Experts claim that Bitcoin DeFi is a difficult environment to navigate because of its fragmented liquidity and lack of base yield.

The 16-year-old blockchain that has the same name has welcomed new features in the last 12 months, including BRC-20 tokens, runes, and ordinals. Developers, however, remain unfazed by the prospect of a market downturn and predict a thriving ecosystem in the future.

Ryan Chow, a co-founder of SolvBTC, told Cointelegraph in an interview that "the fragmentation of liquidity and the lack of base yield are currently the two key factors constraining BTCFi's development." "A large portion of Bitcoin has been left idle as a result of these factors, making it unable to actively participate in the DeFi ecosystem."

In order to function as a Bitcoin yield protocol, SolvBTC is presently creating Liquid Yield Tokens, which would resemble liquid staking tokens on the Ethereum blockchain in that they would enable Bitcoin ticker holders to deposit their assets and get revenue from DeFi. Since its early launch this year, the project has drawn 292,000 members and a total value locked of $1.3 billion.
With the impending Ethereum mainnet launch of SolvBTC, users will have direct access to the Ethereum DeFi ecosystem's yield generators and wrapped Bitcoin (wBTC) liquidity.

Another Bitcoin yield mechanism, Master Yield Market, was just introduced and brings together all of the assets in the Bitcoin ecosystem that are yield-bearing. Using Tether and Ethereum, the protocol enables users to directly purchase Bitcoin yield assets sources from blockchain-native DeFi protocols.

In conclusion, Fung added that despite the fact that Bitcoin was "designed the earliest and lacked smart contracts," its features—such as the highest consensus, decentralization, security, and on-chain data storage via satoshis—make it the "best carrier for Web3 applications."