Bitcoin’s Trillion-Dollar Liquidity Finds New Purpose with Chainlink BTCFi Integration

• BTCFi projects have been integrating Chainlink for its secure and reliable real-world data through oracles to unlock the trillion-dollar liquidity held up in Bitcoin.
• They include 21.co, whose 21BTC Wrapped Bitcoin uses Chainlink for transparency; B² Network, which uses CCIP for cross-chain functionalities; and liquid restaking protocol Bedrock, which has integrated CCIp and Proof of Reserves.

As the decentralized finance sector has bloomed, more attention has been given to the $1.36 trillion Bitcoin ecosystem and how it can best be leveraged in DeFi. While there are now dozens of solutions targeting this liquidity, they all have one thing in common: they rely on Chainlink’s products for interoperability, real-time data and more.

Chainlink has become the lifeblood of the DeFi world across all chains. As we have reported, it has been integrated into over a hundred networks and applications, the latest being the Ronin Network and Lido DAO. As shown below, most networks recorded a surge in total value locked (TVL) immediately after integrating Chainlink’s solutions.

This integration is heading to Bitcoin. As Chainlink revealed, more projects building Bitcoin-based DeFi applications (BTCFi), are using its products and solutions to better serve their clients.

BTCFi on Chainlink

One of these is 21.co, an asset management company that launched the world’s first crypto ETP back in 2018. The company has been using Chainlink’s Proof of Reserves solution on Solana and Ethereum to provide transparency for 21BTC, its wrapped Bitcoin product. While announcing the integration in September, the Swiss firm singled out programmatic utility, decentralization, and transparency as vital to its decision to turn to the Chainlink PoR solutions.

.@21co__ is using Chainlink PoR on @ethereum and @solana to enhance the transparency of 21BTC, its wrapped Bitcoin product.

Chainlink PoR provides reliable monitoring of reserves and enables a secure minting function for 21BTC.https://t.co/kUqFTlofcJ pic.twitter.com/IkJC886TLr

— Chainlink (@chainlink) November 3, 2024

A few months before 21.co, Babypie announced that it was integrating five solutions from Chainlink. These included price feeds, CCIP, and Proof of Reserves.

As we reported, Babypie is a subDAO of Magpie, a yield platform with nearly $2 billion in TVL. Babypie allows users to stake their BTC through Babylon, the Bitcoin staking protocol.

“Chainlink’s secure and reliable infrastructure is essential for unlocking the full potential of both mBTC and smBTC,” the Babypie team stated.

Still on liquid restaking, Bedrock is also leveraging Chainlink to “enhance the liquidity of restaked assets.” Bedrock noted that Proof of Reserve would offer more assurance to users that their funds were safe, while CCIP would power cross-chain transfers of tokens and messages.

Early last month, yet another BTCFi project — dlcBTC — announced that it would leverage Chainlink CCIP for programmable token transfers of its tokens across Ethereum, Arbitrum, and Base.

Other recent integrators include the Lorenzo Protocol, Lombard Finance, Ignition FBTC, Botanix Labs, and BitLayer Labs.

While Bitcoin DeFi is still in its early stages, the #Chainlink platform is already empowering innovation across the BTCFi space.

Explore the BTCFi opportunity ↓https://t.co/1XsbBhEo3b

— Chainlink (@chainlink) November 3, 2024

BTC trades at $68,800, dipping 3% in the past week after rallying to surpass $73,400 early last week. Meanwhile, LINK trades at $10.60, trading sideways over the past day despite a 7.5% dip in the past week.