high of their spot market holdings.
“At its core, it’s seen as a digital store of value,” Farrelly instructed CoinDesk. “Unlike more complex crypto projects, Bitcoin doesn’t require deep technical explanation — it has a clear, focused purpose. That clarity may be part of what makes it easier to understand, easier to model, and with the ETF, easier to allocate. “In a panorama filled with complexity and speculative narratives, Bitcoin gives a sort of sign — and that, more and more, appears to resonate,” he continued..
As a result, many purists resist the idea of introducing features similar to DeFi directly on the Bitcoin blockchain, fearing it could dilute its core appeal.
The buzz around Bitcoin DeFi at the Bitlayer event and the main Token2049 conference was tangible, highlighting the growing demand among BTC holders for additional yield opportunities.
“Bitcoin DeFi with trust minimized bridge, sustainable yield products for onchain bitcoin holders is becoming very important for bitcoin asset holders and the network maintainers,” Charlie Yechuan Hu, co-founder of Bitlayer told CoinDesk.
“At Bitlayer we are building important infrastructures which can empower the Bitcoin DeFi with our BitVM technologies,” Hu added. “A lot of interesting Bitcoin DeFi use cases can make bitcoin assets more valuable, give users more reason to hold and use in the future”
This BTC DeFi trend could also benefit miners, who are rewarded for mining blocks. While the per-block reward is halved every four years, increased on-chain activity driven by DeFi applications could help offset this reduction through higher transaction fees, supporting the network’s security and sustainability.
“Importantly, Bitcoin DeFi additionally introduces new transaction charges — a essential part for the community’s long-term sustainability and safety as block rewards proceed to say no,” Farrelly mentioned.
Hu voiced an identical opinion, saying the rising community hashrate means miners want extra actions, like Bitcoin DeFi, to stay worthwhile.
“We would need to build good Bitcoin Rollup with security verification capacity, which can contribute fees back to Bitcoin,” Hu famous.
