Audience, Bitcoin's main NFT protocol, was launched in January 2023, and the main availability token protocols, BRC20 and Runes, were launched in March 2023 and April 2024, respectively. Despite this recent launch, additional features are needed to build a strong decentralized financial ecosystem. This addition is being introduced to Bitcoin in two ways. First, efforts are underway to enhance smart contract capabilities and increase Bitcoin's efficiency through Bitcoin Improvement Proposals (BIPs). Second, technology development such as BitVM, Pegs, and Bridges will provide improved programming capabilities and efficiency without upgrading Bitcoin core software.
Although the Bitcoin DeFi ecosystem is still in its infancy, we see strong indicators of future growth through the growing number of developers and DeFi activities. In 2023, 40% of Bitcoin's open source developers focused on Bitcoin Layer 2 and scaling solutions, and in the first quarter of 2024, the Bitcoin ecosystem's total locked value (TVL) increased more than sixfold from $492 million to more than $2.9 billion. Given these early indicators and what has happened in other ecosystems, the Bitcoin DeFi ecosystem is projected to generate more than $1 trillion in value over the next 5 to 10 years.
