Dormant No More: Why Reactivating Bitcoin in DeFi Could Revolutionize Crypto Finance
Unleashing Bitcoin’s idle billions could transform DeFi liquidity, yield, and stability—without compromising its store-of-value legacy
Bitcoin: The Sleeping Giant of Crypto Liquidity
Bitcoin is one of the world’s most valuable financial assets, yet an astonishing 62% of its supply remains inactive—sitting untouched in wallets for over a year. While Bitcoin’s identity as a “store of value” is well-entrenched, this dormancy means billions of dollars in potential liquidity lie idle, unable to support the fast-evolving decentralized finance (DeFi) ecosystem.
According to Glassnode, as of early 2025, this inactive portion forms a substantial part of the Bitcoin supply—highlighting a unique opportunity.
“Dormant Bitcoin is a vast, untapped reservoir of opportunity within the Web3 economy,” says Amitej Gajjala, CEO of KernelDAO.
From Dormant to Dynamic: What If Idle Bitcoin Rejoined the Market?
If even a fraction of dormant Bitcoin were reactivated, the crypto market could witness a massive shift. Such a move might cause volatility if assets are dumped en masse, but there’s a smarter alternative: channeling dormant BTC into DeFi protocols.
Rather than disrupting markets, restaking dormant Bitcoin in DeFi platforms offers yield, supports liquidity, and preserves Bitcoin’s scarcity and long-term value.
Bitcoin Reserves as a Strategic DeFi Tool
Take the U.S. government’s 198,000 BTC reserve—held under strict no-sell policies. Instead of letting it sit idle, imagine it earning passive income via DeFi restaking strategies, all while boosting ecosystem stability.
“These are ideal conditions for putting this Bitcoin into DeFi without selling a single satoshi,” notes Gajjala.
Bitcoin in DeFi: A Sleeping Powerhouse
As of March 2025, Bitcoin’s total value locked (TVL) in DeFi stands at just $5 billion, a mere 6% of all blockchain TVL, compared to Ethereum’s 52.56% dominance with $48 billion.
If even a small portion of dormant BTC enters DeFi, Bitcoin could redefine DeFi’s liquidity landscape, encouraging more stable and long-term capital flows.
Why Restaking Is the Key to Unlocking Bitcoin’s DeFi Potential
Restaking allows Bitcoin holders to securely stake their assets in DeFi protocols to earn predictable, passive returns, much like traditional finance tools.
It offers a win-win scenario: yield for holders and economic security for the network.
Restaking is especially attractive to conservative Bitcoin investors, who typically avoid volatile trading but might embrace a capital-preserving, yield-generating strategy that keeps their assets productive.
From Store of Value to Source of Liquidity
Integrating dormant Bitcoin into DeFi won’t just unlock billions in liquidity—it could enhance stability across the decentralized finance space. This transformation allows Bitcoin to act as both a store of value and a productive financial instrument, deepening its role in global finance.
Share This“Activating even a small slice of dormant BTC can provide significant benefits for the entire ecosystem,” Gajjala emphasizes.
