Defi on the Bitcoin blockchain has the potential to amass $225 billion

Defi on the Bitcoin blockchain has the potential to amass $225 billion, as projected by analysts at Pantera Capital. This move could position Bitcoin-based decentralized applications (dApps) as prominent assets in the cryptocurrency space, presenting a substantial half-trillion-dollar opportunity.

Pantera Capital’s recent email newsletter emphasized the prospect of Bitcoin accumulating $450 billion in liquidity through defi projects. This estimation assumes similar market shares achieved by Ethereum’s defi projects. Currently, Ethereum dominates the defi landscape, hosting a significant majority of activities.

Historically, decentralized applications on Ethereum have represented varying percentages of Ethereum’s market capitalization, ranging from 8% to 50%, with the current figure at approximately 25%. If these proportions are extrapolated to Bitcoin, it suggests the potential for the network to attract around $225 billion in value.

Furthermore, Pantera Capital anticipates that the leading decentralized application on Bitcoin could achieve a valuation of $20 billion, establishing itself among the most valuable assets in the crypto ecosystem.

Pantera Capital underlined the importance of selecting tokens with robust protocols and proven product-market fit in a mid-January communication. While not specifying particular tokens, the firm emphasized that token selection will be crucial for long-term success, considering performance on a case-by-case basis rather than relying on sector trends or short-lived speculative narratives.

The hedge fund also expressed expectations for the continued growth of defi on the Bitcoin blockchain, projecting that the total value locked on the platform could potentially reach 1-2% of Bitcoin’s market cap in the foreseeable future.