Introduction
Bitcoin is the most secure, decentralized, and liquid asset in the world. For more than a decade, it has served as the bedrock of crypto – a store of value, a hedge against inflation, and the ultimate settlement asset. But for BTC holders, one question has remained unresolved: how can Bitcoin generate sustainable yield?
Historically, BTC yield opportunities have been fleeting. They’ve relied on token subsidies, liquidity mining campaigns, or seasonal incentive programs that vanish (along with the users) once budgets run out. For serious Bitcoin holders, this creates a frustrating cycle of chasing temporary rewards from one chain to the next.
Starknet is breaking this cycle. By becoming the first dual-staked rollup and the hub of BTCFi, Starknet is positioning itself as Bitcoin’s sustainable DeFi layer-a place where BTC can be put to work in genuine economic activity rather than fleeting incentives.
Background: The State of Bitcoin DeFi
Since the rise of Bitcoin L2s in 2023, most of BTCFi’s earning capacity came from token-incentivized liquidity programs. These programs offered parking liquidity in underutilized pools, which resulted in short shelf lives.
This model is unsustainable for two reasons. First, incentives are finite. Second, users are left constantly searching for the next opportunity, with no reliable place to deploy their BTC long-term.
Each time incentives dry up, users must:
- Research a new network
- Bridge their BTC through unfamiliar channels
- Learn a fresh set of DeFi protocols
- Trust new smart contracts
This process introduces friction, complexity, risk, and ultimately undermines confidence in Bitcoin yield as a concept. BTC deserves a home where earning capacity is not seasonal, but evergreen.
The Problem with Past Incentives-Based Bitcoin DeFi Programs
On the surface, incentives can appear attractive: >50% APY lures users in. But beneath the surface, the reality includes select issues:
- They are temporary. Incentives are funded by treasuries and budgets that always run out.
- They create mercenary capital. Liquidity flows in for the rewards, and leaves the moment those rewards taper.
- They fragment ecosystems. Instead of building depth and resilience in one place, capital scatters across dozens of chains, none of which achieve sustainable network effects.
- They force perpetual migration. Users chase the next reward, onboarding and offboarding from chain after chain, never settling.
This is not sustainable. It’s a game of musical chairs with BTC assets being passed around.
Starknet’s BTCFi-Centric Shift
Starknet is rewriting this story by re-centering its ecosystem around BTC and specifically – Bitcoin DeFi and earn-based products and offerings. This is not a marketing narrative, but a deliberate shift grounded in two major initiatives:
- BTC Staking: BTC holders can stake their BTC to secure a Layer 2 and earn rewards, all without losing custody. Bitcoin will be embedded into Starknet’s core security and consensus. BTC stakers will help secure the network and attest transactions in exchange for rewards. Read more about Starknet’s recent post on BTC staking.
- BTCFi Season: BTCFi Season is a structured incentive program supporting eligible ecosystem protocols that enable highly liquid BTC pools on DEXs and lending markets and borrowing of stablecoins against BTC collateral. BTCFi Season is aimed at fostering active economic activity by incentivizing specific DeFi user behaviors. Learn more about the BTCFi Season incentive program here.
Together, these steps make Starknet the DeFi domain for Bitcoin. It transforms Bitcoin from a passive store of value into an active participant in network security and DeFi yield generation.
This is more than a technical upgrade. It’s a philosophical commitment to Bitcoin as the foundation of Starknet’s future.
Starknet’s Long-Term Synergy with Bitcoin
Starknet is poised to become the premier DeFi domain for Bitcoin. Deep liquidity, cohesive applications, and fine-tuned automated trading strategies will be the fundamental components of BTCFi on Starknet. This vision unfolds across three phases:
- Near-term: Launch a series of cross-chain integrations, BTC asset deployments, apps, bridges, and stablecoin integrations to enable seamless inflow of new traders (e.g. Spline, Extended, Uncap, Hyperlane, LayerZero, etc.)
- Mid-term: Build a full-stack, composable BTCFi ecosystem that incorporates liquid staking, efficient high-volume trading, new DeFi primitives, and advanced structured products
- Long-term: Advancing Bitcoin scalability research (for example by collaborating with Alpen labs in building the Glock trust-minimized Bitcoin bridge), while ushering in a new wave of institutional-grade BTC products on Starknet with industry-leading asset managers.
This trajectory defines Starknet’s role in Bitcoin’s future as Bitcoin’s dedicated DeFi layer.
What is Sustainable Bitcoin DeFi?
Sustainable Bitcoin DeFi comes from genuine economic activity from apps in the Starknet ecosystem that adds value to both sides of a market. Examples of this activity include apps that play a part in the following:
- Trading: Market-making and liquidity provision generate fees
- Lending and Borrowing: Payments accrue to lenders
- Derivatives: Long and short positions create funding flows
The key distinction is this: sustainable yield emerges from real demand. When traders pay fees, when borrowers pay interest, when markets fund longs or shorts- those flows are organic. They don’t vanish when an incentive program ends.
This model produces earning capacity that is:
- Year-round, not seasonal
- Consistent, not volatile
- Predictable, not arbitrary
- Scalable, not budget-capped
This is the type of sustainability Bitcoin deserves – and Starknet is building it. Participants:
Enter Re7 Capital
Re7 Capital, an asset management firm with over $1B AUM and operating with investment managers that are regulated by both the FCA and CIMA, has been pioneering tokenized yield products that bring institutional-grade strategies on-chain. Its flagship tokenized stablecoin yield fund (mRe7yield), can generate up to 10%* APY by allocating stablecoin deposits across a number of multichain strategies and DeFi protocols, and will be deployed natively on Starknet to provide composable, sustainable returns.
Big Reveal: Re7 Tokenized BTC Yield Certificate
The major reveal is Re7’s upcoming Bitcoin Yield Fund, a tokenized BTC Yield Certificate (mRe7BTC) that applies its proven BTC options and DeFi strategies to deliver consistent BTC-denominated yield. With an impressive track record, the fund captures volatility premia through options trading, hedges exposures with defined-risk positions, and supplements returns via BTC staking and DeFi liquidity. Tokenized through Midas and launching first on Starknet, it marks a breakthrough moment: giving BTC holders direct access to hedge-fund grade yield without leaving the network.
The industry is shifting the focus from incentives to automated trading strategies for BTC yield. Re7 is creating organic and sustainable BTC yield.
*This APY is past performance, which is not necessarily indicative of future performance.
The BTCFi Flywheel
This can be conceptualized in three main streams – upstream, midstream, and downstream.
- Upstream: Capital Onboarding
- Bridges like StarkGate & LayerZero bring BTC assets into Starknet
- AMMs like Ekubo and Spline, with AVNU’s smart routing, provide capital efficiency & deep liquidity for BTC pairs
- Routing tools like RhinoFi, Layerswap & Atomiq smooth cross-chain flows for BTC assets
- Goal: frictionless onboarding- BTC should move easily into Starknet and convert into usable collateral without slippage or complexity
- Midstream: Collateralization & Borrowing
- Lending markets like Vesu
- CDPs like Uncap, Opus & Avalon, which mint BTC-backed stables (e.g., USDU, USDA)
- Stablecoin liquidity pools that support healthy borrowing dynamics
- Downstream: Yield Strategies
- Liquidity provision on AMMs
- Basis trading and perp strategies on DEXs like Extended
- Tokenized yield certificates like Re7, which bundle strategies into accessible products that undergo institutional-grade trading strategies that are tried and tested, with industry-leading performance
- This is where sustainable yield crystallizes into real returns, creating a self-reinforcing cycle of lending, trading, and yield generation
Together, these three layers form the BTCFi flywheel – upstream onboarding, midstream collateralization, downstream yield. Each stage feeds the next, creating a complete user journey from holding BTC to earning sustainable yield.
Easy-to-Use Products
Now let’s wrap the above into single-click, easy-to-use products. While DeFi veterans may be comfortable piecing together bridges, swaps, lending markets, and strategies, the average BTC holder wants simplicity. 0D Capital is the asset management arm of Starknet’s native oracle provider Pragma. Specializing in data-driven trading & risk management, 0D collaborated with Vesu to launch several vault strategies that bundle together these multi-step flows, so the user can let the automated trading strategies do all the legwork.
These vaults will soon be hosted on Earn: a simple interface offering streamlined BTC onboarding to Starknet, along with multiple single-click products from third party applications on Starknet.
From one dashboard aggregating third party apps, users will be able to:
- Bridge BTC from other chains
- Choose from a menu of yield strategies with clear descriptions
- Deploy BTC into staking, LST looping, stablecoin borrow strategies, and more
- Monitor performance in real time
The Role of Incentives
Starknet is not abandoning incentives entirely- but it is redesigning them.
For staking, rewards will remain. Staking BTC alongside STRK provides another entry point for rewards, introducing new users to Starknet.
But beyond staking, the focus will be on apps creating opportunities for the following:
- Borrowing stablecoins against BTC
- Providing liquidity to critical pools
- Engaging in trading strategies
Incentives will act as a catalyst, not a crutch. They will jumpstart user behavior, but the majority of the yield itself will come from organic activity. This design ensures that when incentives eventually taper, the ecosystem continues to thrive.
This model abstracts away the complexity of DeFi while preserving composability under the hood – all accessible through a single click.
What’s to Come
Q4 2025 of Starknet’s roadmap is packed with launches that complete the BTCFi ecosystem:
- New BTC Assets!
- Bridges: LayerZero, Stargate Finance, Native USDC, CCTP v2
- Stablecoins: Native USDC integration, yield-bearing stablecoins & BTC-backed stablecoins
- DeFi Products: Extended (perp DEX) upgrades, Spline (low-slippage stable swaps), new CDPs such as Uncap, Re7 tokenized yield certificates, and new one-click vaults by 0D Capital & Vesu (see a more detailed list below)
Each of these integrations strengthens the foundation of Starknet as the home for BTC yield- expanding liquidity, deepening markets, and diversifying strategies.
How to Participate
The BTCFi ecosystem on Starknet is designed to make it easy for users to put their BTC to work. Whether you want to provide liquidity, borrow against BTC collateral, or participate in structured strategies, there are multiple app entry points.
Wallets
- Ready – (Formerly Agent X) a self-custody, multi-purpose wallet with 2 million downloads
- Xverse – A Bitcoin-focused wallet, featuring Bitcoin asset implementations as well Layer 2 integrations such as Starknet
- Braavos – A user-friendly wallet for trading, staking, and earning on top of BTC. Integrated with Starknet as well as Bitcoin
- Keplr – A multichain wallet, featuring multisigs, staking, and validator dashboards
- Ledger – A hardware wallet that enables users to securely store their private keys offline while seamlessly interacting with Starknet dApps
BTC Assets
- WBTC – The most liquid Bitcoin wrapper across all chains, issued by the WBTC DAO with BitGo as custodian and fully backed 1:1 with BTC
- tBTC – Threshold’s trust-minimized BTC asset, widely regarded for its decentralization and security
- SolvBTC – A highly active BTC asset in DeFi, issued by Solv Protocol and backed 1:1 with BTC, with Chainlink Proof-of-Reserve and deep integrations across multiple chains
- LBTC – Lombard’s liquid staked BTC, representing BTC staked via Babylon to unlock yield and institutional-grade onchain capital markets
- … with more to come!
DeFi Apps
- Ekubo – AMM swap platform with deep liquidity pools; liquidity providers can earn up to 5% APR paid in STRK on specific BTC pairs
- Spline – Low-slippage swap extension for correlated assets; liquidity providers can earn up to 5% APR paid in STRK on specific BTC pairs
- Vesu – A lending market for borrowing USDC against BTC assets, offering up to 2% APR on lending, with a 40% rebate in STRK rewards; also the home of vault strategies built in collaboration with 0D Capital
- AVNU – An all-in-one trading hub on Starknet, for optimized trading execution, DCA, paymaster, token lists & more
- Uncap – A Starknet-native CDP platform for BTC-backed loans, featuring the stablecoin USDU.
- Extended – Lightning-fast and one-click perps trading with diverse markets, deep liquidity, and advanced order types. Built by an ex-Revolut team
- Re7 Yield Funds – Tokenized yield-bearing assets, including mRe7yield for stablecoins and mRe7BTC for BTC. Both of these assets can be collateralized on Vesu for leverage, increasing exposure
- Syntetika – A synthetic Bitcoin protocol, incorporating institutional-grade hedge fund strategies for organic BTC-based yield generation
- LayerAkira – A hybrid order book DEX built natively in the Starknet ecosystem, supporting spot asset markets
- Opus – Advanced CDP platform unlocking flexible borrowing against BTC
Vaults
- Re7 Managed LP Vaults – Where funds can be used in various Ekubo liquidity pools, curated by Re7 Capital. Built in collaboration with Troves.
- 0D Capital Vaults – Collaborative BTC yield vaults designed to maximize capital efficiency through automated strategies using Vesu’s lending markets. Also hosted on Vesu.
- Endur – Where BTC assets can be staked to mint LSTs
- Troves – A Starknet native automated vault strategy platform that allows leverage looping LSTs
Aggregators
- Earn – A dashboard for curated vault strategies where BTC and stablecoins can be deployed into automated yield products. With integrations to bridges, this interface serves as a one-stop shop for onboarding into Bitcoin yield products on Starknet, with multiple one-click vault strategies.
Bridges & Cross-Chain
- RhinoFi – Cross-chain swap hub for routing BTC liquidity into Starknet
- Atomiq – Atomic swaps between BTC and WBTC on Starknet
- Layerswap – Enables swaps & bridging across 71 chains
Together, these DeFi apps, vaults, and bridges form the practical pathways into BTCFi – making it possible for users to bridge their BTC, deploy into strategies, and begin earning sustainable yield on Starknet.
Conclusion
Bitcoin earning capacity today is broken – fragmented, seasonal, and dependent on fleeting incentives. Starknet is fixing it.
By building the first dual-consensus rollup, centering its ecosystem on BTC, and developing the full stack of DeFi infrastructure, Starknet is becoming Bitcoin’s sustainable layer.
Here, BTC holders will finally have access to year-round, predictable yield – powered not by subsidies, but by genuine economic activity. Here, capital will no longer need to migrate from chain to chain. Here, the future of Bitcoin yield will be built to last.
The age of unsustainable Bitcoin yield is ending. The age of sustainable Bitcoin yield – built on Starknet – has begun.
Not investment advice. Engagement is subject to risk, including the risk of loss. BTCFi is supported by third party applications on Starknet. The Apps referenced herein are third-party service providers, and are subject to the provisions outlined in their own terms of use. References to such Apps is not intended to be an endorsement of their services or an offer of any kind. See terms and conditions.
