BTCFi is not dead, it just hasn't started yet—

Today I resonated deeply with @kevinliub's article:

Since Babylon went live, its price has been incredibly disappointing, and the enthusiasm for the BTCFi sector has plummeted.

Many people have begun to doubt whether this sector has been validated as a failure.

However, if we break it down carefully, we will find that the problem does not lie in the narrative of "BTCFi" itself, but rather in the fact that Babylon chose the wrong entry point for its model.

The underlying logic of "shared BTC security" proposed by Babylon is actually not wrong in direction.

But the problem lies on the demand side: who is willing to use it? Who will pay for it?

Large chains will not use Babylon for security sharing, as that would undermine their own native tokens;

Smaller chains may be interested, but their scale is insufficient to support Babylon's valuation.

To be more realistic, even if smaller chains manage to implement it, they will ultimately have to return to their own token systems for security. This creates a demand closed loop—

No one really needs Babylon.

The ETH ecosystem has long begun to explore the path of "security sharing," such as EigenLayer, which has a more complete mechanism and was developed earlier, but to this day has still not truly addressed the demand side.

This is not a BTC issue; it is a problem with the entire "security sharing" logic.

So the question arises: is BTCFi at an end?

I don't see it that way. @kevinliub's analysis is very insightful; what BTCFi really needs to solve are two more fundamental questions:

1️⃣ How to achieve native BTC security?

2️⃣ Where does native BTC yield come from, and can it be sustainable?

These two questions correspond to the key path that ETH took when it successfully navigated the L2 route.

The success of ETH's Optimism/Rollup relies on their complete inheritance of the security of the ETH main chain, with no technical forks and no value divergence.

For BTC to have its own "OP moment," it also needs a native solution that does not modify the main chain or disrupt consensus—currently, BitVM2 seems to be the most likely direction to achieve this.

In terms of the economic model, if BTCFi relies solely on platform token incentives, it is no different in essence from any previous DeFi bubble and will not last long.

But if it can truly achieve something like ETH L2, pricing L2 gas fees in BTC and then returning BTC to holders through mechanisms—

This would represent true "native BTC yield," rather than a parasitic model dependent on others' systems.

If BitVM2 can indeed achieve this without altering the main chain while also having a viable economic closed loop, then BTCFi is not the end, but just the beginning.

When everyone is disappointed, it may actually be the time for a new order to be born.

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