For over a decade, Bitcoin was primarily viewed as "digital gold", a passive store of value to be held in cold storage. However, the ecosystem has shifted dramatically. Driven by innovations like the Taproot upgrade, BitVM, and Layer 2 solutions such as Rootstock, Midl and Stacks, Bitcoin is transforming into a productive asset class known as BTCFi.
For the intermediate investor, this means Bitcoin can now generate yield, secure other networks, and serve as collateral in decentralized finance (DeFi) without relying on centralized intermediaries. The following five decentralized applications (dApps) represent the cutting edge of this ecosystem, moving beyond simple transfers to complex, yield-generating financial operations.
1. MoneyOnChain
Network: Rootstock (Secured by Bitcoin) Category: Stablecoin & Leveraged Bitcoin
MoneyOnChain is widely regarded as one of the most "Bitcoin-native" DeFi protocols, designed specifically for holders (HODLers) who want to maximize the utility of their stack without introducing fiat or centralized counterparty risks. It uses a unique model where Bitcoin collateral is split into risk-averse and risk-seeking products.
Dollar On Chain (DOC):
A stablecoin 100% collateralized by Bitcoin. Unlike algorithmic stablecoins that can fail, DOC is over-collateralized and uses a derivative mechanism to absorb volatility, making it ideal for users who need stability without exiting the Bitcoin ecosystem.
BPro (BitPro):
A token designed for Bitcoin bulls. It provides holders with a small amount of leverage (approx. 1.04x) and passive income derived from platform fees and interest paid by stablecoin traders. Historically, BPro has outperformed holding raw BTC by over 20% in BTC terms.
Censorship Resistance:
The protocol operates on Rootstock, which is secured by over 80% of Bitcoin’s mining hashrate via merged mining, ensuring a security profile closely aligned with Bitcoin itself.
2. Babylon
Network: Bitcoin Layer 1 (Native) Category: Native Staking
Babylon represents a massive leap in Bitcoin utility by introducing trustless, non-custodial staking directly on the Bitcoin network. Historically, earning yield on Proof-of-Stake (PoS) chains required bridging assets (wrapping them), which introduced significant security risks. Babylon allows Bitcoin holders to stake their BTC to secure external PoS chains and dApps while the assets remain in their own self-custodial wallets.
Trustless Staking:
Uses advanced cryptography (Extractable One-Time Signatures - EOTS) to slash malicious validators without needing a smart contract on the Bitcoin main chain.
No Bridging Required:
Users do not need to send their Bitcoin to a third-party bridge or L2 multisig wallet; the Bitcoin remains locked on the main chain.
Shared Security:
By staking, users contribute to the economic security of interconnected blockchain networks (Cosmos zones, L2s, and data availability layers) and earn native token rewards in return.
3. Solv Protocol
Network: Multi-Chain (Rootstock, Merlin, and others) Category: Yield Aggregation
Solv Protocol addresses the fragmentation of Bitcoin liquidity by creating a unified liquidity layer. Its flagship product, SolvBTC, allows users to deposit Bitcoin into a "Solv Vault" and receive a liquid token that represents their share of the pool. These vaults execute sophisticated yield-generating strategies across the DeFi landscape, effectively turning idle Bitcoin into an interest-bearing asset.
SolvBTC:
A liquid yield token backed 1:1 by Bitcoin. It solves the issue of idle capital by deploying reserves into market-neutral strategies and lending protocols.
Institutional Grade:
The protocol utilizes a Secure Exchange Rate (SER) oracle and proof-of-reserves mechanism to ensure transparency and solvency, catering to both retail and institutional miners.
Yield Vaults:
Offers different risk profiles, including "Conservative Vaults" (lending/basis trading) aiming for 5–7% APY and "Opportunistic Vaults" for higher potential returns.
4. Pell Network
Network: Omnichain (Compatible with various L2s) Category: Bitcoin Restaking
Pell Network brings the "Restaking" narrative - popularized by EigenLayer on Ethereum - to Bitcoin. It allows users to take their Bitcoin (or Liquid Staking Tokens like stBTC and SolvBTC) and "restake" them to provide security for decentralized infrastructure services, known as Decentralized Validated Services (DVS). This includes bridges, oracles, and data availability layers that need strong economic security.
Dual Yield:
Users can stack yields by earning base staking rewards from liquid staking tokens
plus
additional rewards for securing infrastructure via Pell.
Critical Infrastructure Security:
Instead of just earning passive interest, restaked Bitcoin actively secures the bridges and oracles that the BTCFi ecosystem relies upon.
Broad Compatibility:
Pell aggregates various forms of Bitcoin assets (wBTC, LBTC, coreBTC), creating a massive pool of cryptoeconomic security that benefits the entire ecosystem.
5. Sovryn
Network: Rootstock Category: Decentralized Trading & Lending
Sovryn is a comprehensive "financial operating system" for Bitcoin. It is a full-suite DEX that offers spot trading, margin trading, borrowing, and lending. Unlike Ethereum-based DEXs that rely on wrapped assets, Sovryn is built on Rootstock, allowing it to interact with smart contracts while staying tied to the Bitcoin network's security.
Deep DeFi Features:
Supports margin trading with up to 5x leverage and a spot exchange with an automated market maker (AMM).
Lending Pools:
Users can lend their BTC to borrowers (often margin traders) to earn variable APYs, historically ranging between 0.5% and 6.5%.
Zero Protocol:
Allows users to borrow a 0% interest stablecoin (ZUSD) against their Bitcoin collateral, offering a way to access liquidity without selling their stack.
Bonus: Midl
Network: Bitcoin (External VM) Category: Native Execution Environment
Midl represents a distinct approach to Bitcoin programmability, positioning itself not as a Layer 2, but as a "Bitcoin execution environment" with the power of the Ethereum Virtual Machine (EVM). It is designed to allow smart contracts and dApps to function natively on Bitcoin, providing the engine for a token economy that the network has historically lacked.
How it Differs: Midl distinguishes itself from the standard Layer 2 rollups and sidechains listed above through its architecture and user experience:
• Not a Layer 2: Midl explicitly operates as an "External VM" rather than a traditional L2. While Layer 2s typically batch transactions off-chain and require users to bridge assets to a separate network, Midl executes logic internally while ensuring the transaction finalizes directly on Bitcoin.
• No Bridging Required: Users do not need to lock assets or trust a bridge. Instead, they interact with dApps by signing regular Bitcoin transactions using native BTC, ensuring they never have to leave the Bitcoin network or navigate complex wrapping procedures.
• Native Finality: To exist on Midl, a transaction must always exist on Bitcoin. Validators execute the smart contract logic and reflect the outcome, maintaining a "zero friction" experience where the security is tied directly to the main chain rather than a separate consensus layer.
