To facilitate this, Starknet is collaborating with Xverse, a Bitcoin Web3 wallet, to enhance Bitcoin's DeFi capabilities, with integration expected in the second quarter of 2025.

Crypto VC Dan Held suggests that Bitcoin DeFi has untapped potential that could grow into a $300 trillion market, making Starknet's update significant for this growth.

Starknet has announced its ambitious plan to unify Bitcoin and Ethereum by establishing itself as Bitcoin's execution layer, aiming to enhance scalability and user experience.

As part of its strategy, StarkWare has also announced the creation of a Bitcoin reserve, indicating a commitment to Bitcoin's growing utility in the crypto space.

This initiative involves settling transactions on both blockchains, potentially creating a unified decentralized finance (DeFi) layer for these major cryptocurrencies.

If successful, Starknet's integration would enable developers to create various applications on Bitcoin, including staking, borrowing, lending, and yield farming.

The Starknet Foundation has highlighted Bitcoin's current limitations, primarily as a store of value, and the demand for broader applications beyond simple transactions.

Investor confidence in Bitcoin DeFi is on the rise, with total value locked (TVL) increasing from 48,000 BTC last December to nearly 70,000 BTC, marking a growth of 43%.

Ethereum co-founder Vitalik Buterin has expressed support for Starknet's initiative, stating it could significantly improve crypto payments and facilitate asset transfers between Bitcoin and Ethereum.

This initiative aims to enhance Bitcoin's transaction capacity from 13 transactions per second to thousands, thereby reducing blocks and gas fees.

Eli Ben Sasson, CEO of StarkWare, mentioned that the reintroduction of the OP_CAT opcode could enable Starknet to settle on the Bitcoin blockchain, facilitating smart contract development.

Starknet plans to utilize federated bridges to integrate Bitcoin assets while awaiting the OP_CAT soft fork, which aims to improve Bitcoin's smart contract capabilities.