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 humorous and not intended to defame or undermine the belief in Bitcoin. We respect Satoshi Nakamoto and revere time. If any viewpoints are harsh, we hope the builders of the ecosystem can be forgiving.

The Pizza Day celebrates its 14th anniversary, and Bitcoin has also surpassed $110,000 today, setting a new record. Bitcoin is on the rise, while the Bitcoin ecosystem seems to be on the decline.

Bitcoin has grown from a white paper into a new anchor for global assets, and the story of the Bitcoin ecosystem has transformed from a simple technical narrative into a complex tapestry woven with humanity, market dynamics, power, and belief. However, amidst all the noise, the real issues are seldom addressed.

Pizza Day is worth commemorating and reflecting upon. At this juncture, let’s take a clearer look at the "Seven Deadly Sins" hidden behind the Bitcoin ecosystem.

The Light of Ideals Shines into the Difficulties of Reality

Bitcoin's market capitalization returned to the trillion-dollar mark in early 2024, and it has been nearly a year and a half since then, but the activity level of its ecosystem is severely imbalanced with its asset size.

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

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 Ethereum's ecosystem ($62.3 billion). Among this, Babylon contributes $5 billion, accounting for over 80%, indicating an extremely concentrated ecosystem structure.

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

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, BounceBit in the staking track, and ordinal assets like ORDI and SATS, most have continued to perform poorly in price.

While Bitcoin is the "golden signboard" of the crypto market, in terms of ecosystem construction, it is almost an empty high tower. Below are the "Seven Deadly Sins" we have identified.

First Deadly Sin - The Sin of Ecosystem Illusion

From the end of 2023 to 2024, the Bitcoin ecosystem has witnessed a wave of "grand" awakening narratives. From ordinals to L2 and re-staking, it seems that the dormant BTC ecosystem suddenly became a hotbed of innovation overnight. However, when the market fervor fades, the real achievements that remain are still sparse.

Many protocols themselves lack disruptive innovation, neither reconstructing existing paradigms nor creating truly new market demands. A large number of projects are merely new packaging of old concepts, with weak underlying structures, rough designs, and disconnected from use cases. The related teams vary widely, with very few possessing genuine long-term construction intentions and capabilities.

As community member @blapta stated: "From a business results perspective, these so-called technologically advanced projects have hardly any real implementation. Whether the protocol is established has long ceased to be the focus; after one round of financing, the story is told, and the flags are lowered. This is not only a technical failure but also a cultural silence."

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 belief," technical routes, consensus mechanisms, and even development directions can easily evolve into black-and-white camp struggles once they touch upon certain "fundamentalist" positions.

Every major upgrade of the Bitcoin network has almost undergone a long acceptance process. SegWit, two years after its activation, only covered about 50% of transactions, and it took four years to approach 80%; the Taproot activated in November 2021 was similarly slow, with an adoption rate of less than 1% at the beginning of 2023, reaching only 39% by early 2024. Developers and the community are extremely cautious about protocol evolution.

Source: Ki Young Ju, founder of CryptoQuant

Historical events like the BCH and BSV forks also confirm the deep-rooted sources of ideological rifts and factional conflicts within the early Bitcoin community. Meanwhile, some community members hold a resistant attitude towards innovations such as smart contracts and asset issuance, resulting in a long-term game of tug-of-war between "adhering to Satoshi's route" and "promoting functional upgrades."

Third Deadly Sin - The Sin of Talent Drain

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

This decline in development power partly stems from its long-term reliance on a donation-driven development model, lacking a stable and sustainable incentive system, making it difficult to attract fresh blood and retain experienced veterans.

According to DeveloperReport data, there are currently only 359 full-time developers in the BTC ecosystem, 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 dropping by 4%. Counting only the main chain developers (excluding EVM and SVM stacks), Bitcoin ranks fifth among all chains, far below Ethereum, which ranks first with 2,181 developers, making Ethereum's developer count six times that of Bitcoin.

Moreover, it is worth noting that among the limited developers, as much as 42% focus on scaling solutions, indicating that manpower for Bitcoin's native application layer and other areas is even scarcer.

Source: Developerreport

Fourth Deadly Sin - The Sin of Value Stagnation

The vast amount of BTC in circulation 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 Bitcoin has not been transferred in the past year, and this proportion continues to rise.

Proportion of Bitcoin that has not moved in the past year, Source: Binance Research

This not only reflects the further solidification of Bitcoin's "digital gold" positioning but also exposes a serious gap in its ecosystem regarding financial usability. BTC holders have very limited ways to utilize their assets, mainly concentrated in centralized lending platforms or cross-chain generated WBTC, but these paths generally face issues such as low yields, high centralization risks, and insufficient security, lacking attractiveness.

In contrast, Bitcoin's financial ecosystem has yet to establish a sustainable asset utilization mechanism that can meet investors' multi-layered demands for yield acquisition, risk management, and strategy deployment. This "value stagnation" is becoming a key shackle limiting the evolution of the Bitcoin ecosystem.

Fifth Deadly Sin - The Sin of Attention Mismatch

Recent discussions on upgrades within the Bitcoin community have fallen into a "high heat, low efficiency" paradox: proposals with real technical depth and development potential are rarely brought up, while some "trivial" topics are repeatedly debated.

Take BIP177 as an example; although it is merely an adjustment regarding unit display, it has sparked prolonged disputes within the community; meanwhile, proposals that could genuinely elevate protocol capabilities, such as the CTV + CSFS combination for asynchronous payments and optional payment paths, or BIP360 (quantum attack resistance) to address future security challenges, receive little attention.

The already inefficient BIP system in Bitcoin's governance mechanism has become increasingly rigid under this attention mismatch. Core upgrades that genuinely require extensive testing, evaluation, and collaborative promotion have quietly faded in the battle for discourse. Community member @blapta expressed: "I hope the community discussions around Bitcoin can return to normal soon; if this drags on, the developers will age."

Sixth Deadly Sin - The Sin of Narrative Closure

In the fast-paced crypto industry, the narrative of the Bitcoin ecosystem appears particularly monotonous. The "digital gold" narrative plays a role in solidifying consensus and conveying value, but it should not evolve into a framework that limits innovation and expands imagination.

In contrast, other chain ecosystems continuously spark new interests and narratives around Restaking, Meme, DePIN, AI, etc., driving sustained community vitality and capital attention.

Although Taproot Assets, Ordinals, and others briefly ignited imaginative space, the lack of sustained narrative promotion and systematic support ultimately failed to form a solid growth curve.

Seventh Deadly Sin - The Sin of Lack of Investability

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

Data also reflects this: aside from 2024, which briefly attracted capital attention due to the Ordinals and Runes craze, the financing performance of the Bitcoin ecosystem in other years has been lackluster. Notably, projects with financing above ten million dollars are extremely rare, directly reflecting mainstream investment institutions' doubts and reservations about the "investability" of the BTC ecosystem.

Confronting Problems, We Can Go Further

We look back at our original intentions while facing reality. Today's Bitcoin ecosystem is both a mid-term review of a technical experiment and a mirror reflecting culture and order. The term "Seven Deadly Sins" is merely a jest; the true starting point is the hope that the ecosystem can rejuvenate and find a direction for sustained growth.