Bitcoin DeFi Is Waking Up: Stacks, Runes & On-Chain Liquidity

The DeFi ecosystem has experienced remarkable growth over the past few years, yet one area that had largely been underexplored was Bitcoin's integration with decentralized finance (DeFi). 

Stacks, Runes, and on-chain liquidity protocols are helping to change that by creating opportunities for Bitcoin to be utilized in DeFi applications. 

In this article, we will take a deep dive into Bitcoin DeFi's resurgence in 2025, focusing on key developments like Stacks' Total Value Locked (TVL), the Runes Protocol, and the expanding liquidity options available for Bitcoin.

The Rise of Bitcoin DeFi in 2025

Bitcoin's dominance as the first cryptocurrency and a store of value has never been in question. However, its programmability and use in DeFi applications have been limited due to its script-based architecture. 

Enter Stacks, a Bitcoin Layer-2 (L2) solution that enables smart contracts and DeFi functionalities using Bitcoin’s robust security. 

This integration allows developers to tap into Bitcoin's liquidity and base layer security while offering the flexibility of Ethereum-like programmability.

Stacks' TVL (Total Value Locked) has seen substantial growth in 2025, marking a significant shift in the way Bitcoin is utilized in DeFi. By Q2 2025, Stacks saw a 9.2% increase in its TVL, bringing it to a total of $164.2 million. 

This growth has been driven by the rising demand for Bitcoin-native DeFi protocols and the introduction of features like sBTC, a decentralized Bitcoin token that facilitates seamless interaction with DeFi applications.

Read Also: What is the SBTC? Understanding Stakestone's Version of Bitcoin

Stacks: A Bitcoin DeFi Leader

Stacks has established itself as a leader in the Bitcoin-DeFi ecosystem, with its Proof-of-Transfer (PoX) consensus mechanism and Clarity smart contract language. 

PoX allows Stacks to securely interact with the Bitcoin network, enabling users to lock Bitcoin as part of the DeFi ecosystem and earn rewards through a decentralized staking model.

As of 2025, Stacks has seen an uptick in institutional support, with major players like BitGo, Hex Trust, and Copper integrating support for sBTC (Stacks' decentralized BTC token). 

This institutional confidence is a strong signal that Bitcoin DeFi is entering a new era. 

Additionally, the Stacks network's TVL surged by 97.6% in Q1 2025, and new developments outlined in the 2025+ roadmap promise to further enhance scalability and user experience.

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Runes Protocol: Decentralizing AMM/Agents for Bitcoin DeFi

The Runes Protocol is another key player in the Bitcoin DeFi ecosystem. As a decentralized automated market maker (AMM), Runes allows users to create liquidity pools for Bitcoin-native assets. 

This liquidity facilitates decentralized trading, allowing Bitcoin holders to interact with DeFi protocols in a trustless and permissionless environment.

Runes' innovative approach to liquidity provision and market-making offers an exciting alternative to traditional centralized exchanges. 

The protocol also includes "agents," a novel feature that acts as intelligent bots facilitating trade and liquidity management on-chain. 

By combining these elements, Runes is creating a robust ecosystem for Bitcoin DeFi, offering users enhanced trading flexibility and opportunities for yield generation.

Read Also: Stacks (STX): The Future of Bitcoin Layered Innovation and Trading Insights

On-Chain Liquidity: A Game-Changer for Bitcoin Users

One of the most significant advancements in Bitcoin DeFi is the creation of on-chain liquidity for Bitcoin. 

Traditionally, Bitcoin was seen as a “non-programmable” asset, with limited use cases beyond being a store of value. 

However, through Stacks and Runes, Bitcoin users now have access to a wide range of DeFi protocols, enabling them to participate in yield farming, liquidity provision, and decentralized trading—all while maintaining Bitcoin’s security and value.

This development marks a turning point for the Bitcoin network, as it now has a fully integrated decentralized finance system that doesn’t require users to trust third-party custodians or intermediaries. 

The combination of on-chain liquidity and decentralized protocols like Stacks and Runes opens up vast possibilities for Bitcoin holders, including access to higher yield opportunities, decentralized lending, and borrowing platforms.

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The Future of Bitcoin DeFi: What's Next?

As we move further into 2025, the growth of Bitcoin in DeFi applications is expected to accelerate. 

With Stacks’ upcoming developments—such as self-minting sBTC, dual staking with BTC and STX, and enhanced liquidity solutions—Bitcoin DeFi is poised for mainstream adoption.

Additionally, the increasing interest from institutional players, as evidenced by the support from BitGo and Hex Trust, signals that Bitcoin’s role in the decentralized economy is becoming more prominent. 

As the ecosystem matures, we can expect more projects to launch on Stacks and other Bitcoin Layer-2 solutions, further contributing to the overall growth of Bitcoin DeFi.

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FAQ

What is Bitcoin DeFi?

Bitcoin DeFi refers to the integration of Bitcoin with decentralized finance (DeFi) applications, enabling Bitcoin to be used in smart contracts, yield farming, liquidity pools, and other decentralized financial activities, typically through Layer-2 solutions like Stacks.

What is Stacks TVL in 2025?

Stacks' Total Value Locked (TVL) in 2025 has seen significant growth. By Q2 2025, the TVL reached $164.2 million, marking a 9.2% increase compared to the previous quarter.

What are Runes Protocol AMM/agents?

Runes Protocol offers a decentralized automated market maker (AMM) and intelligent agents that manage liquidity pools and trading on-chain. It allows Bitcoin holders to provide liquidity and trade Bitcoin-native assets in a trustless manner.

How is Bitcoin being used in DeFi now?

With solutions like Stacks and Runes, Bitcoin can now be used in decentralized finance (DeFi) protocols. Through platforms like Stacks, Bitcoin can be used in smart contracts, staking, liquidity pools, and decentralized exchanges (DEXs).

What’s the future of Bitcoin in DeFi?

The future of Bitcoin in DeFi looks bright, with ongoing developments in Stacks and other Layer-2 solutions to make Bitcoin more accessible to DeFi applications. Institutional adoption and enhanced liquidity options will likely drive significant growth.