BTCFi explained: How Elastos uses Bitcoin’s security to power DeFi
18 Março 2025 - 12:11PM
Cointelegraph



The decentralized finance (DeFi) landscape continues to evolve,
and Bitcoin-centric solutions are gaining momentum. BTCFi is an
emerging sector that transforms Bitcoin (BTC) from a passive
store of value into an actively utilized asset in DeFi.
A new report by Cointelegraph Research and
Elastos delves into how Bitcoin’s security helps to create
trustless, scalable financial ecosystems.
Bitcoin’s expanding role in DeFi
DeFi has traditionally been dominated by Ethereum, which
accounts for
over 50% of the sector’s total $175 billion total value locked
(TVL). However, Bitcoin’s strong security and liquidity make it an
attractive foundation for DeFi innovation.

Despite its strengths, Bitcoin’s lack of native smart contract
functionality has historically limited its role in decentralized
finance. The emergence of Bitcoin-centric
DeFi solutions aims to bridge this gap and enable Bitcoin
holders to participate in lending, stablecoin issuance and
crosschain interoperability without custodial risks.
Elastos: Leveraging Bitcoin’s security for decentralized
applications
Elastos stands out as one of the leading players in this
evolution by incorporating merged mining, a method that allows
secondary blockchains to inherit Bitcoin’s security.
Because approximately 50% of Bitcoin’s total 800 EH/s hashrate secures
Elastos, the platform is positioned as one of the most
computationally robust Bitcoin-linked networks. This ensures that
financial applications built on Elastos maintain a level of
security akin to that of Bitcoin itself.
At the core of Elastos’ infrastructure is its Elastic
Consensus model, a hybrid mechanism that integrates auxiliary
proof-of-work, bonded proof-of-stake, and
proof-of-integrity.
This multi-layered approach enables Elastos to provide secure,
scalable financial services and enhances its appeal for DeFi
applications. The Elastos Smart
Chain, an Ethereum Virtual Machine-compatible sidechain,
facilitates the development of decentralized applications (DApps)
to ensure seamless integration with the broader DeFi ecosystem.
BeL2: A breakthrough for BTCFi
A major highlight of the report is the BeL2 Arbiter Network,
designed to bring trustless Bitcoin transactions into DeFi. BeL2
leverages zero-knowledge proofs (ZKPs) to verify Bitcoin
transactions on the Elastos and Ethereum networks without relying
on centralized custodians.
This mechanism allows Bitcoin to be used in DeFi protocols
without
synthetic assets or intermediaries and addresses a
long-standing challenge in BTCFi.
This model has already attracted institutional interest. An
initiative
led by students and alumni of Harvard University is developing a
BTC-backed stablecoin using BeL2. The platform also supports
decentralized lending that allows Bitcoin holders to collateralize
loans in stablecoins while retaining exposure to BTC’s price
appreciation.
Elastos’ market position and future potential
Elastos’ BTCFi approach competes with established Bitcoin DeFi
solutions such as Stacks and Rootstock. Stacks primarily benefits
from Bitcoin finality, and Rootstock focuses on EVM compatibility,
while Elastos distinguishes itself by combining high security (via
merged mining) and crosschain interoperability. This positions
Elastos as a formidable player in the BTCFi landscape.

However, the report also identifies some challenges, such as
regulatory uncertainties, ecosystem awareness and some technical
complexities. Despite these hurdles, Elastos’ combination of
Bitcoin security, trustless smart contract execution and
institutional backing positions it for potential growth in the
evolving BTCFi sector.
Challenges and opportunities in Bitcoin DeFi adoption
As the blockchain industry shifts toward crosschain
interoperability and decentralized governance, Bitcoin-secured
assets are expected to play an important role in reshaping both
traditional and decentralized finance.
Elastos’ innovations, particularly through BeL2 and its
decentralized identity (DID) framework, aim to enhance the
security, scalability and institutional adoption of Bitcoin in
DeFi.
With Bitcoin-secured finance projected to
expand significantly, Elastos’ infrastructure provides a robust
foundation for the next wave of decentralized financial
applications.
This article does not contain investment advice or recommendations.
Every investment and trading move involves risk, and readers should
conduct their own research when making a decision.
This article is for general information purposes and is not
intended to be and should not be taken as legal or investment
advice. The views, thoughts, and opinions expressed here are the
author’s alone and do not necessarily reflect or represent the
views and opinions of Cointelegraph.
Cointelegraph does not endorse the content of this article nor any
product mentioned herein. Readers should do their own research
before taking any action related to any product or company
mentioned and carry full responsibility for their decisions.
...
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