As the sector of decentralized finance (DeFi) continues evolving, Bitcoin’s position inside it’s being quietly (or not a lot) redefined. Whereas the first cryptocurrency has lengthy stood (and maybe, continues to) as a passive retailer of worth, newer frameworks like restaking protocols are rising to unlock its large financial potential with out altering its base-layer integrity.
On this thrilling interview with Luke Xie, the co-founder and CEO of SatLayer, we discover how the idea of Bitcoin restaking might reshape its utility throughout DeFi.
From programmable slashing logic to multi-chain safety coordination, nonetheless, restaking presents each technical hurdles and appreciable alternatives. So keep tuned and let’s dive proper into it.
What position do you suppose the Bitcoin Reserve within the US will play in decentralized finance?
The U.S. Bitcoin Reserve symbolizes mainstream validation of Bitcoin’s long-term worth. Whereas it might circuitously take part in DeFi, its existence underpins belief in Bitcoin as a pristine, censorship-resistant collateral asset. This belief creates a stronger basis for decentralized finance constructed on Bitcoin. The extra confidence establishments and sovereign entities have in BTC, the extra seemingly DeFi protocols are to undertake it as a core asset — unlocking composability, liquidity, and programmability that respects Bitcoin’s ethos.
What are the largest technical challenges in bringing restaking to Bitcoin?
Xie summarized the challenges into three important teams.
Slashing programmability throughout numerous BVSs
In contrast to conventional staking, which is usually binary (you both signal accurately or not), restaking introduces service-specific enforcement. Every BVS — whether or not it’s an oracle, bridge, DEX, or rollup — has its personal definition of misbehavior. The problem lies in designing slashing logic that’s not solely programmable and verifiable, but in addition versatile sufficient to adapt to the wants of every particular person service.
Safe multi-BVS coordination
Operators typically safe a number of BVSs on the identical time, every with its personal guidelines and threat parameters. Guaranteeing that slashing and reward logic is accurately remoted or cross-enforced — with out compromising safety or equity — is a important a part of restaking infrastructure design.
Vault design and isolation ensures
Restakers deposit BTC LSTs into vaults that connect with a number of BVSs. Every vault inherits that service’s particular slashing situations and threat publicity. The problem is making certain restakers have full visibility into what dangers they’re opting into, with clearly encoded slashing logic, predictable withdrawal flows, and clear grace interval mechanics.
What benefits does Bitcoin restaking provide in comparison with conventional staking in proof-of-stake ecosystems?
Bitcoin’s market cap is at $2.1T (as of Could 23, 2025) and but over 90% of Bitcoin sits idle — saved however unused, with its financial potential untapped. Restaking adjustments that. It transforms BTC from passive capital into productive, yield-generating collateral, unlocking highly effective financial utility with out altering Bitcoin’s base layer.
Bitcoin restaking pairs BTC’s unmatched financial credibility with a fee-based, utility-driven yield mannequin. In contrast to conventional proof-of-stake programs that depend on inflationary emissions and dilute token holders, Bitcoin restaking is constructed on actual providers and actual demand.
Restaked BTC is used to safe Bitcoin Validated Companies (BVSs) — decentralized use-cases like on-chain insurance coverage protection and liquidity float provisioning — that generate protocol-level charges from day one. This implies restakers earn sustainable, non-inflationary yield based mostly on the precise financial worth they contribute, not only for locking up capital.
With SatLayer, restaked BTC doesn’t simply safe a single chain — it could actually assist a modular, multi-chain ecosystem, from rollups and bridges to oracles and appchains. Restakers acquire publicity to a number of sources of actual yield with out being tied to anyone protocol’s inflation schedule.
What does a “productive BTC” world seem like within the subsequent 2–3 years, and what must occur to get there?
A “productive BTC” world is one the place Bitcoin is now not only a passive retailer of worth — it’s actively securing decentralized programs, incomes actual yield, and serving as pristine collateral throughout DeFi and real-world purposes.
On this future, BTC is restaked to safe important infrastructure like oracles, rollups, bridges, and appchains. The rewards aren’t pushed by inflation or speculative tokenomics, however by delivering tangible, economically worthwhile safety to networks that want it. The yield is actual — paid by customers and purposes that derive real utility and belief from Bitcoin’s financial weight.
On the heart of this transformation is SatLayer — the protocol that connects BTC holders, rising protocols, and actual financial exercise.
To make this future a actuality, SatLayer is, from day one, onboarding Bitcoin Validated Companies (BVSs) — income producing decentralized providers that depend on Bitcoin-backed restaking to perform securely — with the intention to generate sustainable, actual, protocol-level charges.
This design promotes a vital mindset shift: BTC holders are now not simply “hodling” — they’re empowered to place their belongings to work and earn sustainable, ecosystem-driven yield.
As this takes maintain, it units off a self-sustaining, incentives-aligned flywheel:
- BTC enters productive restaking by way of SatLayer.
- Protocols acquire Bitcoin-backed safety, boosting their credibility and resilience.
- Restakers earn actual sustainable yield, rising Bitcoin’s utility and attraction.
- That yield attracts extra BTC into the system, amplifying its safety ensures.
- Extra initiatives select to construct on Bitcoin-backed safety, unlocking much more yield alternatives.
With SatLayer as the inspiration, BTC evolves from digital gold into the financial engine of a safe, decentralized future.
How is SatLayer approaching safety and slashing dangers in a modular, multi-chain restaking mannequin?
Constructed with a security-first mindset, SatLayer’s core infrastructure undergoes quarterly third-party audits by main safety corporations, together with steady testing and formal verification of important elements.
However SatLayer’s actual innovation lies in the way it handles threat: by means of programmable, application-specific slashing. In contrast to conventional staking fashions with one-size-fits-all penalties, SatLayer allows every Bitcoin Validated Service (BVS) to outline its personal slashing logic — custom-made to its particular use case, safety necessities, and menace mannequin.
Instance: Within the context of an on-chain protection BVS, Bitcoin restakers present safety ensures for underwriting sensible contract threat or protocol failures. Within the occasion that an insured protocol fails — attributable to a hack, sensible contract bug, liquidation shortfall, or depeg — programmable logic can set off a slash and provoke payouts. Basically, BVSs act as decentralized claims adjudicators — ingesting on-chain occasions, oracle knowledge, and even off-chain proofs to confirm claims and execute protection.
This modular, opt-in safety mannequin ensures that Bitcoin restakers are solely ever uncovered to dangers they explicitly settle for, with full visibility into every BVS’s slashing logic and parameters earlier than delegating capital.
By combining audit-grade infrastructure with programmable threat administration, SatLayer brings Bitcoin-grade assurance to a dynamic, restaking setting — all whereas preserving sovereignty and minimizing unintended publicity.
How can Bitcoin’s credibility and SatLayer’s infrastructure assist rebuild belief in decentralized finance?
The 2022–2023 wave of DeFi failures uncovered the risks of over-financialization and opaque, mispriced threat. Bitcoin gives a counterweight — with financial readability, fastened provide, and a impartial, non-inflationary baseline.
And SatLayer extends that readability into DeFi.
By enabling BTC to safe protocols by means of restaking — in a clear, opt-in approach — it replaces governance-heavy programs with code-enforced belief.
When decentralized providers are underpinned by Bitcoin’s credibility and SatLayer’s modular, verifiable financial layer, they acquire stronger ensures, are basically extra resilient — and change into extra aligned with the unique values of decentralization: trustless execution, clear logic, consumer sovereignty, and censorship resistance.
What’s a serious false impression the crypto group has about Bitcoin’s potential position in DeFi?
A serious false impression within the crypto group is that Bitcoin can’t play an lively position in DeFi — that it’s solely helpful as a passive retailer of worth, not as programmable collateral.
This perception stems from Bitcoin’s intentionally minimal scripting mannequin and the absence of native sensible contracts. Consequently, many assume that BTC have to be wrapped, bridged, or basically compromised to take part in decentralized purposes.
However that’s altering.
Protocols like SatLayer problem this assumption head on — introducing restaking and slashing mechanisms that stretch Bitcoin’s utility with out sacrificing its core rules. By means of opt-in vaults, verifiable operator habits, and programmable financial enforcement, Bitcoin can now present real, cryptoeconomic safety to providers like oracles, insurance coverage, bridges, and liquidity layers — with out being bridged or reissued.
The true false impression is underestimating how far credibility, transparency, and programmable enforcement can go when composed with intention.
With a modular framework like SatLayer, Bitcoin transforms from passive digital gold into an lively basis for a brand new monetary economic system — one which’s safe, programmable, and trustless by design.
Disclaimer: The content material shared on this interview is for informational functions solely and doesn’t represent monetary recommendation, funding suggestion, or endorsement of any challenge, protocol, or asset. The cryptocurrency area entails threat and volatility. Readers are inspired to conduct their very own analysis and seek the advice of with certified professionals earlier than making any monetary selections. This interview was performed in cooperation with SatLayer, who generously shared their time and insights. The content material has been reviewed and accepted for publication in mutual understanding. Minor edits have been made for readability and readability, whereas preserving the substance and tone of the unique dialog.
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