Starknet [STRK] Aims to Unify and Offer Settlement on Bitcoin [BTC] and Ethereum [ETH]

Starknet [STRK] seeks to unify and offer settlement on Bitcoin [BTC] and Ethereum [ETH], a first of its kind if achieved this year.

Starknet [STRK] is aiming to become the first Layer 2 to offer settlement on both Bitcoin [BTC] and Ethereum [ETH] by 2024, a integration that could unlock new possibilities in DeFi and liquidity.

The ETH L2 scaling solution noted that it is one of the cheapest L2s and would bring low-cost transactions to unlock BTC DeFi potential. As a result, it would be positioned as BTC’s ‘execution layer’ for DeFi activities like lending, borrowing, staking, etc.BTC DeFi potential

However, there are other BTC scaling solutions, including Stacks, Lightning Network, BitVM, and BitcoinOS. As of early 2024, BTC TVL (total value locked) on its DeFi was about 68K BTC or $5.3B. The TVL hit an all-time high of 73.2K BTC in January 2024. For comparison, that was a relatively small 4K BTC drop in Q1 2024. When zoomed out from last December, BTC DeFI TVL grew from 48K BTC to nearly 70K BTC, translating to 43% growth. It reinforced investor confidence in BTC DeFi, which was currently dominated by staking platforms Babylon, Lombard, SolvBTC, and payment provider Lightning Network.

Source: DeFiLlamaInterestingly, the increased interest in BTC DeFi could expand the TVL even further. According to Dan Held, a crypto VC at Asymmetric and BTC DeFi investor, the sector has the biggest untapped potential and could explode to a $300 trillion market size.

“If DeFi could be unlocked on Bitcoin, it would be by far the biggest opportunity to happen in crypto.”On the Starknet update, Held termed it as ‘huge’ for BTC DeFi growth and mindshare. In a separate interview with the Supply Shock podcast, Held projected that BTC DeFi growth could eat Ethereum and Solana’s market share.

“I think what will happen is that this just absorbs market share from the other ones significantly, but not totally, and that this increases Bitcoin’s dominance.”In the meantime, Starknet plans to use federated bridges to bring Bitcoin assets to its platform as it waits for OP_CAT, a soft fork that aims to enhance the Bitcoin network’s smart contract capacity. It remains to be seen how the DeFi renaissance would trickle down to BTC’s value on price charts.