Bitcoin's DeFi Ecosystem Expands with zk Rollups, Covenants, and Starknet Integration
1min read Bitcoin's programmability is rapidly advancing without the need for changes to the Bitcoin Core code. This evolution is driven by new solutions that enable zk rollups, covenants, and full DeFi ecosystems on the Bitcoin network. These developments are significant as they allow for the scaling of Bitcoin to thousands of transactions per second, introducing features like yield farming, staking, and lending, all without the need for protocol changes.
One of the key players in this space is Xverse, a popular Bitcoin wallet, which has announced its upcoming integration with Starknet. Starknet, originally an Ethereum-native Layer 2 solution, is now expanding its reach to Bitcoin. By positioning itself as "Bitcoin’s execution layer," Starknet aims to provide a seamless DeFi experience to Bitcoin users without the need for contentious opcode upgrades. This move is part of a broader push to unlock Bitcoin’s smart contract potential without altering the protocol.
This push began with research breakthroughs such as BitVM, followed by Starknet-backed ColliderScript, and most recently, Bitcoin PIPEs. Bitcoin PIPEs (Polynomial Inner Product Encryption) is a particularly ambitious project backed by Polychain Capital. It has developed a cryptographic method to verify zk-SNARKs on Bitcoin without new opcodes, offering a trust-minimized alternative to existing solutions. The key promise of PIPEs is to reduce the verification process to checking Schnorr signatures, thereby sidestepping Bitcoin’s script limitations using cryptography.
Misha Komarov of cryptography research and development company [[alloc] init] explains the significance of this approach: "What can we verify on Bitcoin? We can verify signatures. We turn the zk verification into a signature verification," thus avoiding contentious opcode upgrades. While this method is currently expensive to compute, it proves that zk rollups and covenants do not require a protocol change. Komarov sees PIPEs as a potential replacement for BitVM, which relies on challenge-response mechanics for trust-minimized bridging to off-chain layers. PIPEs offer a single-transaction verification method, providing instant finality.
Ask Aime: What new features can I expect from Bitcoin's recent advancements in scalability and smart contract capabilities, and how will this affect the future of DeFi on the Bitcoin network?
Bitcoin PIPEs is also an alternative to ColliderScript, developed by Starknet researchers to enable covenants on Bitcoin without a fork. Starknet has pitched this as a stepping stone to its broader Bitcoin expansion, which includes the upcoming Xverse integration. StarkWare CEO Eli Ben-Sass 
