The world of decentralized finance (DeFi) is on the cusp of a major explosion, with Bitcoin-native DeFi emerging as one of the hottest themes in 2025. As institutional adoption accelerates and the DeFi ecosystem matures, several industry executives have predicted that Bitcoin staking will be a significant market.
Growth Potential for BTC Staking
The growth potential for BTC staking is especially strong, with a total addressable market in the hundreds of billions of dollars. As of December 30, 2024, Bitcoin staking commands roughly $5.5 billion in Total Value Locked (TVL), according to Staking Rewards.
"It all aligns for Bitcoin staking being a significant market," Matt Hougan, Bitwise’s head of research, told Cointelegraph. "There’s a lot of demand for Bitcoin yield. Even if you’re getting a 3% yield, it’s attractive compared to other options."
Hougan estimates that Bitcoin staking represents a $200 billion market opportunity.
Bitcoin DeFi’s Total Value Locked (TVL) Could Increase by Approximately 300x
Alexei Zamyatin, co-founder and CEO of Build on Bitcoin, told Cointelegraph that "We have spoken with dozens and dozens of large Bitcoin DeFi users and funds keen to put their Bitcoin holdings to work earning yield."
Bitcoin’s total value locked (TVL) could increase by approximately 300x, according to Zamyatin.
Institutional Adoption
In 2024, Bitcoin surpassed $100,000 per coin for the first time as investors poured more than $100 billion into spot BTC exchange-traded funds (ETFs).
"Bitcoin’s all-time high will spark renewed interest in crypto from institutions and regulators alike and should reinvigorate the entire crypto sector in 2025," Dean Tribble, CEO of layer-1 network Agoric, told Cointelegraph.
Protocols Well-Positioned to Benefit
Some protocols are particularly well-positioned to benefit. Babylon, a Bitcoin layer-2 (L2) scaling network, and EigenLayer, a restaking protocol on Ethereum taking Wrapped Bitcoin (WBTC) as collateral, are seen as legitimate by institutions, Hougan said.
"The tech seems reasonable, even from a high-level perspective," Hougan noted.
As of December 30, Babylon’s and Eigenlayer’s TVLs exceed $5 billion and $15 billion, respectively, according to data from DefiLlama.
Staking Bitcoin Involves Locking BTC as Collateral
Staking Bitcoin involves locking BTC as collateral to secure Bitcoin L2s in exchange for rewards. Restaking involves taking a token that has already been staked and using it to secure other protocols simultaneously.
Additionally, staked BTC ETFs could catalyze institutional interest in 2025, Hougan said.
Liquid Staking Tokens (LSTs) Representing Claims on Staked BTC
Liquid staking tokens (LSTs) representing claims on staked BTC are proliferating, enabling more complex DeFi use cases. As of December 30, Bitcoin LSTs command upward of $2.5 billion in total TVL, according to Staking Rewards.
Novel DeFi Strategies Will Emerge Across the Risk Curve
Jacob Phillips, Bitcoin staking protocol Lombard’s co-founder and head of strategy, told Cointelegraph that "Soon, novel DeFi strategies will emerge across the risk curve with Bitcoin as a collateral asset, from simple buy-and-hold strategies with yield-bearing Bitcoin assets to basis trades and options strategies."
Bitcoin’s Maturing DeFi Ecosystem Will Help Cement Its Status as the World’s Reserve Currency
Phillips foresees Bitcoin’s maturing DeFi ecosystem eventually helping cement its status as the world’s reserve currency.
"The Bitcoin staking rate will become the ‘risk-free rate,’ flipping the US Treasury bill rate and becoming a benchmark for DeFi lending and borrowing," Phillips said.