Bitcoin DeFi Struggles to Gain Traction as Botanix Closure Raises Questions

The closure of Bitcoin scaling platform Botanix earlier this month has raised questions about the viability of Bitcoin DeFi. Despite being well-funded and technically ambitious, Botanix failed to attract enough usage to cover its infrastructure costs, blaming demand rather than technical issues or regulatory shocks. This outcome calls into question the broader appeal of Bitcoin DeFi, which remains a niche proposition with total value locked (TVL) of just $4.12 billion across all protocols—a tiny fraction of Bitcoin’s $1.2 trillion market cap.

Andre Dragosch, Head of Research Europe at Bitwise, noted that while Bitcoin excels as a monetary asset and collateral, its use as a standalone DeFi execution layer is structurally weaker than often claimed. Botanix’s experience illustrates this, as despite offering competitive yields and a security model aligned with Bitcoin values, it couldn’t compete with wrapped BTC (wBTC) on Ethereum and other EVM-based chains due to Ethereum’s established infrastructure and deeper liquidity.

Willem Schroé, co-founder of Botanix, attributed the platform’s failure to Ethereum’s large infrastructure network and the preference of users for wBTC on mature ecosystems over bridging to Bitcoin-aligned chains. This preference, despite potential security benefits, highlights the challenge Bitcoin DeFi faces in convincing users to adopt native solutions over more established, albeit less secure, alternatives.

Data from DeFiLlama and surveys like one by GoMining in October 2025 (which found 77% of Bitcoin holders had never used a BTCFi platform) underscore the niche status of Bitcoin DeFi. Most productive Bitcoin in DeFi resides in wrapped form on non-Bitcoin chains, with native Bitcoin DeFi platforms struggling to attract significant volume.

However, not all stakeholders agree that demand for native Bitcoin DeFi is inherently low. Diego Gutierrez Zaldivar, CEO of RootstockLabs, points to growing institutional interest in Bitcoin-secured DeFi products, citing increased flows of hundreds to thousands of BTC into Rootstock-based solutions. Orkun Mahir Kılıç, co-founder of Chainway Labs, argues that the failure of platforms like Botanix reflects a flawed approach to cloning EVM DeFi models onto Bitcoin rather than a lack of demand for secure, native BTCFi solutions tailored to different needs.

The future of Bitcoin DeFi remains uncertain, with some seeing a path forward in secure, institutionally focused products, while others question whether the base layer’s store-of-value narrative and slow, conservative nature are incompatible with the dynamic requirements of DeFi.