We will examine developments from leading Bitcoin DeFi projects including Leather, Zest Protocol, Badger DAO, ZenGo, and Stacks as they demonstrate their long-term value. These projects were selected based on their uniqueness, collaborations, growth, and ongoing improvement of the Bitcoin DeFi ecosystem, potentially setting the stage for the competitiveness of Bitcoin in DeFi.

Zest Protocol

Source: Zest Protocol

Zest Protocol is the first Bitcoin native lending protocol enabling users to harness the power of their bitcoin through straightforward transactions. Smart contracts are at the core of Zest Protocol, facilitating on-chain bitcoin loans and bitcoin collateralized loans, providing a seamless and efficient way for lenders and borrowers to engage in the Bitcoin capital market.

The striking advantage of this platform is its ability to enable users to put their bitcoin to work through a simple Bitcoin transaction, allowing them to facilitate their credit requirement without borrowing against assets. Being the pioneering on-chain lending protocol in the Bitcoin ecosystem, Zest Protocol is paving the gateway to a new era of financial opportunities for Bitcoin holders. By leveraging the security and liquidity of Bitcoin in a decentralized lending environment, Zest Protocol is creating a more inclusive and efficient Bitcoin DeFi ecosystem.

Leather (Hiro)

Source: Leather

Leather (Hiro) is a non-custodial software wallet for BTC and alternative Bitcoin assets. Today, it’s probably the most popular wallet for managing alternative Bitcoin assets such as Ordinals, BRC-20 tokens, Stamps, and Runes. But you can also use Leather to deposit, view, create, trade, and transfer assets on the Bitcoin mainnet. It also supports the Bitcoin Layer 2 chain (Stacks), with support for the Lightning network coming soon.

In addition to these main uses, Leather aims to give users access to hundreds of dApps like Gamma, Magic Eden, ALEX, and Velar. Leather is a highly versatile wallet that offers ways to get involved with the ever-growing DeFi ecosystem. With a focus on transparency, reliability, and security, Leather positions itself as a non-custodial and open-source solution that facilitates the secure management of Bitcoin and related assets.

Badger DAO

Source: Badger

Badger is a platform that facilitates decentralized solutions, focusing on connecting Bitcoin to other blockchains, particularly Ethereum. Badger’s community-driven platform—Badger Builders—aims for the collaborative development of Bitcoin across DeFi. The project also includes a BADGER governance token for decentralized decision-making, SETT vaults for Bitcoin asset optimization, and DIGG, an innovative Bitcoin-pegged elastic supply cryptocurrency. These features highlight Badger DAO's focus on integrating Bitcoin with DeFi.

Stacks

Source: Stacks

Founded in 2019, Stacks aims to enable smart contracts and dApp creation using Bitcoin. Stacks is a layer 2 blockchain network that relies on a unique consensus mechanism called proof of transfer (PoX). Under PoX, miners spend Bitcoin to receive newly minted STX tokens. STX holders can also “stack” their tokens, locking up tokens to support the network and then earn Bitcoin.

STX is used to pay for transactions on the Stacks blockchain, just like ETH or SOL are used to pay for transactions on Ethereum or Solana. However, unlike those other blockchains, Stacks uses STX tokens to settle transactions in another currency, BTC. To power its smart contract functionality, Stacks Blockchain uses Clarity, a smart contract programming language that optimizes for security and predictability.

ZenGo

Source: ZenGo

ZenGo is a Bitcoin and cryptocurrency self-custodial wallet with native UI integrations, DeFi lending protocols, and staking providers. It is a mobile app that stores users' crypto funds, allowing them to trade cryptocurrencies from the wallet.

A remarkable feature of ZenGo is its approach to self-custody. The idea of self-custody is to allow users to have full control of their private keys, shifting all the wallet responsibilities to the users. ZenGo takes a different approach by implementing Multi-Party Computation (MPC) cryptography which replaces private keys with two unique signatures—one belongs to the user and the other is stored on ZenGo’s servers. This feature adds an extra layer of security to the wallets, increasing reliability.

In addition to being a secure crypto wallet, ZenGo also allows users to earn annual percentage yield (APY) or annual percentage rate (APR) on the assets stored in their wallets such as Bitcoin, Ethereum, and Tezos. This increases the use cases of these assets, incentivizes holders, and increases their passive income earnings.