“This isn’t about one platform winning; it’s about the entire ecosystem growing together.”

The recent Hemi Partner AMA panel discussion brought together thought leaders to unpack the evolving landscape of Bitcoin in decentralized finance (DeFi). The conversation revolved around the expanding role of Bitcoin within DeFi, technical and cultural challenges, and the groundbreaking interoperability efforts reshaping the ecosystem.

This episode we spoke to Sharon Yoo from LayerBank, Kenny Z from LayerZero, and our own Max Sanchez. The panel emphasized how Bitcoin, traditionally viewed as a “hold-only” asset, is finally finding utility in DeFi. Platforms like Hemi are enabling Bitcoin holders to earn yield while maintaining security and usability. This shift is unlocking new potential for one of the largest crypto assets in the world, transforming it from a static store of value into a dynamic financial instrument. Several challenges remain for Bitcoin’s broader adoption in DeFi. Custodianship risk is a major barrier, particularly for a community that values decentralization and self-custody. Participants noted the importance of building trust and ensuring that tokenized Bitcoin is fully backed and easily redeemable. Liquidity also plays a key role. Institutional markets require deep liquidity pools, and creating cross-chain interoperable ecosystems can help address this.

Platforms like Hemi, Layer Zero, and Layer Bank are collaborating to bridge these gaps by integrating cross-chain messaging, lending, and borrowing solutions to drive capital efficiency. The discussion highlighted the transformative potential of interoperability. Hemi provides a secure way to tokenize Bitcoin as an ERC-20 asset, while Layer Zero enables seamless cross-chain transfers. Layer Bank complements this ecosystem by offering cross-chain lending and universal liquidity hubs. Together, these platforms are reducing fragmentation and creating a cohesive environment where users can access liquidity and competitive yields across chains.

The future of Bitcoin in DeFi looks promising but requires continued innovation. Addressing technical hurdles, enhancing user experience, and fostering trust are all critical. With collaborations like Hemi, LayerZero, and LayerBank leading the charge, the vision of a fully interoperable and inclusive DeFi ecosystem centered around Bitcoin is becoming a reality. Bitcoin’s evolution in DeFi is just beginning.

By solving liquidity, custodianship, and interoperability challenges, the industry is poised to unlock new opportunities for retail and institutional participants alike.