Bitcoin’s DeFi Revolution: How Botanix Is Helping Bitcoin Leverage Ethereum

Bitcoin's dominance in the crypto market has never been in question. But for all its stature, the network has largely remained a passive asset rather than an active foundation for innovation. That is, until now.

"You have the biggest crypto asset, Bitcoin, 60% of the market, and there's almost nothing built on it. If you think about value, right, it's very little," says Willem Schroe, founder of Botanix Labs. "And I think the main reason is because it's really hard to build on Bitcoin."

That reality is now changing, with projects like Botanix bringing Ethereum’s virtual machine (EVM) functionality to Bitcoin. "What Botanix is, is a Layer- [Ethereum Virtual Machine] on Bitcoin. We're only purely connected to Bitcoin. We use Bitcoin as the gas fees," Schroe explains. "So think you're transacting on Ethereum, but then instead of seeing Ethereum, you see Bitcoin."

The idea is simple: Unlock Bitcoin’s security and liquidity for DeFi and other applications that have found their home on Ethereum. Many projects, like Stacks and Babylon and others have attempted to find their footing in a similar space — offering ways to finally leverage Bitcoin beyond just holding 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 says. "I think four years from now you'll see this whole Bitcoin application market absolutely explode."

Ethereum has long been the de-facto home for decentralized finance, with its ecosystem ballooning into a multi-billion-dollar market. However, Bitcoin’s gravitational pull is undeniable. "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."

That opportunity hasn’t gone unnoticed, with an increasing number of projects looking to bring Ethereum’s usability to Bitcoin for exactly the same reason. "We are fully EVM equivalent, meaning you can now copy-paste anything you have on Ethereum and the whole thing works," Schroe notes. "Actually, we take the EVM as a black box and we integrate that in our Layer-2. So there's no technology barrier anymore to suddenly have your application on a Layer-2 on Bitcoin."

While Ethereum has cemented itself as the go-to network for smart contracts, Bitcoin’s newfound programmability could shift the balance.

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