History is full of pivotal moments. Some slide in without warning, just to dust off

History is full of pivotal moments. Some slide in without warning, only to be dusted off and thrust into the spotlight by historians decades later, while others roar into existence with all the fanfare of a holiday parade. From the hype alone, the launch of the Runes token standard appears to fall into the latter category.

On April 19, the new protocol — designed to facilitate more efficient creation of Bitcoin's native fungible tokens and coinciding with the scheduled fourth halving of Bitcoin (BTC) — led to a flurry of investment activity. More than 7,000 rune tokens were minted in the first two days after launch. As of the time of writing, more than 91,000 runes have been mined on Bitcoin with an associated $4.5 million in transaction fees paid to miners. At the height of the hype in mid-April, demand pushed transaction fees to an unprecedented high of $128.45.

At the time, quite a few analysts wondered whether we were seeing a repeat of the 2021 “summer” of decentralized finance (DeFi), when the launch of numerous decentralized applications and tokens led to rampant activity and a sudden influx of liquidity into Ethereum. blockchain. But if so, autumn came rather quickly; In mid-May, the number of runic inscriptions decreased by 99%.

Therefore, the runes were released truly A historic moment for Bitcoin DeFi (BTCFi) or just an expression of momentary interest? Maybe it was a little of both.

Facilitating the Runes protocol to create tokens can be instrumental in enabling liquid storage and, in turn, investment activity, layer 2 expansion, and DeFi innovation. But make no mistake: runes alone are just one advance among many. Over the past decade, the BTCFi revolution has been quietly underway – and pending possible approval of the Bitcoin Improvement Proposal (BIP) OP_CAT in 2025, it appears poised to spur unprecedented growth for Bitcoin.

Related: Runes Protocol Will Spark a New Season for Bitcoin After the Halving

But before we can predict what is to come, we must consider where we currently stand. Mainstream adoption depends on three key pillars: visibility, diversity and accessibility. As the first and most important cryptocurrency, Bitcoin commands attention and respect but (at least for now) falls short of the other two categories.

Temporary Hurdle: Innovators address BTCFi's capital inefficiency and limited scalability

Bitcoin is capital efficient but not capital efficient. Despite its high market capitalization, leading position as a store of value, and significant buying by investors, BTC is largely underutilized as an investment asset. As of early April, approximately 65% ​​of Bitcoin supply has not moved in over a year. That was 10% lower than in January, which coincided with the launch of several exchange-traded funds. While investors are starting to put their Bitcoin to work, more than half of them are still hunkering down.

To be fair, Bitcoin investors have had plenty of reasons to be conservative, given the lack of sustainable return opportunities, the absence of institutional-friendly return products, and the unknown risks of moving or deploying assets. Enter our slow undercurrent of revolution – a slow, stretching climax Years From the continued determination to evolve Bitcoin from a store of value into a vibrant financial ecosystem in its own right.

Related: 3 Trends to Consider Before Bitcoin's Uptrend Resumes

Efforts so far focus on two main priorities: making Bitcoin more programmable and improving capital efficiency. By design, the current Bitcoin network does not provide smart contract functionality. While this reduces complexity and the risk of security breaches, it also prevents the use of loops and logical conditions, thus restricting the development and scaling of decentralized applications. High transaction fees on the blockchain and inefficient coding protocols – even Runes – have hindered active, yield-generating investment activities.

Bitcoin's decentralized finance ecosystem may be nascent, but it is undoubtedly on the rise. In addition to core DeFi fundamentals like DEXs, Money Markets, Vaults, Oracles, and Stablecoins, BTCFi includes solutions aimed at solving the current risks facing BTC, assets, and the Bitcoin network. Public and purpose-built L2s, such as Stacks, Merlin, and B2, are developing their own BTCFi ecosystems. Projects like Babylon are driving DeFi development by bridging the gap between Proof of Work and Proof of Stake models.

Taking all of this into context, the emergence of BTCFi and the subsequent “Summer of Bitcoin DeFi” seems inevitable, if long overdue. But advocates will likely need to wait another year — or even two, given the innovation time — before the season begins.

OP_CAT could mark the start of a new BTCFi renaissance – if it goes through 2025

If the runes arrived in cacophony, the OP_CAT Bitcoin proposal arrived in a whisper. This document is expected to undergo revision in 2025, and will bring back smart contract functionality that has not been available on Bitcoin since Satoshi Nakamoto himself disabled it in 2010. OP_CAT would enable logical loops and conditions, thus allowing the creation of rules or conditions on how money can be spent. Bitcoin – opening the door to many development possibilities, including layer 2, smart contracts, and more.

If OP_CAT passes, it will fundamentally change how people make use of Bitcoin and usher in a new renaissance for projects seeking to make Bitcoin more programmable or capital efficient. Innovators will finally have a secure way to adapt Bitcoin's programmability to critical use cases such as decentralized finance, scalability, and chain-chain interoperability, leading to more abundant, diverse, and profitable investment opportunities.

At this point, we will officially have the second pillar of mass adoption. Bitcoin will continue to attract attention as an area for expansion of decentralized finance. This, coupled with the development of a secure and robust infrastructure, could lead to massive amounts of capital flowing into Bitcoin revenue generating protocols. Obstacles exist, of course. For example, as individual L2 and DeFi ecosystems emerge and grow, they will form their own communities and leverage their own version of BTC – which will inevitably lead to a fragmentation of liquidity and returns.

Accessibility is also a concern. Despite its appeal and potential, cryptocurrency can seem intimidating and inaccessible to retail investors. While institutional players have committed to the cause, there is still more work to be done to educate and engage the general public. Many Bitcoin holders and potential users may be familiar with DeFi's use or underlying concepts (e.g., bridging). Education and abstraction of the concepts will be important priorities for ecosystem advocates who intend to encourage mainstream adoption.

the real BTCFi Summer may be a few years away, but if history has told us anything, it's that we need to start empowering our future users now. Although these quiet moments of progress and preparation may not all command the headlines of Runes' debut, they are all important. Much like blockchain work, making history is a collective endeavor; Individuals must come forward and contribute to the cause. Things are looking up, change is underway, and our collective advocacy on this issue is strong – the only remaining question is when we will see our vision for BTCFi realized.

This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.