Bitcoin’s utility in decentralized finance (DeFi) has taken a major step forward as Peg-BTC (YBTC), a bridged Bitcoin token, becomes available on the Sui blockchain. This development is made possible through a collaboration between Bitlayer, a Bitcoin Layer 2 built on the BitVM paradigm, and the Sui network.
The integration involves Sui adopting Bitlayer’s BitVM bridge, enabling Bitcoin holders to move their BTC onto the Sui platform as Peg-BTC. Once bridged, Peg-BTC can be deployed across Sui’s growing DeFi ecosystem to generate yield, marking a significant expansion of Bitcoin’s functionality beyond its traditional role as a store of value.
“Bitcoin dominates as a store of value, but its potential within DeFi remains largely untapped,” said Charlie Hu, co-founder of Bitlayer. “By bringing Bitcoin liquidity into Sui, Peg-BTC empowers users to earn yield while maintaining direct exposure to BTC’s value — a true paradigm shift for BitcoinFi.”
BitcoinFi — the concept of enabling Bitcoin holders to earn yield via decentralized finance — was a hot topic at the recent Token2049 conference in Dubai. Industry heavyweight Franklin Templeton endorsed the approach, highlighting its potential to broaden Bitcoin’s appeal.
Bitlayer’s technology leverages the BitVM paradigm to bring smart contract capabilities to Bitcoin without altering its core consensus. Its BitVM-powered zero-knowledge (zk) bridge facilitates trust-minimized, secure, and decentralized transfer of BTC onto other blockchains, eliminating reliance on centralized intermediaries.
Sui, a Layer 1 blockchain known for high-speed, low-cost transactions enabled by parallel processing, supports a vibrant DeFi ecosystem with 49 projects and over $2 billion in deposits, according to DeFiLlama.
The launch of Peg-BTC on Sui unlocks new use cases: users can stake Peg-BTC to earn interest, lend it to generate yield, use it as collateral for loans, or trade it on Sui’s decentralized exchanges, earning fees by providing liquidity.
Bitlayer plans to collaborate closely with top Sui protocols, targeting those with the highest total value locked (TVL), fully diluted value, and user engagement.
Adeniyi Abiodun, Co-Founder and CPO at Mysten Labs, which develops Sui, emphasized the platform’s comprehensive approach to BitcoinFi. “We are onboarding a full stack of infrastructure and BitcoinFi assets, including staking, restaking, bridge integrations, WBTC, sBTC, and soon Peg-BTC. Demand is increasing for Bitcoin to serve beyond simple holding.”
Abiodun highlighted the impact of the BitVM bridge integration: “It’s transforming Bitcoin holders’ experience by allowing them to earn yield, engage with DeFi, and actively put their assets to work on Sui.”
Currently, BTC assets represent over 10% of Sui’s total TVL, with more than 587 BTC flowing into its DeFi ecosystem since February. “With leading BitcoinFi integrations, Sui’s advanced programmability is unlocking Bitcoin’s utility, enabling users to move beyond holding and into a secure, high-performance blockchain environment,” Abiodun concluded.
