Botanix's closure raises critical questions for Bitcoin developers: Is there genuine market interest in programmable BTC, or merely a demand for enhanced borrowing, lending, and yield options?
By Jamie Crawley, AI Boost|Edited by Cheyenne Ligon Jun 17, 2026, 7:17 p.m. 4 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on (CoinDesk)SummaryShow- Botanix is ceasing operations after determining that programmable Bitcoin "did not work" in the current market environment.
- Developers assert that general-purpose layer-2 ecosystems are facing challenges, although there remains interest in bitcoin-backed lending, staking, and yield.
- A variety of projects emerged during the bullish market of 2024-2025, but current subdued sentiment suggests users prioritize BTC's value retention.
Last week, Botanix disclosed it would be shutting down, delivering a straightforward message about its situation.
"It did not work," the company stated in a social media announcement regarding the closure. "At least not in this market and not in this timeline."
Botanix was among several initiatives promoting Bitcoin as a platform for decentralized finance (DeFi), staking, zero-knowledge rollups, and smart contracts.
The firm concluded that "making Bitcoin programmable, productive, and integrated into real financial activities is not where real-world users are focused right now."
Current market conditions might not be ideal for fostering utility and programmability for the original cryptocurrency. Many investors are drawn to Bitcoin primarily for its role as a store of value, which may overshadow other potential functionalities when its core function isn't performing effectively.
This situation prompts a challenging question: has the enthusiasm for Bitcoin's utility diminished?
The data provides little reassurance. According to DefiLlama, Ethereum boasts approximately $39 billion in total value locked, whereas Bitcoin’s on-chain DeFi activities are under $5 billion, despite its market capitalization being four to five times larger than that of Ethereum.
Rootstock, a well-established Bitcoin smart contract platform, reports a total value locked of about $101 million, based on DefiLlama's data. Meanwhile, Citrea, a newer zero-knowledge rollup for Bitcoin, has less than $1 million in stablecoin market capitalization.
New Economic Landscape
Despite Botanix's downfall, remaining developers argue that it doesn’t signify the end of Bitcoin's utility. They believe it illustrates a shift away from the overly simplistic notion that Bitcoin requires its own equivalent to Ethereum or Solana.
David Tse, co-founder of Babylon, a staking initiative, noted that many Bitcoin layer-2 projects falter because they attempt to establish a completely new economy.
Babylon, he explained, takes a different route by integrating Bitcoin into established liquid markets, such as Ethereum's DeFi ecosystem.
"We're introducing Bitcoin to Ethereum as our primary use case," Tse stated. "Aave is the leading DeFi protocol on Ethereum, so we are connecting it with the most significant hub of the smart contract economy."
This distinction is crucial. Products like wrapped Bitcoin, including WBTC, Coinbase’s cbBTC, and Circle’s recently launched synthetic bitcoin product, already facilitate BTC’s participation in DeFi. However, Tse noted that many Bitcoin holders are reluctant to relinquish custody in favor of synthetic tokens.
"Most users, many users, do not like it," he asserted. "They prefer to maintain ownership and custody."
Challenges Facing Bitcoin Layer-2s
Orkun Mahir Kılıç, co-founder and CEO of Chainway Labs, which developed Citrea, offered a more direct critique of the sector's previous ambitions.
"Launching with the same objectives as Solana from day one is illogical," he remarked.
Kılıç suggested that Bitcoin layer-2s should refrain from marketing themselves as general-purpose blockchains since mature ecosystems already exist for trading, lending, consumer applications, and perpetual futures.
Instead, he argued, Bitcoin layer-2s should concentrate on products that leverage Bitcoin's unique security and settlement features.
"There are still issues to be addressed in the Bitcoin layer-2 markets," he noted. "However, aiming for a general-purpose ecosystem and competing with Ethereum applications right from the start is quite challenging."
Diego Gutierrez Zaldivar, CEO and co-founder of Rootstock Labs, emphasized that Botanix's closure underscores a broader lesson: establishing a blockchain ecosystem is considerably more complex than merely addressing technical challenges.
"Building an ecosystem is more akin to founding a new city than launching a new application," he commented.
He also pointed out that users don't adopt infrastructure for its elegance. "Users are indifferent to technology," he stated. "Their primary concern is utility."
Focus on Bitcoin-Backed Lending
For Rootstock, the focus is increasingly on bitcoin-backed lending and institutional offerings. Gutierrez Zaldivar noted that the collapse of centralized lenders like Celsius, BlockFi, and Voyager did not negate the demand for bitcoin lending; rather, it highlighted the necessity for transparent, protocol-based alternatives.
"If I can demonstrate that your bitcoin is held in a protocol transparently and in real time, ensuring safety and preventing multiple rehypothecation, we can create a scalable product," he explained.
He added that weaker market conditions may actually help clarify genuine demand versus speculative hype. "As speculative elements of the ecosystem diminish, productive aspects rise," he stated. "Currently, we’re having more discussions around Bitcoin-backed lending than we did in the past year."
The aspiration to transform Bitcoin into a versatile application platform seems to be waning. While Botanix may not have definitively proven the death of Bitcoin utility, it has revealed the challenges of building "Ethereum on Bitcoin" and waiting for users to engage.
The forthcoming phase of Bitcoin development may shift focus from trying to make Bitcoin perform every function to identifying the specific tasks that only Bitcoin can accomplish.
Bitcoin NewsDeFiAI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.Latest Crypto News- 1Here is how Coinbase plans to survive the crypto downturn by reducing its dependence on trading fees36 minutes ago
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CEX Volumes Plummet to Lowest Since September 2024 as RWA Perpetual Futures Reach Record High
CEX Volumes Plummet to Lowest Since September 2024 as RWA Perpetual Futures Reach Record High
In May, total exchange volumes decreased by 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, achieving a new all-time high.
By CoinDesk ResearchJun 15, 2026In May, total exchange volumes decreased by 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, achieving a new all-time high.
Why it matters:
In May, total exchange volumes decreased by 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, achieving a new all-time high.
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