Market landscape

Research: Market Landscape — BTCfi + Privacy on Stellar

Author: Justin (Business Analyst) Date: 2026-06-22 Status: Complete — initial survey

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BTCfi Market

Growth trajectory

Bitcoin DeFi has been one of the breakout trends of the 2024–2025 cycle:

Date	BTCfi TVL
January 2024	$304M
December 2024	$7B+
Mid 2025	$8.6B+

That is a 28x growth in 18 months. The market is expanding fast and still early.

What is driving growth

• Bitcoin holders want to generate yield without selling BTC or giving up custody
• Institutional interest in BTC-collateralized lending (cleaner regulatory profile than altcoins)
• Maturing cross-chain infrastructure making BTC accessible on other chains
• Bitcoin’s “digital gold” narrative evolving toward “productive asset”

Current BTCfi players

Protocol	Chain	Mechanism	Privacy
WBTC (BitGo)	Ethereum	Custodial bridge	None
tBTC	Ethereum	Threshold signatures	None
Aave (WBTC collateral)	Ethereum	Lending	None
Compound (WBTC collateral)	Ethereum	Lending	None
Stacks (sBTC)	Stacks L2	Threshold bridge	None
RSK (RBTC)	RSK sidechain	Federated peg	None
Starknet (strkBTC)	Starknet	ZK-powered	Partial
Interlay (iBTC)	Polkadot	Collateralized vaults	None

Key observation: Every significant BTCfi player is either on Ethereum or a Bitcoin L2/sidechain. None are on Stellar. And none offer full ZK-privacy for positions.

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Privacy Market

Why privacy matters in DeFi

Public blockchain DeFi has a fundamental problem: every position, every trade, every liquidation threshold is visible to anyone. This creates:

• Front-running: Bots watch liquidation thresholds and exploit them
• Competitive intelligence leakage: Institutional players don’t want competitors seeing their positions
• Personal financial exposure: Individuals don’t want their net worth and borrowing behavior public
• Regulatory uncertainty: Some jurisdictions treat DeFi activity differently based on public visibility

Privacy in crypto — 2026 state

Zero-knowledge proofs have moved from experimental to practical infrastructure:

• Proof generation is orders of magnitude faster than 2022 — GPU/FPGA-accelerated provers produce basic proofs in milliseconds
• ZK has gone from research tool to production infrastructure (Starknet, zkSync, Aztec, etc.)
• The regulatory conversation has shifted toward “selective transparency” — private by default, auditable on request

Stellar’s privacy position

Stellar launched Protocol X-Ray in January 2026, making it uniquely positioned:

Feature	Detail
ZK proof verification	Noir circuit proofs verifiable inside Soroban smart contracts
Stellar Private Payments	Open-source framework: private deposits, transfers, and withdrawals using Groth16 ZK proofs
Compliance hooks	Association Set Providers (ASPs) enable selective disclosure to regulators — “open by default, private when needed”
Protocol 24 roadmap	Confidential assets are the next milestone — Stellar views privacy as a multi-year buildout

Stellar is the only major blockchain with ZK privacy infrastructure that is simultaneously compliance-friendly. This is critical for institutional adoption.

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Stellar Ecosystem

Key metrics (2025–2026)

• USDC volume: $500M/month on Stellar — the dominant stablecoin, real usage not speculation
• Network operations: Surpassed 1 billion network operations in Q3 2025
• Soroban maturity: Smart contracts moved from early experimentation to production-grade deployments
• RWA tokenization: Hit $3B target set by SDF
• Protocol 23 (Whisk, Sep 2025): Parallel smart contract execution — significantly faster network

DeFi protocols on Stellar

Protocol	Type	BTC support	Privacy
Blend	Lending (Aave-style)	No	No
Stellar DEX	Native AMM	No native BTC	No
Various AMMs	Soroban-based	No	No

Gap: There is no protocol on Stellar that handles real BTC as collateral or for trading. The entire BTCfi category is empty on Stellar.

USDC + Stellar = unique combination

USDC is the world’s most regulated and trusted stablecoin. On Stellar, USDC is natively issued by Circle — not bridged. This means:

• No bridge risk on the USDC side
• Stellar USDC is the same USDC that businesses already use for payments, remittances, and treasury
• Users borrowing USDC on Writz are getting a real, liquid, institutionally recognized asset

This combination — real BTC collateral + real USDC output — makes Writz Protocol’s value proposition immediately understandable to mainstream financial players.

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Competitive Analysis

Direct competitors to Writz Protocol

Nobody is building exactly what Writz is building. The closest analogues are:

On privacy + DeFi: Aztec Network (Ethereum), Penumbra (Cosmos) — but none handle BTC natively and none are on Stellar.

On BTCfi: Stacks, RSK, Interlay — but none have ZK privacy and none are on Stellar.

On Stellar DeFi: Blend — but no BTC support and no privacy.

Indirect competitors

Competitor	Why they’re indirect	Writz advantage
WBTC on Aave	Custodial bridge, no privacy, Ethereum fees	Trustless, private, Stellar low fees
tBTC	Complex threshold bridge, no privacy	Simpler UX, ZK privacy
Blend	On Stellar, but no BTC	Same ecosystem + BTC + privacy
Stacks sBTC	Bitcoin-native, but no privacy, no Stellar	ZK privacy, USDC output

The competitive moat

Writz’s moat is technical first-mover advantage in a specific niche:

1. First Bitcoin SPV client on Soroban — takes 12–18 months to build and audit
2. First integration of Stellar’s ZK privacy (Protocol X-Ray) with BTC collateral
3. Open SDK creates ecosystem lock-in — once Stellar wallets/protocols build on Writz SPV, switching is costly

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Market Sizing

Total Addressable Market (TAM)

BTCfi TAM: $8.6B TVL and growing. If Writz captures 5$430M+ in TVL. Protocol revenues at 1–2% annualized on TVL = $4.3M–$8.6M/year from lending alone.

Privacy DeFi TAM: The privacy DeFi category is emerging. Aztec raised $100M. Penumbra raised$23M. The market for private financial infrastructure is early but large.

LATAM remittances (future product): $150B/year market where Stellar already has distribution. BTC→USDC private remittances would be a natural extension after the core protocol is established.

Serviceable Addressable Market (SAM)

Near-term realistic targets:

• Bitcoin holders on Stellar-adjacent ecosystems (existing Stellar users with BTC)
• Privacy-conscious individuals in LATAM with BTC savings
• Crypto-native companies needing ZK Proof of Reserve (post-FTX demand is structural)
• Stellar DeFi protocols wanting BTC exposure

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Timing Assessment

Why now:

1. Protocol X-Ray launched January 2026 — the ZK infrastructure is production-ready TODAY
2. BTCfi is in a growth phase — early but proven market
3. Stellar has real USDC liquidity — not a chicken-and-egg problem on the output side
4. Soroban has matured — Protocol 23 brought parallel execution; smart contracts are production-grade
5. The summa-tx Rust SPV library exists — no need to build cryptographic primitives from scratch

Window: 12–18 months before a well-funded competitor could plausibly replicate the SPV + ZK combination on Stellar. The first-mover in a niche this specific tends to hold the position.

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Last updated: 2026-06-22