Bitcoin News Today: Bitcoin's Survival May Hinge on BTCfi's Ability to Reignite Fees

Bitcoin's fee model is under threat as transaction fees plummet to historic lows, raising concerns about the network’s long-term security. According to Galaxy Digital , daily transaction fees have dropped more than 80% since April 2025, with nearly 15% of blocks now mined at minimal or no cost, defined as one satoshi per virtual byte or less [1]. This sharp decline, while beneficial for users seeking low-cost transactions, has left miners struggling to maintain profitability, particularly after the April 2024 halving reduced block rewards to 3.125 BTC per block [1]. The reduced incentive structure has created a precarious situation where the network’s reliance on transaction fees has become more critical than ever.

The decline in fees is attributed to a reduction in onchain activity, particularly from non-monetary use cases like Ordinals and Runes, which previously drove a significant portion of Bitcoin’s network throughput. OP_RETURN transactions, once a major driver of volume during the 2024 Ordinals boom, now account for just 20% of daily volume, down from over 60% at their peak [1]. Additionally, the rise of spot Bitcoin ETFs, which now hold over 1.3 million BTC, has shifted more BTC activity offchain, further reducing the incentive for miners to secure the network [1]. The Bitcoin fee market is designed to be elastic—fees rise with demand and fall when activity declines—but if this trend continues, miners may face insufficient rewards to justify maintaining network security [1].

Amid this crisis, a potential solution is emerging in the form of Bitcoin-native DeFi, or BTCfi. Unlike DeFi on Ethereum or Solana , BTCfi leverages Bitcoin as the base asset while building financial applications such as lending, trading, and yield generation on layers or protocols that interact directly with the Bitcoin network. According to Pierre Samaties, chief business officer at the Dfinity Foundation, every BTCfi action necessitates the movement of Bitcoin, which in turn generates block space usage and fee revenue [1]. By driving onchain activity through financial primitives and programmable components, BTCfi could potentially restore the fee base and sustain the network’s security model.

Bitcoin’s infrastructure has also seen significant evolution in recent years, transforming from a simple settlement layer into a multi-layered ecosystem. Julian Mezger of Liquidium noted that the last five years have laid the groundwork for true Bitcoin-native DeFi [1]. However, the current ecosystem remains in its early stages, and while new solutions like ZK-Rollups, RGB protocols, and BitVM are promising, widespread adoption is still some time away. The challenge lies in aligning these innovations with Bitcoin’s native architecture while ensuring security, scalability, and composability.

The Bitcoin ecosystem is now at a crossroads, with multiple Layer 2 (L2) technologies competing to define the future of the network. Solutions such as the Lightning Network, RGB, and ZK-Rollups each offer distinct trade-offs between speed, privacy, and security. The Lightning Network, for instance, has matured into a robust infrastructure for micropayments, while RGB focuses on asset security and confidentiality [1]. ZK-Rollups, on the other hand, bring EVM compatibility and high throughput but rely on external verification mechanisms. BitVM represents a novel approach by enabling Turing-complete computation without altering Bitcoin’s consensus rules [1]. These diverse pathways suggest a multi-polar future for BTC L2s, where different solutions serve different use cases—payments, contracts, assets, and more—within a cohesive ecosystem.

The coming years will likely determine whether BTCfi and L2 innovations can sustain Bitcoin’s network security and drive its adoption beyond digital gold. As the market continues to evolve, the role of stablecoins and regulatory clarity—such as the U.S. GENIUS Stablecoin Act—could further shape Bitcoin’s trajectory, reinforcing its position as a foundational settlement layer for the global financial system [1].

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