Decentralized Finance (DeFi) is a blockchain-based financial system that removes traditional intermediaries like banks by using smart contracts—self-executing code that runs on decentralized networks. DeFi enables open, permissionless access to services like lending, borrowing, trading, and yield farming. It marked a major evolution in crypto, shifting it from a static, store-of-value phase (like Bitcoin in its early years) into a dynamic ecosystem of programmable money.

This transformation was made possible by Ethereum, the first blockchain to support smart contracts, which laid the groundwork for DeFi’s rapid growth. As more users and applications entered the space, Layer 2 networks like Arbitrum and Optimism emerged to solve Ethereum’s scalability challenges, offering faster and cheaper transactions. DeFi is now the foundation of crypto’s real-world utility—pushing the industry beyond speculation into a full-fledged, decentralized financial alternative.

Bitcoin was not part of DeFi for a long time because its blockchain lacks built-in smart contract functionality, which makes it difficult to support complex decentralized applications directly on the network. While Bitcoin excels as a secure, decentralized store of value, it wasn't designed for programmability—so it couldn’t easily be integrated into the rapidly growing DeFi ecosystem built on Ethereum and other smart contract platforms. As a result, a large portion of BTC has remained idle, simply stored in wallets or on centralized exchanges, rather than being put to work in lending, liquidity pools, or other financial protocols.

This idle status is seen as a missed opportunity by many in the industry. Bitcoin still holds the largest market cap of any cryptocurrency, representing hundreds of billions of dollars in value. That’s a massive pool of capital that, if activated within DeFi, could boost liquidity, enable new financial products, and generate yield for holders—all while helping bridge Bitcoin into the broader decentralized economy.

Unlocking the potential of this dormant BTC has become a priority for developers and protocols seeking to bring the world’s most valuable digital asset into a more active financial role. Recent innovations—such as Bitcoin Layer 2 networks (like Rootstock or Stacks), wrapped BTC on other chains (like WBTC on Ethereum), and emerging BTC-native DeFi platforms—are making it possible to use BTC in decentralized finance.

BTC DeFi in MEW

MEW (MyEtherWallet) has long been a trusted wallet for Ethereum users, but as the crypto space grows, so do we. With support for Bitcoin now integrated, MEW lets you manage your BTC, ETH, and other assets all in one place—securely and with full self-custody. No more juggling apps or relying on centralized platforms. Whether you're holding or actively using DeFi, MEW gives you the power to keep everything in one wallet you trust and unlock the full potential of your crypto.

At this point there are only a few applications that will support BTC in DeFi directly (and even then, the platform is probably actually converting it in the background). The easiest path to using BTC for yield is to start by swapping to ETH. Using ETH opens doors to all DeFi on Ethereum and Layer 2s. To learn how to swap your BTC to ETH you can view this guide.

Here are some ways you can use BTC in DeFi:

Swap BTC to ETH and stake itConvert your BTC into ETH and stake it. If you choose liquid staking, you can use your liquid staking tokens (LSTs) like stETH or rETH to earn staking rewards without locking up your assets.
Use ETH and LSTs for additional yieldOnce you have ETH or LSTs, you can deposit them into DeFi protocols like Aave or Lido to earn extra yield through lending or liquidity provision.
Bridge and wrap your BTC (e.g., WBTC, cbBTC)Instead of swapping, you can keep exposure to BTC by using a bridge to wrap it into tokens like Wrapped BTC (WBTC) or Coinbase BTC (cbBTC). These are pegged 1:1 to BTC and let you use your Bitcoin in DeFi without selling it.
Swap BTC to stablecoins (e.g., USDC, USDT, DAI)If you prefer less volatility, you can convert BTC into a stablecoin. Stablecoins give you access to a wide range of DeFi opportunities like lending, farming, and payments—while protecting against market fluctuations.
Swap back to BTC anytimeRegardless of the path you take, you can always swap back to BTC using decentralized exchanges (DEXs) like Uniswap or 1inch, depending on the network you’re on.

While Bitcoin's original design limited its participation in Decentralized Finance due to a lack of smart contract functionality, recent innovations have paved the way for its integration. Through solutions like Layer 2 networks, wrapped BTC, and native BTC DeFi platforms, Bitcoin's vast liquidity can now be actively utilized within the DeFi ecosystem. Users of wallets like MEW Mobile can leverage their BTC by swapping it to other tokens on EVM-compatible chains, using bridges to create wrapped tokens, or converting it to stablecoins, enabling them to engage in various DeFi activities such as lending, borrowing, and yield farming while maintaining or managing their asset's value.

Thank you for checking out our guide on What is Bitcoin DeFi! Don't forget to download Enkrypt for a seamless web3 multichain wallet experience. We would love to hear from you on our social media about any guide suggestions you have for the future. Also, if you enjoy using mobile cryptocurrency wallets, give our MEW Mobile app a try, it's available on both iOS and Android platforms!