Bitcoin Scaling Solution Botanix Launches To Solve Bitcoin DeFi

Bitcoin may have risen to new all-time highs by solidifying its place on the world stage as "digital gold," but a new blockchain is now officially launching to unlock new ways for holders to leverage the asset's "digital" store of value.

"Right now, we're in this interesting space where you have Bitcoin [as] a store of value that doesn't do anything," Botanix co-founder Willem Schroe recently told Coinage, pointing out that most of the lending against Bitcoin is still handled by centralized, off-chain lenders. "There's so much more in the world that needs to come onchain."

Botanix is looking to solve that by launching its mainnet to pair Bitcoin with the world of DeFi already built on Ethereum. Up until now, that bridge has mostly been gapped by centralized, offchain lenders or onchain custodians, like BitGo or others, offering wrapped bitcoin assets across different chains.

Historically, centralized lenders and centralized chokepoints for liquidity have run into issues. Centralized bitcoin lenders BlockFi and Celsius both imploded in the 2022 crypto winter that followed in the wake of Terra's $40 billion collapse. Bitcoin lending has slowly returned, but options usually carry higher interest rates than what's available in DeFi. Botanix is looking to make it easier for users to close that gap by pairing Bitcoin's value as digital gold with their Ethereum compatible chain to let users tap DeFi on Ethereum.

"You've got these two worlds, and I absolutely believe they are converging. That's what we're building," he said. "The reason is, it's going to be more permissionless, more transparent, it's going to be global, it's going to be onchain. That's what we're building for."

Other projects, like Stacks and Babylon have similarly attempted to find their footing in a similar space — offering ways for holders to finally leverage Bitcoin beyond just sitting on it. According to Schroe, the lack of programmability on Bitcoin has kept builders away, but that's quickly shifting.

"There's a lot of people building a lot of infrastructure. Now, we still have to see it actually play out, but I think over the next four years, this Bitcoin Layer-2 market, just because there is so much liquidity ... can go really, really fast," he said. "I think four years from now you'll see this whole Bitcoin application market absolutely explode."

So far, it's been a tough battle for Bitcoin scaling projects to convince holders in the Bitcoin world to unlock Bitcoin's store of value onchain. It may continue to take time, but Schroe remains set on chipping away at what continues to be an ever-growing market opportunity.

"Take the TVL of Ethereum DeFi ... it's going to be somewhere around $50 billion," Schroe says. "Ethereum is one fifth or one fourth [the market cap] of Bitcoin ... so that means the potential DeFi market on Bitcoin Layer-2s should be $250 billion."

As a novel part of the mainnet launch, Botanix is also jointly launching “Bitcoin 2100”, a retro-futuristic video game to get users comfortable with what's left to explore using Bitcoin onchain.

Users can collect fractionalized pieces of Bitcoin (sats) by playing in a stylized world set in the year 2100, where Bitcoin has become the rails of a new financial system. Each house within the game represents a different live application on the Botanix network, such as Arch, Rover, and others, giving users new ways to discover what’s possible when Bitcoin becomes programmable.