Market Background & Problem Statement
The Isolation of Bitcoin
Despite commanding over 40% of the total cryptocurrency market capitalization, Bitcoin remains largely isolated from DeFi. Its design—while brilliant in terms of security and censorship resistance—was never intended for composability or smart contract logic. Consequently, the vast capital locked in BTC remains inert, disconnected from the broader financial innovations happening across Ethereum, L2s, and beyond.
The Limitations of Bridges
To bridge this utility gap, centralized and semi-centralized solutions emerged. These include custodial tokens like wBTC and renBTC, or synthetic wrapped versions created via bridges. However, they carry significant risks:
Custodial Risk: Most wrapped Bitcoin relies on third-party custodians holding BTC off-chain, which introduces single points of failure.
Bridge Vulnerabilities: Cross-chain bridges have historically been the most targeted attack surface in DeFi, responsible for billions in losses due to smart contract exploits and mismanagement.
High Overhead: Wrapping BTC incurs costs, time delays, and additional operational complexities that hinder user experience and capital efficiency.
The Opportunity: Native Bitcoin in DeFi
A trust-minimized infrastructure that brings real BTC on-chain—without synthetic wrapping, centralized custodians, or security trade-offs—would unlock immense value:
Improved Liquidity: Tapping into Bitcoin's multi-hundred-billion dollar market cap for use in lending, yield farming, and stablecoin collateralization.
New Market Structures: Allowing Bitcoin to flow freely across DeFi protocols and chains will give rise to previously impossible composable primitives.
True Omnichain Interoperability: Real BTC that moves like a stablecoin across Ethereum L2s and rollups, unlocking Bitcoin-native composability at scale.
BTO is engineered to capture this opportunity.
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