Definition
Bitcoin DeFi is a broad label for financial applications that use BTC or assets linked to Bitcoin for activities such as trading, borrowing, collateral management, or payment coordination. It does not identify a single protocol or a uniform security model. Some arrangements use Bitcoin's native transaction scripting, while others rely on sidechains, additional execution networks, bridges, custodians, or wrapped BTC tokens. These differences determine who controls funds and which software enforces the application's promises. A platform connected to Bitcoin does not automatically inherit every protection of holding native BTC in a self-controlled wallet. Questions about redemption, liquidation rules, price oracles, administrator keys, and emergency withdrawals are therefore central to understanding a particular application. Bitcoin itself uses proof of work; a product advertising BTC staking or yield should explain its separate reward mechanism rather than imply that simply holding BTC earns native consensus rewards.
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