The Complete Guide to BTCFi: From Wrappers and L2s to Atlas Protocol
If you’ve tried to follow “BTCFi” lately, it can feel like navigating three different conversations at once. Some teams mirror BTC onto other chains, others keep BTC on Bitcoin but rent out its security, and a third camp builds entire application layers besides or on top of Bitcoin. All three are valid approaches; they just solve different problems, and come with different trade-offs. Let's untangle these core approaches to BTCFi.
Wrapped Bitcoin
This is the oldest and most established approach in BTCFi. Here, native BTC is locked by a custodian or a distributed signer set, and a corresponding "claim token" is minted on another blockchain so it can be used in DeFi.
wBTC popularized this model on Ethereum with a clear, custodial workflow. Threshold’s tBTC modernized it by introducing threshold cryptography for a more decentralized system. Solv’s solvBTC emphasizes multi-chain liquidity, while exchange pegs like BTCB primarily serve their home ecosystems. The upside is immediate composability and access to deep liquidity on established DeFi platforms. The fine print is the trust and redemption model you inherit from the issuer or the security guarantees of the signer set.
Bitcoin Restaking
This second approach aims to keep Bitcoin on its native network while still making it a productive asset. This is "Bitcoin on DeFi," not just "Bitcoin in DeFi."
"Restaking" systems like Babylon allow users to time-lock native BTC on the Bitcoin network, extending its slashable economic security to proof-of-stake networks. Liquid layers such as Lombard issue a token representing the staked position, allowing you to use it in DeFi while the underlying BTC continues to earn network rewards.
Even the Lightning Network belongs in this picture—not for DeFi yield, but as the payments rail that proved the power of Hash Time Locked Contracts (HTLCs) at scale.
Bitcoin Sidechains & L2s
The third approach focuses on building entirely new environments next to Bitcoin. Sidechains and so-called Layer 2s (L2s) add smart-contract throughput and richer application layers, connecting back to Bitcoin through a peg or gateway.
Rootstock is the veteran: an EVM-compatible chain that is merge-mined with Bitcoin.
Core blends delegated Bitcoin hashpower and delegated proof-of-stake in an EVM-compatible L1.
Hemi stitches Bitcoin and EVM stacks together in a modular L2 architecture designed for speed.
Botanix is building a decentralized, EVM-equivalent L2 on Bitcoin with its "Spiderchain" design.
Bitlayer is exploring a BitVM-style rollup path while currently using federated gateways.
BOB (Build on Bitcoin) runs an OP-stack rollup designed to pull BTC capital directly into EVM liquidity.
These chains offer a user experience that feels like Ethereum: fast, composable, and feature-rich. However, your security guarantees ultimately depend on the integrity of the peg, the honesty of the operators, and the reliability of the exit path back to native BTC.
A Map of BTCFi: How to Choose?
Put together, BTCFi isn’t a single market; it’s a map with different territories defined by these core strategies.
Wrappers replicate BTC on other chains, trading custody for composability.
Restaking keeps BTC at home and exports its immense economic weight.
Sidechains/L2s relocate activity to new runtimes, bringing the app layer to Bitcoin users.
So how do you choose? Start by asking these critical questions:
Custody: Who can move or freeze the underlying coins?
Exits: How, exactly, do you get back to native BTC, and under what conditions?
Use Case: What is your goal? Money markets, perpetuals, AMMs, or payments?
Atlas Protocol: The Next Iteration
Atlas Protocol lives outside the wrapper and sidechain binary on purpose. It’s a non-custodial, chain-abstracted liquid staking rail for native BTC.
Here’s how it works: You stake BTC on the Bitcoin blockchain. Atlas then uses Chain Signatures (MPC), powered by NEAR, to mint atBTC 1:1 on any chain, without relying on an app-to-app bridge or a single custodian. When you’re finished, you simply burn your atBTC to redeem the exact same sats back on Bitcoin. It’s a symmetric, fully auditable mint-and-burn pathway.
This design allows atBTC to behave like first-class collateral wherever liquidity lives. You can supply it to money markets, post it as margin for perpetuals, pair it in AMMs, deposit it into options vaults, or open Collateralized Debt Positions (CDPs). All the while, your underlying BTC position can participate in partner staking programs, earning native yield.
It’s Bitcoin’s security model preserved and DeFi’s composability unlocked, without pretending Bitcoin is an app chain or asking you to trust a monolithic bridge.
The Big Picture
The short version: BTCFi is many things at once, and that’s a good thing. Wrappers mirror, sidechains migrate, and restaking exports security.
Atlas connects. It brings native Bitcoin into DeFi through an omni-chain, non-custodial mint-and-burn rail that keeps self-custody tight and exits predictable. Welcome to the next evolution of BTCFi.
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