Bitcoin layer-2 builders pitch BTCFi as the next institutional unlock

Hong Kong — Bitcoin layer-2 builders made the case on Thursday that the next phase of crypto’s evolution won’t be about replacing bitcoin as “digital gold,” but making it productive.

Speaking at Consensus Hong Kong 2026, leaders from Citrea, Rootstock Labs and investment firm BlockSpaceForce argued that Bitcoin’s scaling layers are less about raw throughput and more about turning the world’s largest cryptocurrency into a programmable financial base layer.

“Most of it — the mission — is just making Bitcoin a productive asset,” said Gabe Parker, head of business development at Citrea, a zk-rollup built on Bitcoin. Bitcoin’s base layer, he noted, was never designed for expressive smart contracts. “It’s about introducing existing narratives like DeFi, lending, borrowing, and adding that stack to Bitcoin…It’s more of a programmability feature than scaling.”

Diego Gutierrez Zaldivar, CEO of Rootstock Labs, pointed out that the industry’s obsession with the term “layer two” misses the point.

“Layer one is a store of value. Layer two is an economic coordination layer…and layer three is a scaling layer that enables payments,” Gutierrez Zaldivar said. “We should start talking about networks that are economic coordination layers.”

Panelists pointed to growing institutional demand for bitcoin-backed lending and yield strategies. “Bitcoin has grown into a macro financial asset that everyone wants to hold,” said Charles Chong of BlockSpaceForce. “The next unlock is to build a financial system around it.”

But trust assumptions remain central to the debate. Parker of Citrea criticized the reliance on centralized custodians behind wrapped bitcoin products on Ethereum. “If you look at what secures wrapped bitcoin, it’s just a three-to-five multisig,” he said. “That model is not scalable. If you want to manage hundreds of billions or trillions, you need protocol-based assumptions, not counterparty-based assumptions.”

Still, institutions are cautious. “On the one hand, they can work with regulated counterparties and have legal recourse in a centralized manner,” Chong of BlockSpaceForce said. “Or they can deploy in BTCFi permissionless manner, but in that case, you are trusting the protocol governance and assuming smart contract risk. I think with this in mind, a lot of institutions are actually going to pick the former solution today, at its current point.”

Gutierrez Zaldivar of Rootstock Labs argued hybrid compliance models may bridge that gap in the interim, but emphasized the long-term vision goes further.

“In order for Bitcoin to become relevant for the world, it’s not enough to be a store of value,” he said.

For Bitcoin’s scaling advocates, the bet is that even a small portion of bitcoin flowing into decentralized finance could reshape both the network and global markets in the years ahead.

Read more: As DATs Face Pressure, Institutions Could Soon Look to BTCFi for Their Next Strategic Shift