How to move BTC to DeFi without a CEX?
You never have to use a centralized exchange ever again.
Today, we have plenty of options to transfer Bitcoin from its native chain to decentralize finance (DeFi) and back without any centralized exchange or KYC requirements.
This preserves and protects your privacy.
Here are the top protocols and tools to do that. Scroll down!
This newsletter is sponsored by the Olympics App, a competitive SoFi platform on Base network where teams engage in virtual sports competitions!
I cover three key protocols that allow you to move native Bitcoin to and from various networks in DeFi. On top of that, I will also show you two bridge aggregators that can do the same and are best used for smaller transfers.
Let’s list them first then discuss each after.
Protocols:
Unit = uBTC (on Hyperliquid, $240M TVL)
Threshold = tBTC (on Ethereum, $500M TVL)
Thorchain = wBTC / tBTC (on Ethereum)
Protocols usually have their own tokenized version of BTC like uBTC or tBTC which are credited to your DeFi wallet after a native BTC deposit is confirmed. Just follow their deposit steps. Such protocols also have the best fees.
Bridge Aggregators:
They search for the best route to make the swap across chains. This can mean using one of the protocols from above or others depending on your chosen network. Best used for smaller amounts.
Unit - uBTC
Unit is the asset tokenization layer on Hyperliquid that integrated BTC, ETH, SOL and FARTCOIN to date. It allows these assets to flow seamlessly between their native chains and the Hyperliquid ecosystem.
You should use Unit and uBTC if you plan to be active on the Hyperliquid exchange or its ecosystem. If your intention is to trade with your Bitcoin then you can credit it using Unit directly from the Hyperliquid exchange interface. Just click deposit and select BTC.
Alternatively, you can simply credit your wallet on Hyperliquid (Rabby now supports this network) with uBTC and then deploy it in the various DeFi protocols across its ecosystem. I covered the best ones in this alpha post which will make you eligible for airdrops!
Another use case is to simply buy Bitcoin with USDC on Hyperliquid and then move it to its native chain via the Unit withdrawal process. That’s a great way to protect your privacy and stack BTC securely! They do no apply any fee, except the standard network fee plus a minimum transfer of 0.002 BTC.
Unit and its assets like uBTC, uETH, and uSOL are fairly new just like the Hyperliquid ecosystem. Even so, they managed to reach $240M TVL in a very small amount of time. This goes to show demand for BTC on Hyperliquid is huge.
I do not recommend storing your BTC in a derivative like uBTC even if it is collateralized by real BTC. You only expose yourself to uBTC to trade BTC’s volatility or to farm yields.
Threshold = tBTC
tBTC is an ERC-20 token backed 1-to-1 by BTC and allows you to access Ethereum’s DeFi ecosystem.
Threshold is excellent if you want to move native BTC to the Ethereum ecosystem. Once your BTC is on Ethereum as tBTC, you can simply swap tBTC for wBTC and then do your thing. You can also use tBTC across DeFi, but its use cases are not as many.
tBTC is a direct competitor of wBTC. Its advantage is that the protocol design and how it stores native BTC is decentralized. This makes it a more robust alternative to wBTC which is controlled by three keys that have access to all that BTC collateral.
Nevertheless, wBTC was first and sees better liquidity and usage across Ethereum DeFi, including on Layer-2 networks like Arbitrum. For this reason, you can use tBTC as an intermediary to move BTC to and from its native chain.
The fees are minimal with 0% on minting tBTC and 0.2% to redeem it back to the native chain. This effectively encourages growing the tBTC ecosystem.
Thorchain = wBTC / tBTC (on Ethereum)
Thorchain is a very popular protocol that pioneered the swap of native coins between different sovereign networks, including BTC. It does not have its own tokenized Bitcoin since it used wBTC for this purpose.
While being one of the first to allow users to move Bitcoin to other networks without a third party or KYC, Thorchain does suffer from quite high fees.
In the example below, 1 BTC turns out as 0.9938 wBTC on Ethereum. That’s a loss of $658 due to fees or 0.60%. Simply based on this, minting tBTC on Ethereum with 0% fees is better even if you later have to swap it into other assets.
Nevertheless, for smaller amounts the fees would be negligible and Thorchain is always featured as one of the possible routes to move native BTC to other networks when using bridge aggregators. More on that below.
Become a Patron for lifetime access to our exclusive private alpha!
Great user interface and lots of chains available. Perfect to move assets around or swap them.
Aggregators are excellent if you want to move assets between networks and find the best route. Sometimes it can be useful to consult at least two such sites to search for the best possible route to save on fees.
I don’t recommend aggregators if you plan to move anything over 10k as then you may be punished via slippage and fees. In such cases, try to use the above protocols I mentioned that mint their own BTC derivative like uBTC/tBTC.
Also avoid using the native swap feature of your DeFi wallets because most of them apply a fee on top. Just connect to the aggregators instead and execute the swap or bridge there to cut out unnecessary fees.
As you can see above, Jumper also uses Thornchain for this swap from BTC to wBTC on Ethereum. The fee is too high in my opinion at 0.55%. Best to use uBTC or tBTC in such cases. Jumper shines on other networks like Solana or Arbitrum where fees are minimal.
To do a swap you will need to connect a BTC compatible wallet (like Phantom or Ledger) and then a deposit wallet like Rabby which is compatible with all EVM networks. You can also manually enter the deposit address, just make sure you double check your addresses and don’t mix chains.
Similar to Jumper and an alternative to double check.
Rango Exchange is older than Jumper and its user interface is a bit more clunky, but it does the job just as fine. Good to check both sites to see which one has the best route.
In both cases, sometimes the route proposed will show a better exchange rate than the one that is actually displayed before you approve the transfer. Just be mindful of this. This can be caused by changes in price, slippage, or a bad DEX.
As you can see, Rango offers more options for BTC to wBTC. They are much better than Jumper with an average fee of around 0.20% and possible even faster in execution if you choose the Relay option.
Whatever you chose, I always recommend testing with a smaller amount before going in full. This applies across all protocols. Sometimes there may be no route, but in most cases when using the biggest chains you should find no problems to move stablecoins, ETH or BTC.
What is great about the above is that you have many options and each is tailored to a different use case. The most important aspect is that anyone can move their Bitcoin to and from its native chain without ever touching a centralized exchange.
As DeFi grows, more and more options will appear to move Bitcoin and put it to work, if you decide to take that route. We’re now close to a point where DeFi is able to replace traditional banking. You can literally make and spend money directly from your DeFi accounts with nobody else having access but you.
If you enjoyed this guide, leave a comment down below and consider a subscription to our Patrons group to access my best alpha. Thank you for reading!
This newsletter is made possible with the generous support of our Patrons and partners. Upgrade your experience by becoming a Patron for lifetime access to our exclusive private alpha! Details are available on our Patrons page. All info is provided for educational purposes only and is not financial advice.
I used Threshold to mint tBTC and it works nice!
What I am missing from your list though is Apollo and zBTC. Similar stuff but for Solana.
Have you used any of the apps mentioned? Which one is your favorite?