BTCfi, short for Bitcoin finance, is the effort to let people earn, borrow and lend with bitcoin instead of only holding it. It covers three routes: wrapping BTC into tokens that work on other chains, staking BTC to help secure other networks, and moving BTC onto Bitcoin layer 2s, separate networks that add smart contracts on top of Bitcoin. The pitch has always been simple. Bitcoin is the largest crypto asset, worth about $1.5 trillion at about $75,800 per coin on 6 November 2026, and very little of it does anything.

The hard part is the audience. Bitcoin holders are among the most sceptical buyers in crypto, and many of them hold BTC precisely because they do not trust the rest of it. At AnkhLabs we think that is the right starting point for any BTCfi marketing plan, because the projects that ignored it spent 2024 and 2025 buying deposits that left as soon as the rewards did.

What is BTCfi, and how big is it in 2026?

The numbers are smaller than the narrative. DeFi value on the Bitcoin network was about $4.03 billion on 6 November 2026, according to DefiLlama, down from a peak of about $9.13 billion on 7 October 2025. Most of that is one protocol. Babylon, which lets holders stake BTC to help secure other networks without moving it off Bitcoin, held about $3.11 billion, or roughly 40,800 BTC, against a peak of about $7.14 billion on the same October 2025 day. The liquid staking token Lombard LBTC, a tradable receipt for staked BTC, held about $523 million.

Measured in coins rather than dollars, the share of bitcoin in DeFi is tiny. The Block's 2026 Layer 2 Outlook found that BTCfi value fell 10% during 2025, from 101,721 BTC to 91,332 BTC, about 0.46% of all bitcoin in circulation, and that the value on Bitcoin layer 2s shrank by more than 74% over the year.

A larger pool of bitcoin is used in DeFi away from Bitcoin altogether, as wrapped tokens on Ethereum and other chains. A wrapped token is a stand-in for BTC that a custodian or bridge issues after locking the real coins. The oldest wrapped token is WBTC, which was backed by about $8.9 billion of bitcoin on DefiLlama as of 6 November 2026. Wrapped tokens are the most useful form of BTC in DeFi because every lending app accepts them, and they are also what sceptical holders object to most. Each one replaces the promise of the Bitcoin network with the promise of whoever holds the keys. Much of the BTCfi story since 2024 has been an attempt to remove that middleman, first through staking on Babylon, then through Bitcoin layer 2s and now through native collateral that never leaves the Bitcoin chain.

What happened to Bitcoin layer 2s?

In 2024 and 2025 a wave of teams launched networks that copied Ethereum's tools onto Bitcoin and paid users in points for depositing BTC. Deposits arrived quickly and left almost as quickly. These are DefiLlama's figures for some of the best-known names.

Source: DefiLlama. Figures count DeFi deposits on each network and move with the price of bitcoin.

Stacks is the oldest of the group and has kept a working ecosystem. Its bridged bitcoin token sBTC held about $189 million on DefiLlama. Even so, the network's own token STX traded about 91% below its April 2024 high on CoinGecko, and Babylon's token BABY was about 93% below its April 2025 high on CoinGecko.

The Block's outlook put the cause plainly: "Launching the same existing primitives seen on EVM-based L2s on a BTC chain is not enough to attract liquidity or developers." Holders were asked to bridge their coins to a new network, trust a new team and accept a new token, all for rewards that ended. We described the same pattern in our article on crypto points programs.

What is working in BTCfi?

The clearest success is the least exotic product. Coinbase launched bitcoin-backed loans for its customers in January 2025, using the lending protocol Morpho on its own Base network, and by September 2026 those variable-rate loans had passed $1.4 billion in active borrowing, backed by nearly $3 billion of collateral, Crypto Briefing reported. Coinbase added fixed-rate loans on 22 September 2026, and borrowing against bitcoin on Morpho's Base markets was up 55% for the year.

Look at what a customer actually experiences. They open an app they already use, see their bitcoin, and borrow dollars against it without selling. The loans are backed by cbBTC, Coinbase's own wrapped bitcoin token, and run on a public lending protocol, but the holder is mainly trusting Coinbase. The onchain part is plumbing.

The second thing to watch is native collateral, which keeps BTC on the Bitcoin chain itself. Babylon and Aave announced in December 2025 that they would let holders borrow against native BTC on Aave V4 through Babylon's Trustless Bitcoin Vaults, with a target of April 2026. That date slipped. On 14 October 2026 Babylon submitted a formal request for comment to Aave's governance, which does not yet authorise a launch, crypto.news reported. The design locks coins on Bitcoin in Taproot vaults and says it works "without transferring custody to any trusted third party". Babylon reported reviews from six security firms. It also said more than 100,000 BTC had been staked through its protocol at some point since August 2024, with about 40,772 BTC staked when the proposal was written.

How do you market BTCfi to Bitcoin holders who distrust DeFi?

A Bitcoin holder reads a yield offer and asks one question first: what could make me lose my coins? Marketing that answers that question before it talks about returns has a chance. Marketing that leads with an annual percentage yield confirms every suspicion.

• Lead with custody, not yield. Say exactly where the BTC sits, who holds the keys, and what has to go wrong for a user to lose it. If the honest answer involves a bridge or a custodian, name them.

• Sell the use, not the protocol. Borrowing without selling is a need most holders already understand. "Earn on your BTC" sounds like every scheme that failed in 2022. Show the loan, the rate and the liquidation price in plain numbers.

• Borrow trust from people holders already trust. Coinbase's loans work partly because Coinbase is the brand. Integrations with known wallets, custodians and exchanges are worth more than a launch campaign. Our article on institutional crypto adoption covers how those partnerships are won.

• Publish the security record. List the auditors, link the reports and explain what each one checked. Babylon's six reviewers are a marketing asset as well as an engineering one.

• Skip the points. Holders who are only there for points are the first to leave, and the long-term holders you want read a points banner as a warning sign. If you need incentives, pay them for staying, not for arriving.

• Speak to treasuries separately. Companies that hold bitcoin on their balance sheet want the same product with different paperwork. Our guide to bitcoin treasury companies explains what they look for.

The tone matters as much as the content. Bitcoin culture rewards understatement and punishes hype. A calm, specific explainer from an engineer will do more than a thread full of rocket emoji and multiplier badges.

What we'd tell a founder building in BTCfi

First, choose your voices for credibility, not reach. For OKX Alpha our KOL distribution supported a $500K public sale close, with creators selected on trading credibility and audience quality rather than follower count. Bitcoin audiences are even less forgiving of paid noise, so the same rule applies with more force. Our guide to crypto KOL marketing explains how to vet them, and more examples are in our case studies.

Second, make the risk page the best page on your site. Before a holder deposits, they will read it, and so will every journalist who covers you after an incident. Our product marketing work often starts there, because a clear explanation of how the product fails is what persuades a careful buyer that you understand it.

Third, measure deposits that stay. A spike of BTC during a campaign tells you about the campaign. The number that matters is how much is still there 90 days after rewards end.

If you are building a BTCfi product and want a second opinion on how to explain it to Bitcoin holders, talk to AnkhLabs.

The bottom line

BTCfi in 2026 is smaller and more honest than the version sold in 2024. Points-driven Bitcoin layer 2s mostly emptied out, Babylon remains the largest staking venue at about half its peak, and the fastest-growing use is borrowing dollars against BTC inside a trusted app. Native BTC collateral on Aave could be the next step if governance approves it. Either way, the projects that win Bitcoin holders will be the ones that explain risk first and let the product carry the rest.

This article is for information only and is not investment advice. Figures are as of 6 November 2026 unless stated.