Starknet’s Plans for Bitcoin and Ethereum

Starknet [STRK] has unveiled plans to enable settlement on Bitcoin [BTC] and Ethereum [ETH], making it a pioneering move if achieved this year. Part of its statement read:

> “Starknet will become the first L2 to settle on both Bitcoin & Ethereum, bringing the two largest blockchain ecosystems on a single layer, unlocking new DeFi opportunities and greater liquidity.”

The Ethereum L2 scaling solution noted it is among the cheapest L2 options available, facilitating low-cost transactions to unlock the potential of BTC DeFi.

This positions Starknet as BTC’s execution layer for DeFi activities such as lending, borrowing, and staking.

BTC DeFi Potential

Nevertheless, there are alternative BTC scaling solutions, including Stacks, Lightning Network, BitVM, and BitcoinOS. As of early 2025, the BTC Total Value Locked (TVL) in DeFi was about 68K BTC or $5.3B. The TVL reached an all-time high of 73.2K BTC in January 2025, reflecting a drop of 4K BTC in Q1 2025.

That said, from December last year, BTC DeFi TVL grew from 48K BTC to nearly 70K BTC, representing a growth of 43%. This growth reinforces investor confidence in BTC DeFi, currently led by staking platforms such as Babylon, Lombard, SolvBTC, and the payment provider Lightning Network.

Interestingly, the increased interest in BTC DeFi could drive further growth in TVL. According to Dan Held, a crypto VC at Asymmetric and BTC DeFi investor, the sector has untapped potential that could reach a $300 trillion market size, stating:

> “If DeFi could be unlocked on Bitcoin, it would be by far the biggest opportunity ever to happen in crypto.”

On Starknet’s update, Held characterized it as ‘huge’ for BTC DeFi growth and influence.

In a separate interview with the Supply Shock podcast, Held predicted that BTC DeFi growth could capture market share from Ethereum and Solana.

> “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.”

Meanwhile, Starknet intends to use federated bridges to integrate Bitcoin assets onto its platform as it anticipates the OP_CAT, a soft fork aimed at upgrading Bitcoin’s smart contract capacity.

Ultimately, it remains to be seen how this DeFi renaissance will impact BTC’s value on price charts.