As part of the State of DeFi 2025 report, we examined the evolution of Bitcoin DeFi in 2025 and found a sector moving from experimentation toward more deliberate infrastructure choices. Real increases in deployed BTC drove growth while activity remains concentrated; the year marked a shift toward execution environments designed around Bitcoin’s security and settlement model rather than attempts to replicate Ethereum-style DeFi.
Within this landscape, Hemi stands out for its execution-first approach to Bitcoin DeFi. The network is designed to extend Bitcoin’s economic utility without modifying Bitcoin itself, enabling programmable activity anchored to Bitcoin security. Through its tunneling system, BTC and Ethereum assets can be transferred to and from Hemi without reliance on multisig bridge custody, providing a clearer and more trust-minimized path for deployment into vaults, lending markets, and yield strategies.
Report data shows that Hemi’s activity strengthened meaningfully over the course of 2025. Transaction volumes accelerated through the second half of the year, with multiple periods of sustained usage and circulating asset balances that point to deeper engagement than headline TVL figures alone capture. Rather than relying on short-term deposit incentives, Hemi’s growth reflects increased onchain usage and asset movement.
This interview explores how Hemi has approached Bitcoin DeFi, what its performance in 2025 signals about demand for BTC-aligned execution, and how the team views the sector’s trajectory as Bitcoin-native finance continues to evolve.
Bitcoin now underpins both passive products and emerging DeFi ecosystems; what would you consider a credible path for Bitcoin to behave more like productive collateral and less like a static reserve asset?
The credible path starts with getting Bitcoin into programmable environments in a trust-minimized way and giving it roles beyond passive storage.
First, we need safer, more native representations of BTC as collateral. The closer the system aligns with Bitcoin’s settlement assurances, whether through L2s, rollups, or covenant-aligned constructions, the more comfortable serious capital becomes using BTC as margin. That unlocks perps, options, credit lines, and Bitcoin-backed stablecoins. At Hemi, this is exactly why we built hVM and are extending the model further: to enable truly native BTC representation and reduce reliance on opaque wrapping.
Second, BTC needs protocol-level jobs, not just collateral slots. It should secure data availability, contribute to economic security, participate in insurance layers, or back structured credit. This is the direction we’ve taken at Hemi: treating Bitcoin as an active component of system security and capital formation rather than a network of static reserve.
Third, the UX must align with Bitcoin’s culture. Locking BTC on Bitcoin, minting usable collateral in one or two steps, and deploying it across DeFi should be the norm, not five bridges and multiple trust points. Ultimately, BTC doesn’t stop being a reserve asset; it becomes the base layer of a broader collateral stack. Hemi’s role is to make that transition usable, composable, and aligned with Bitcoin’s guarantees.
When you look at the landscape of BTC-oriented L2S, sidechains, and token wrappers, what features or guarantees do you see as nonnegotiable if Bitcoin DeFi is to attract long-term capital rather than speculative flows only?
Three guarantees are essential:
1. Clear, minimized trust assumptions around BTC custody. Institutions need to know who or what controls the asset and under what conditions; ambiguous operator models won’t scale.
2. Predictable settlement and exit guarantees tied to Bitcoin. Systems that can halt or censor withdrawals will never attract long-term collateral.
3. Preservation of Bitcoin’s principles: self-custody, verifiable state, permissionless access, all the while enabling capital efficiency. The moment these are compromised, the asset stops behaving like Bitcoin.
This is precisely the design philosophy behind Hemi: a trust-minimized, verifiable execution environment that gives BTC productive utility while remaining aligned with Bitcoin’s settlement assurances.
As Bitcoin DeFi grows, do you expect it to evolve into an ecosystem with its own liquidity and narratives, or do you think its primary impact will be to feed high-quality collateral back into Ethereum and other L2s?
Both dynamics will play out, but the gravitational centre shifts toward Bitcoin as soon as BTC becomes productive collateral in a Bitcoin-aligned environment. There’s little reason for long-horizon BTC to leave once the infrastructure is in place.
At the same time, Bitcoin DeFi won’t be isolated. It can export high-integrity collateral into Ethereum and other L2s, strengthening those systems with assets that carry Bitcoin’s assurances rather than synthetic representations.
Hemi is designed precisely for this dual role: enabling a native Bitcoin liquidity stack while cleanly interfacing with the rest of DeFi.
From a risk perspective, how should conservative BTC holders consider the step from custodial or ETF exposure into participation in BTC-based DeFi, and what disclosures or tooling help them make that decision rationally?
Conservative holders should approach the shift the same way they evaluate any movement up the risk curve: by understanding control, conditions, and worst-case behaviour.
What they need are:
- explicit trust assumptions around custody and operators,
- predictable withdrawal guarantees,
- real-time monitoring of bridge health, proofs, and risk parameters,
- stress-scenario transparency, showing how the system behaves during periods of heavy volatility or downtime.
They don’t need risk removed; they need it quantified.
Hemi provides this through auditable trust boundaries and settlement behaviour rooted in Bitcoin rather than in a custodian, giving conservative holders a way to participate without sacrificing their risk profile.
How do you envision Bitcoin’s monetary properties, such as fixed supply and its current holder base, shaping the types of DeFi applications most likely to succeed in a BTC native environment?
Bitcoin’s monetary profile rewards durability over experimentation. With a fixed supply and a long-horizon holder base, the successful applications will be those that respect scarcity and deliver predictable outcomes.
That means structured credit, term lending, conservative perps, real-yield vaults such as infrastructure, as opposed to reflexive incentives.
Execution layers like Hemi enable these applications to be built directly on top of Bitcoin’s settlement model, serving a user base that values stability, capital efficiency, and minimal dilution of Bitcoin’s monetary properties.
If more BTC begins interacting with DeFi, what second-order effects do you expect on stablecoins, collateral mixes in money markets, and cross-margin trading on other chains?
A meaningful increase in BTC participation would reshape collateral quality across the ecosystem.
Stablecoins could shift toward Bitcoin-backed reserves or blended reserve structures that reduce reliance on a single collateral type. Money markets would incorporate BTC alongside stables and ETH as foundational collateral, improving credit tiers and lowering portfolio risk. For derivatives and cross-margin systems, productive BTC unlocks tighter spreads, deeper liquidity, and stronger cross-collateral frameworks.
Once BTC enters the collateral stack, systems must handle its liquidity and tail behaviour seriously, effectively raising standards across all chains. Hemi provides the natural environment for this shift: Bitcoin-aligned collateral that remains composable enough to power downstream ecosystems.
