Bitcoin's DeFi Awakening Could Oust Ethereum as Sleepy Giant Wakes

Cardano founder Charles Hoskinson has publicly declared that Ethereum is on a path to obsolescence, citing its heavy reliance on Layer 2 solutions to maintain relevance in the rapidly evolving decentralized finance (DeFi) ecosystem. His comments come as part of a broader vision in which Bitcoin could emerge as the dominant force in DeFi, potentially surpassing Ethereum’s current market influence. According to Hoskinson, Bitcoin—described as the “sleeping giant” of DeFi—has the potential to integrate DeFi functionalities that could attract unprecedented levels of liquidity, rivaling or even exceeding Ethereum’s total value locked (TVL) and market capitalization.

Hoskinson emphasized that Bitcoin’s position in the DeFi space is not constrained by its role as a store of value. He argued that as DeFi protocols evolve, Bitcoin’s liquidity, global recognition, and institutional appeal could become key assets. With its current TVL at approximately $91 billion compared to Ethereum’s $520 billion market cap, Hoskinson envisions a future where Bitcoin’s DeFi value locked surpasses Ethereum’s entire market capitalization. He suggested that institutional players and sovereign entities—including major financial firms like BlackRock—are more likely to build DeFi applications on Bitcoin rather than Ethereum.

Rejecting the idea that Ethereum will serve as the backbone for Bitcoin’s DeFi initiatives, Hoskinson argued that the competitive nature of the two blockchains makes this scenario unlikely. Instead, he proposed that alternative blockchains like Cardano or Layer 2 solutions such as Stacks are more suitable for enabling Bitcoin’s DeFi capabilities. This aligns with Hoskinson’s broader efforts to position Cardano as a critical enabler of Bitcoin’s entry into the DeFi space. Through partnerships like EMURGO’s collaboration with BitcoinOS, Cardano has been developing tools and infrastructure to support Bitcoin-based DeFi applications.

The integration of Bitcoin into the Cardano ecosystem has already begun to take shape. Hoskinson highlighted Cardano’s Babel fees system as a potential mechanism to allow Bitcoin users to engage in DeFi activities without leaving the Bitcoin network. Additionally, the platform’s privacy-focused sidechain, Midnight, has been designed to enable staking of Bitcoin without the need to wrap it on Ethereum-based platforms. Meanwhile, Cardano’s lightweight wallet, Lace, has added Bitcoin support, allowing users to send, receive, and swap native BTC with Cardano-based assets.

The implications of these developments could be profound for the broader crypto market. If Bitcoin DeFi gains traction, it could attract substantial capital from both institutional and retail investors, challenging Ethereum’s current dominance in the DeFi space. Hoskinson believes this shift could redefine the blockchain hierarchy, where Bitcoin not only participates in DeFi but sets new benchmarks for security, scalability, and interoperability. Analysts have noted that the success of Bitcoin DeFi could also have a positive impact on ADA, Cardano’s native token, with some forecasts suggesting its price could rise above $20.

While Ethereum remains the dominant DeFi platform today, Hoskinson’s predictions point to a future where Bitcoin’s DeFi potential could redefine the sector’s landscape. The convergence of Bitcoin’s global liquidity and Cardano’s development capabilities may catalyze a new era of DeFi innovation. For investors and developers, the message is clear: the next crypto cycle may be defined by Bitcoin’s growing role in DeFi, with Cardano playing a central role in enabling that transformation.