Bitcoin (BTC), known for its role as a store of value, is now taking bigger steps into the world of decentralized finance (DeFi). According to a recent report from Binance Research released on Thursday, Bitcoin’s influence in DeFi is expanding, showing it’s becoming much more than just a place to store value.

As Binance Research analyst Moulik Nagesh explained, the Bitcoin network is “evolving into a broader decentralized finance ecosystem with the emergence of Bitcoin DeFi.” This signifies a shift towards Bitcoin playing a more active role in the DeFi space.

The report highlights that this growing sector is all about “unlocking bitcoin’s capital efficiency.” Essentially, it’s about making your Bitcoin work harder for you through financial applications like lending platforms, staking opportunities, stablecoin integrations, and decentralized exchanges (DEX’s).

For those new to the term, DeFi is essentially a catch-all phrase for financial activities like lending and trading that happen directly on a blockchain. The key here is cutting out traditional middlemen, offering a more direct and potentially efficient way to manage finances.

Binance pointed out an interesting statistic: currently, only around 0.8% of the total Bitcoin supply is engaged in DeFi. This small percentage highlights a potentially massive “untapped opportunity” for growth. To put this into perspective, Julian Love, a deal analyst at Franklin Templeton Digital Assets, suggested last year that this opportunity could be as large as a staggering $1 trillion.

The Binance Research report further elaborated that to fully realize this potential, Bitcoin needs layer 2 solutions. The reason? Bitcoin’s network, unlike some others, wasn’t originally built with “native programmability” for complex DeFi applications. Think of layer 1 as the main highway of a blockchain, and layer 2 as faster express lanes built on top. Layer 2 networks are essentially add-ons or separate blockchains constructed on top of the main Bitcoin blockchain.

While there’s been encouraging progress in developing these Bitcoin layer-2 networks, Binance Research notes that they still require wider use and more attractive incentives to really take off and scale effectively. Getting more people and crypto flowing into these layer 2s is crucial for growth.

Looking ahead, the report touches upon the Bitcoin network’s security model, noting “long-term sustainability challenges.” As the rewards for Bitcoin miners (block rewards) continue to decrease over time, there’s a potential impact on their motivation to secure the network.

Ultimately, the long-term success of Bitcoin DeFi hinges on several factors, the report concludes. These include solid execution of current projects, continued advancements in layer-2 technologies, and, importantly, ensuring that Bitcoin DeFi stays true to and enhances Bitcoin’s core strengths and unique value.

Read more: Ethereum L2 Starknet Seeks ‘Bitcoin’s DeFi Take-Off Moment’ With BTC Wallet Xverse