For years, Bitcoin sat on the sidelines as the story of decentralized finance unfolded on smart contract blockchains like Ethereum, but it cannot be ignored any longer. The vast economic potential of Bitcoin is just too great to ignore, and recent innovations are helping it to play a pivotal role in DeFi’s evolution, boosting its legitimacy with mainstream investors.
At the forefront of this push is SatLayer, a pioneering staking infrastructure provider that introduces the idea of Bitcoin Validated Services, enabling decentralized applications to build on Bitcoin’s ironclad security foundation. By making Bitcoin programmable, Satlayer is transforming it from a passive investment to a highly productive asset that will inject billions of dollars of fresh liquidity into DeFi and expand the utility of both.
We sat down with SatLayer co-founder and Chief Executive Luke Xie to find out more about his ambitions to transform Bitcoin into the “universal trust layer” for Web3 and what the implications of that will be.
Q: SatLayer secures decentralized applications with Bitcoin Validated Services. What is a BVS exactly, and how does it secure dApps while enhancing capital efficiency for BTC holders?
A: A Bitcoin Validated Service is a smart-contract framework that borrows Bitcoin’s proof-of-work credibility and Babylon’s staking layer to secure any off-chain or L2 protocol, bridges, DEXs, oracles, or roll-ups, without forcing those projects to bootstrap a brand-new validator set. BTC holders “restake” their idle coins (or LSTs) into the BVS, earning an extra yield stream while the dApp taps into deep Bitcoin security for a fraction of the capital it would otherwise burn on inflationary token incentives. Everybody wins: holders get stacked yield, builders get instant-on security, and the network’s economic bandwidth keeps compounding.
Q: What inspired you to build SatLayer? Why does Bitcoin need this?
A: Watching EigenLayer unlock billions in idle ETH made one thing obvious: the largest, most battle-tested asset, Bitcoin, was economically underemployed.
Despite its $1 trillion market cap and unmatched security, Bitcoin remains largely inert, disconnected from the composability of smart contract ecosystems. SatLayer changes that. Without compromising Bitcoin’s base-layer conservatism, we transform “digital gold” into productive collateral, unlocking its economic potential while preserving its monetary integrity. We’re enabling Bitcoin’s security to power applications across the ecosystem.
Q: What are the main challenges you faced in enabling restaking on Bitcoin, and how does SatLayer get around these?
A: No native smart contracts, no slashing, no fast finality. We solve that by:
- Using Babylon to escrow BTC and mirror it as LSTs on a proof-of-stake sidechain.
- Deploying SatLayer’s programmable-slashing contracts, so dApps can encode liveness, fraud proofs, or custom KPIs.
- Issuing liquid restaking tokens (cBABY, etc.) so capital remains mobile across DeFi.
The result: Bitcoin’s hash-power trust with Ethereum-grade programmability.
Q: Why should developers consider building their dApp on a BVS, as opposed to an Ethereum-based AVS?
A: Neutrality & scale. Bitcoin doesn’t compete with L2s or alt-L1s, so a Cosmos roll-up or Solana app can tap Bitcoin security without endorsing a rival ecosystem. Add a deeper liquidity pool (3× ETH’s free float) and lower correlation to PoS market swings, and a BVS becomes a politically neutral, antifragile security source, ideal for cross-chain bridges, RWAs, and institutions that already carry BTC on their balance sheets.
Q: How much potential is there for Bitcoin DeFi, and what will its growth do for Bitcoin itself?
A: Today BTCFi is ~6 % of total DeFi TVL. Give it liquid staking, restaking, and better UX, and we think it easily clears 25-30% in the next cycle, hundreds of billions in productive BTC. That demand tightens float, drives fee flow back to Bitcoin L1, and cements BTC as both store-of-value and yield-bearing security primitive.
Q: SatLayer has partnered with Babylon Chain and claims to be that network’s official restaking partner. Can you please explain your relationship with Babylon and the need/benefits of this partnership?
A: Babylon handles native BTC staking and finality; SatLayer layers programmable slashing and dApp integration on top. Think of Babylon as the custody & consensus engine, and SatLayer as the middleware that turns staked BTC into BVS-ready collateral. Being Babylon’s exclusive restaking partner lets us offer a single, clean API to builders while sharing R&D on cryptography and custody.
Q: With regards to SatLayer’s roadmap, where are you now, and what do you hope to accomplish this year?
A: For Q2: Cross-chain restaking on L1s (Sui and Berachain pilots), permissionless BVS factory.
For Q3-Q4: Institutional custody, first RWA collateralized on a BVS, public mainnet incentives.
Goal: $1 B TVL and 50 live BVSs by year-end.
Q: What kind of feedback has SatLayer had from Bitcoin maximalists, who have previously always been somewhat dismissive of DeFi in general?
A: Healthily skeptical at first, until they realize we never wrap BTC via custodians, don’t touch base-layer consensus, and actually increase miner fee pressure by making BTC productive. Once they see programmable slashing doesn’t dilute the 21M cap and programmable Bitcoin can become a reality, we hope many turn from critics to silent stackers.
Q: Where do you think SatLayer will be in five years from now?
A: Running the universal trust layer for Web3: hundreds of billions in BTC and LSTs restaked, thousands of dApps secured, and Bitcoin the default benchmark for cross-chain settlement. If we do our job, “secured by SatLayer” will be as ubiquitous a badge as “TLS-encrypted” is on the web today.
