New Bitcoin DeFi opportunities emerged on May 15, 2025, as Bitlayer partnered with Sui to integrate Peg-BTC (YBTC), a Bitcoin-backed token, into Sui’s ecosystem. This collaboration leverages Bitlayer’s BitVM bridge to unlock decentralized finance (DeFi) for Bitcoin holders, enabling yield generation without intermediaries. This article explores the integration, its features, and its impact on the crypto ecosystem.
Unlocking Bitcoin’s DeFi Potential
The New Bitcoin DeFi initiative allows users to transfer Bitcoin (BTC) to Sui via Bitlayer’s trust-minimized BitVM bridge, converting it into YBTC, a 1:1 Bitcoin-backed token. YBTC can be used in Sui’s DeFi protocols for staking, lending, borrowing, or trading on decentralized exchanges. This setup lets users earn yields while retaining exposure to Bitcoin’s price, a significant shift for BTCfi.
Sui, a high-speed Layer 1 blockchain, hosts 49 DeFi projects with over $2 billion in total value locked (TVL), per DeFiLlama. The integration of YBTC expands Sui’s offerings, which already include WBTC and sBTC. Over 587 BTC, comprising 10% of Sui’s TVL, have flowed into its DeFi since February 2025, reflecting growing demand for productive Bitcoin assets.
Bitlayer’s BitVM Bridge: A Game-Changer
The New Bitcoin DeFi landscape benefits from Bitlayer’s BitVM bridge, a decentralized tool ensuring secure BTC transfers to Sui without centralized custodians. Charlie Hu, Bitlayer’s co-founder, called this a “paradigm shift for BTCfi,” enabling Bitcoin’s $1.4 trillion liquidity to fuel DeFi applications. The bridge’s optimistic security model enhances trust, making it a cornerstone of this integration.
Discover: Decentralized Finance (DeFi): How It Works ?
Users can stake YBTC to earn interest. They can also lend it to generate yields. Additionally, they can use it as loan collateral. Moreover, they can provide liquidity on Sui’s exchanges to earn trading fees. These options turn Bitcoin into a dynamic asset. This shift aligns with the crypto ecosystem’s focus on utility.
Strategic Implications
The New Bitcoin DeFi collaboration positions Sui as a hub for BTCfi, competing with platforms like Ethereum and Solana. Abiodun, a Sui representative, noted that Bitcoin’s role is expanding beyond holding, with integrations like YBTC enabling users to “put their assets to work.” This aligns with broader market trends, as altcoins surged 30–100% after U.S. tariff delays and stable Fed rates.
Community sentiment is cautiously optimistic. Online discussions praise the trustless bridge and yield potential but raise concerns about DeFi risks like smart contract vulnerabilities. With Sui’s $2 billion TVL and Bitlayer’s tech, the partnership could drive significant BTCfi adoption.
Conclusion
The New Bitcoin DeFi era begins with Bitlayer and Sui’s YBTC integration, leveraging the BitVM bridge to bring Bitcoin (BTC) into DeFi. Offering staking, lending, and trading, YBTC unlocks yields for holders in Sui’s crypto ecosystem. As BTCfi gains traction, this collaboration could redefine Bitcoin’s role, blending security with productivity in the evolving Bitcoin-backed token market.
