Starknet: When Bitcoin Turns into a Yield-Generating Machine in DeFi Layer-2

The Phenomenon of Quadrupling TVL: Bitcoin and Stablecoins Flow into Starknet

In the past six months, Starknet has undergone a remarkable transformation. The platform’s total value locked (TVL) has nearly doubled, jumping from $155 million to $310 million. By November 2025, this achievement continues to grow, reaching $321.2 million, marking a 10.5% increase since the beginning of the year. This momentum is no coincidence—it is a direct result of the “BTCFi” (Bitcoin Finance) revolution that is changing how users view the most valuable assets in the crypto world.

What is driving this surge? Primarily three elements: “bridged” bitcoins flowing in (almost $130 million in various forms such as SolvBTC, WBTC, LBTC, and tBTC), stablecoins increasing to $147 million, and staking STRK tokens reaching $120 million. All three come together in an ecosystem specifically designed to make crypto assets not just held but actively used.

Technological Foundations: Why Starknet Is Different

To understand why this momentum matters, we need to grasp what makes Starknet special. Launched by StarkWare in November 2021, this platform is not just another Ethereum Layer-2. It is built on zero-knowledge proof technology (STARK) and the Cairo Virtual Machine, meaning transactions are not only cheaper—they are also more secure and can be verified in a revolutionary way.

As a ZK-rollup, Starknet processes thousands of transactions off-chain, aggregating them into a single STARK proof, then verifying everything on Ethereum at once. It’s not just about speed; it’s about unlocking unprecedented possibilities. Perhaps the most innovative feature is native account abstraction, where each account is a programmable smart contract. This means social recovery, custom authentication, and many other advanced features have been possible from day one.

From Passive to Active: How Bitcoin Becomes Productive

But technology is only half the story. The other half is about how users leverage this technology to achieve something tangible: making their bitcoin work.

The lending protocols on Starknet allow users to deposit assets and earn interest, while others borrow those assets and pay interest. This system is collateralized—borrowers must deposit more value than they borrow. The result? Bitcoin holders can access liquidity without selling their assets. A simple example: deposit WBTC, borrow USDC, use bitcoin as collateral.

More sophisticated strategies have emerged. Experienced users employ techniques called looping—a strategy that has transformed how people think about yields on bitcoin.

Automated Vaults and Looping: Smartly Doubling Returns

Looping is an elegant art for both beginners and seasoned traders. It works like this: a borrower deposits bitcoin as collateral, then borrows stablecoins against it. With the newly acquired stablecoins, they buy more bitcoin (or related bitcoin derivatives), redeposit it as additional collateral, and repeat the process. Each cycle increases collateral, and thus, the amount that can be borrowed and the net returns—after deducting loan interest.

In the past, this strategy required high sustainability and technical understanding. Today, automated vaults have changed the game. Protocols like Vesu and Troves.fi offer programmable vaults for automatic looping, making this strategy accessible even to less experienced users. They only need to set parameters—desired leverage, assets used—and the system handles the rest.

But like all leveraged strategies, looping carries risks. If bitcoin prices drop significantly, positions can be liquidated, meaning users lose part or all of their collateral.

Carry Trade: Exploiting Interest Rate Differentials

Another growing strategy on Starknet is carry trade—exploiting interest rate differentials between two markets. Here’s how it works today: bitcoin holders can borrow stablecoins at very low rates (thanks to the large STRK incentives and still moderate borrowing demand) and invest in higher-yield activities like stablecoin farming.

At certain times, the effective cost to borrow USDC against bitcoin has approached zero, while yields on stablecoins have reached 5% to 10% annually. This spread is hard to replicate in traditional markets.

Growing Ecosystem: Protocols, Innovations, and Synergies

Starknet’s growth isn’t just about one protocol or one strategy. It’s about a rapidly expanding interconnected ecosystem:

Core Infrastructure:

• Extended is a decentralized exchange for leveraged perpetual futures, allowing users to bet on price movements with leverage.
• Ekubo functions as an automated market maker (AMM) with concentrated liquidity and modular architecture, offering better efficiency than traditional AMMs.

Lending and Yield Protocols:

• Vesu is a permissionless lending protocol optimized specifically for BTCFi, with large STRK incentives and competitive interest rates.
• Uncap Finance follows the Liquity v2 model, focusing on the fully bitcoin-backed stablecoin USDU.
• Opus is a cross-margin lending platform for advanced users, with APYs ranging from 2% to 7%.
• Re7 Yield Aggregator is a fund employing advanced strategies to generate yields on bitcoin, with advertised APYs reaching 20%.
• Noon is a yield-bearing stablecoin protocol allowing users to deposit bitcoin or USDC to mint sUSN and boost returns through looping.

Aggregation and Trading:

• AVNU and LayerAkira serve as high-performance DEX aggregators and spot trading platforms.

Wallets and User Access:

• Ready, Braavos, and Xverse are advanced wallets offering integrated Earn products, providing users easy access to BTCFi strategies.
• Starknet Earn is the front-end aggregation that consolidates major BTCFi strategies into an intuitive interface.
• Focus Tree is a developer studio that has registered over one million users, building applications that make Starknet accessible to everyone.

The STRK incentive program worth 100 million (September 2025 – March 2026) supports this ecosystem, with a clear goal: to make Starknet the most cost-effective platform for borrowing stablecoins against bitcoin. The idea is that once incentives diminish, a critical mass of users will continue to use the protocols organically because they have seen the real value.

Ready: The First Native Crypto-Neobank

But Starknet’s evolution goes beyond mere lending. With Ready (formerly Argent), the first truly native crypto neobank has been born—a platform that allows users to deposit, earn, and spend crypto assets easily and fully in self-custody.

Ready opens the door to previously impossible finance:

• Direct bank transfers from over 150 countries straight into Starknet wallets.
• Fiat-crypto exchanges without relying on centralized exchanges.
• Thanks to integration with Due, users can obtain a personal vIBAN to receive stablecoins directly into their wallets.
• Self-custody debit cards linked to Visa/Mastercard, with real-time conversions from crypto to fiat.

Google Pay integration is already active, and Apple Pay is in development for launch in January 2026.

Imagine this workflow: a user deposits bitcoin into Starknet via bridge or wrapping. They then earn yields on bitcoin through staking, lending, or products like mRe7BTC. With rewards (such as STRK), they buy coffee, pay bills, or make daily purchases—all through the Ready card, never leaving the Starknet ecosystem. Everything happens quickly, cost-effectively, and without centralized intermediaries, thanks to sub-cent transactions and advanced account abstraction features.

Conclusion: Bitcoin Is No Longer Just for Holding

Starknet’s growth tells a bigger story about the future of decentralized finance. Bitcoin is no longer just an asset to hold passively and wait for appreciation. On Starknet, it is a productive asset, actively used, lent out, spent, and integrated into structured yield strategies.

With tools like Vesu, Uncap, Ready, and Starknet Earn, this platform is building a true onchain bank—a user-owned financial system combining yield, liquidity, payments, and security, all without centralized intermediaries controlling access.

Starknet’s vision is clear and compelling: to make bitcoin not just an asset to hold, but a resource to be used, invested, and spent in real life, enabled by accessible, secure, and continuously evolving DeFi infrastructure.