As Bitcoin integration into DeFi platforms accelerates, the ecosystem faces an increasingly fragmented landscape. Projects are racing to build proprietary Bitcoin solutions, each pursuing their own technical approach.

This fragmentation creates tangible problems. Liquidity gets scattered across competing platforms rather than consolidated. Users find assets trapped in protocol-specific layers with limited interoperability. Security models diverge significantly across different solutions, complicating risk assessment. The underlying infrastructure—cross-chain bridges—wasn't originally designed to handle Bitcoin's unique characteristics. Most existing bridges are either chain-specific, optimized for particular asset types, or built around legacy assumptions that don't align with Bitcoin's architecture.

The result: instead of a unified Bitcoin DeFi ecosystem, we're watching the emergence of siloed systems where coordination and efficient value transfer become increasingly difficult.