The "Seven Deadly Sins" are trapping the Bitcoin ecosystem.

Author: Fairy, ChainCatcher

Editor: TB, ChainCatcher

Friendly reminder: The "seven deadly sins of the Bitcoin ecosystem" listed in this article are purely for humor and not intended to slander or undermine the belief in Bitcoin. We respect Satoshi Nakamoto and are in awe of time. If any opinions are harsh, we hope the builders of the ecosystem can be forgiving.

The Pizza Day celebrates its 14th anniversary, and Bitcoin has also broken through 110,000 USD today, setting a new high. Bitcoin is on the rise, while the Bitcoin ecosystem seems to be heading downwards.

Bitcoin has grown from a white paper to a new anchor for global assets, and the story of the Bitcoin ecosystem has transformed from a purely technical narrative into a complex picture interwoven with humanity, markets, power, and faith. Yet, amid all the noise, the real issues are rarely brought up.

The Pizza Day is worth commemorating and reflecting upon. At this juncture, let's take a clearer perspective and review the "seven deadly sins" hidden behind the Bitcoin ecosystem.

The light of ideals illuminates the troubles of reality

The market value of Bitcoin returned to the trillion-dollar mark in early 2024, and it has been almost a year and a half since then, but its ecosystem activity is severely unbalanced compared to its asset size.

As of now, only 13 Bitcoin ecosystem projects have completed financing in 2025, compared to 72 in the same period last year, and a total of 126 for the entire year. The number of financings has nearly halved, and capital enthusiasm is rapidly waning.

Image source: RootData

Looking at on-chain data, DefiLlama shows that the current TVL of the Bitcoin ecosystem is only $6.3 billion, which is one-tenth of the Ethereum ecosystem ($62.3 billion). Among this, Babylon contributed $5 billion, accounting for over 80%, indicating an extremely concentrated ecological structure.

When comparing TVL to token market capitalization, the issue becomes even more glaring: BTC's TVL/market cap ratio is only 0.2%, far below the average level of mainstream public chains. Chains like Ethereum, Solana, and TRON generally maintain above 10%, with significantly higher capital utilization efficiency than Bitcoin.

Image source: DefiLlama

In addition, looking back at the star projects in the Bitcoin ecosystem, such as Stacks and Merlin Chain in the L2 direction, Solv Protocol, Babylon, and BounceBit in the staking track, as well as the inscribed assets ORDI and SATS, most of them have continued to perform poorly in terms of price.

Bitcoin, although the "golden signboard" of the crypto market, is almost an empty high tower in terms of ecological construction. Below are the "seven deadly sins" we have organized.

The First Sin - The Sin of Ecological Illusion

At the end of 2023 and into 2024, the Bitcoin ecosystem is ushering in a wave of "grand" awakening narratives. From inscriptions and L2 to re-staking, it seems that overnight, the previously quiet BTC ecosystem has suddenly become a hotbed of innovation. However, when the market frenzy subsides, the truly substantial results still appear sparse.

Many protocols are not inherently disruptive, reconstructing old paradigms, or creating truly new market needs. A large number of projects are just new packaging for old concepts, with a weak underlying structure, a rough design, and out of use cases. The relevant teams are uneven, and there are very few people who really have the willingness and ability to build in the long term.

As community member @blapta put it: "In terms of business results, almost none of these so-called technologically advanced projects actually landed. Whether the agreement is established or not is no longer the focus of attention, and after a round of financing, the story is over, and it will die. This is not only a technical failure, but also a cultural silence. ”

The Second Deadly Sin - The Sin of Dogmatism and Infighting

Idealism has never been absent in the Bitcoin ecosystem; however, when it merges with dogmatism, it quietly transforms into closure and self-limitation. In this system that prides itself on "decentralized faith," once the technical route, consensus mechanism, or even development direction touches on a certain "fundamentalist" stance, it can easily evolve into a binary camp struggle.

Almost every major upgrade to the Bitcoin network has gone through a lengthy acceptance process. SegWit only covered about 50% of transactions two years after it was launched, and approached 80% four years later; Taproot, which was activated in November 2021, was similarly slow, with less than 1% adoption at the start of 2023 and only reaching 39% by early 2024. Developers and the community are extremely cautious about the evolution of the protocol.

Image source: Ki Young Ju, founder of CryptoQuant

The historical BCH and BSV fork events also validate the deep-rooted origins of the rift and factional conflicts within the early Bitcoin community. At the same time, some community members hold a resistant attitude towards innovative directions such as smart contracts and asset issuance, resulting in a long-term game of contention and divergence between "adhering to Satoshi Nakamoto's route" and "promoting functional upgrades."

The Third Deadly Sin - The Sin of Talent Exhaustion

If developers are the dreamers and builders of a public chain ecosystem, then Bitcoin is experiencing a chronic talent drain crisis. Unlike the strong development enthusiasm and commercial momentum displayed by ecosystems such as Ethereum and Solana, Bitcoin's development landscape appears increasingly sparse.

The decline in this development capability partly stems from its long-term reliance on a donation-driven development model, which lacks a stable and sustainable incentive system, making it difficult to attract new talent as well as retain experienced veterans.

According to DeveloperReport data, the current number of full-time developers in the BTC ecosystem is only 359, with the number of full-time developers with one year of experience decreasing by 9.1%, and those with more than two years of experience also decreasing by 4%. When only counting main chain developers (excluding EVM and SVM stacks), Bitcoin ranks fifth among all chains, far below Ethereum, which ranks first with 2181 developers, making its developer count six times that of Bitcoin.

It is worth noting that among the limited number of developers, as much as 42% focus on scaling solutions, indicating that the manpower for building the Bitcoin native application layer and other aspects is even scarcer.

Image source: Developerreport

The Fourth Deadly Sin: The Sin of Value Retention

The large BTC supply has not been transformed into financial productivity, but has instead settled as "dormant capital" on the chain. According to the latest research from Binance Research, only 0.79% of BTC is actually used in DeFi, while over 60% of the total supply consists of bitcoins that have not been transferred in the past year, and this proportion continues to rise.

The proportion of Bitcoin that has not moved in the past year, source: Binance Research

This not only reflects the further consolidation of Bitcoin's positioning as "digital gold", but also exposes a serious gap in the financial availability of its ecosystem. There are very limited ways for BTC holders to use their assets, mainly in the form of centralized lending platforms or cross-chain generated WBTC, but these paths generally face problems such as low yields, high centralized risks, and insufficient security, which are not attractive.

In contrast, the financial ecosystem of Bitcoin has not yet established a sustainable asset utilization mechanism, which cannot meet investors' multi-layered demands for yield acquisition, risk management, and strategy deployment. This "value retention" is becoming a key constraint that limits the evolution of the Bitcoin ecosystem.

The Fifth Deadly Sin: The Sin of Attention Misallocation

The recent upgrade discussions in the Bitcoin community have fallen into a "high heat, low efficiency" vicious cycle: proposals with real technical depth and development potential are rarely brought up, while some "trivial" topics are repeatedly debated.

Taking BIP177 as an example, although it is merely an adjustment to the unit display method, it has sparked prolonged disputes within the community; while proposals that could truly enhance protocol capabilities, such as the combination of CTV + CSFS for asynchronous payments and optional payment paths, and BIP360 (quantum resistance) to address future security challenges, receive little attention.

The already inefficient BIP system in the Bitcoin governance mechanism has become increasingly rigid under this misallocation of attention. The core upgrades that truly need extensive testing, evaluation, and collaborative promotion have quietly fallen into silence amid the struggle for discourse. Community member @blapta stated: "I hope the Bitcoin community discussions return to normal discussions soon; if this drags on, the developers will grow old."

The Sixth Deadly Sin: The Sin of Narrative Closure

Under the fast pace of the crypto industry, the narrative of the Bitcoin ecosystem seems particularly monotonous. The "digital gold" narrative serves to solidify consensus and deliver value, but it should not evolve into a framework that limits innovation and expands imagination.

In contrast, other blockchain ecosystems continuously spark new interest and narratives around directions such as Restaking, Meme, DePIN, and AI, driving sustained community engagement and capital attention.

Although Taproot Assets, Ordinals, and others briefly sparked the imagination, they ultimately failed to form a stable growth curve due to the lack of sustained narrative momentum and systemic support.

The Seventh Deadly Sin: The Sin of Lack of Investability

In a market system driven by capital seeking profit, "investability" determines the final direction of funds. Speculation is the most authentic and honest flow logic of on-chain funds. However, the shortcomings of the Bitcoin ecosystem in this regard are exceptionally obvious: complex deployment, weak liquidity, and primitive trading mechanisms make it difficult for market makers, arbitrageurs, and hot money to enter and exit efficiently.

A glimpse can also be seen from the data side: apart from the capital attention briefly attracted by the Ordinals and Runes craze in 2024, the financing performance of the Bitcoin ecosystem in other years has been lackluster. Notably, large financing projects exceeding ten million dollars are extremely rare, which directly reflects mainstream investment institutions' doubts and reservations about the "investability" of the BTC ecosystem.

Face the problem, and you can go further.

We look back at our original intentions and face reality. Today's Bitcoin ecosystem is not only a mid-term review of a technological experiment, but also a cultural and orderly mirror. The term "seven deadly sins" is merely a jest; the real starting point is the hope that the ecosystem can be revitalized and find a direction for sustainable growth.