Botanix Labs is winding down its Bitcoin Layer 2 project, Botanix, citing insufficient demand for Bitcoin-native DeFi. Despite a year of 100% uptime and millions of transactions, the project failed to attract enough users, highlighting a distribution challenge for native Bitcoin rails.
Botanix, a Bitcoin Layer 2 project backed by Polychain Capital, is shutting down due to lack of users and revenue. The platform, launched in July 2025, struggled to attract users, with network fees failing to cover infrastructure costs. This mirrors challenges faced by other Bitcoin Layer 2 solutions like Stacks and Ordi, as users opt for Ethereum's DeFi ecosystem, often via wrapped Bitcoin (wBTC).
The Shariah-compliant stablecoin backed by Gulf currencies expands to a new Layer 2 network aimed at institutional settlement in the Middle East.
Aave's risk management provider LlamaRisk outlined two scenarios for how the $293M Kelp DAO exploit could impact the DeFi ecosystem. Scenario one spreads losses across all rsETH holders resulting in $123.7M bad debt with 15% depeg risk. Scenario two shifts losses to L2 networks creating $230.1M bad debt. Nearly $10B has exited Aave since the Saturday exploit, while Aave's $181M treasury could help cover losses.
