Bitcoin sidechains will drive BTCfi growth

Opinion by: Brendon Sedo, Core DAO initial contributor

Bitcoin is outgrowing the “digital gold” narrative. The primary driver of this shift is the rise of Bitcoin DeFi (BTCfi), which looks beyond the mere store-of-value use cases. 

In 2024, Bitcoin (BTC) became a natively yield-generating asset and the centerpiece of Ethereum-style decentralized finance ecosystems. 2025 is when that kindling can grow its flame on innovative Bitcoin sidechains. 

Most past attempts to tap Bitcoin’s value as a productive asset required significant changes to its base layer. That’s a big reason they failed. The Bitcoin layer 1 is not designed for much change, leaving most Bitcoiners to merely hodl and not do much else. The result is that Bitcoin remained underutilized as a network and an asset.

Bitcoin sidechains have emerged as the perfect solution to all these problems, scaling Bitcoin’s utility without altering or being limited by the base layer. Naturally, these protocols will be the most potent catalyst for BTCfi’s growth, especially with BTC surpassing $100,000, constituting over 60% of the total crypto market share, and entering a new regulatory landscape with the first “pro-crypto” US government regime.

Scaling Bitcoin, a productive asset

Per Hal Finney, “Bitcoin itself cannot scale to have every single financial transaction […] included in the blockchain.” That’s why there’s a need for a secondary level of payment’ in his view.