Bitcoin’s potential as a cross-chain settlement layer has long been constrained by its lack of native programmability and scalability. However, Portal to Bitcoin’s recent $50 million raise—led by Paloma Investments and bringing its total capital to $92 million—signals a pivotal shift in this narrative. The funding targets BitScaler, a trust-minimized adapter that enables native Bitcoin transactions across 30+ blockchains without custodial bridges or wrapped tokens [1]. By addressing Bitcoin’s interoperability and throughput limitations, BitScaler could redefine its role from a store of value to a foundational infrastructure asset in decentralized finance (DeFi).
BitScaler’s architecture leverages modified multi-party channel factories and Taproot scripts to reduce on-chain transaction footprints by consolidating thousands of peer-to-peer transactions into a single on-chain operation [2]. This approach slashes fees and enhances throughput, critical for scaling Bitcoin-based DeFi. The protocol’s non-custodial signing delegation layer further eliminates reliance on intermediaries, allowing users to retain control over funds while participating in liquidity pools or executing atomic swaps [2].
Portal’s integration with PortalOS—a modular operating layer supporting Bitcoin mainnet, Lightning Network, and Layer-2 solutions—adds another layer of security by avoiding bridging risks [2]. Crucially, BitScaler’s Hub-and-Spoke verifier network and Portal Attestation Chain (PAC) ensure all cross-chain operations are verifiable and traceable, aligning with institutional demands for transparency [2]. These innovations position Bitcoin as a settlement layer capable of supporting complex financial primitives, from lending protocols to tokenized real-world assets (RWAs).
Despite Bitcoin’s dominance in market capitalization, only ~0.8% of its supply is currently used in DeFi, representing a $5.52 billion total value locked (TVL) in BitcoinFi protocols as of Q2 2025 [3]. Staking has emerged as the largest use case, with platforms like Babylon and CoreDAO offering liquid staking tokens (LSTs) and dual-token security models [3]. However, Bitcoin’s lack of native smart contract capabilities has limited its ability to compete with Ethereum’s $130 billion TVL.
BitScaler’s focus on layer-2 infrastructure addresses this gap. By enabling Bitcoin to serve as a settlement layer for cross-chain markets, it taps into a $500+ billion addressable market for Bitcoin DeFi [4]. For instance, the Bitcoin Hyper Layer 2—a project aiming to integrate Solana’s Virtual Machine (SVM) with Bitcoin’s security—demonstrates how layer-2 solutions can unlock high-speed, high-security applications [5]. Portal’s non-custodial approach complements these innovations, ensuring Bitcoin’s self-custody guarantees remain intact.
Institutional interest in Bitcoin’s utility is accelerating. Bitcoin ETFs have seen record inflows, with European staking ETFs offering 5–6% annualized returns [4]. This trend underscores a growing demand to “put Bitcoin to work” in yield-generating protocols, a space where BitScaler’s cross-chain liquidity solutions could thrive. Portal’s pilot integrations with wallets and custody platforms further validate its institutional readiness, as non-custodial swaps gain traction among treasuries and hedge funds [1].
Regulatory clarity and interoperability will be critical for Bitcoin’s long-term relevance in DeFi. As Galaxy Digital notes, declining on-chain transaction volumes have shifted liquidity to off-chain products like spot ETFs [1]. However, layer-2 solutions like BitScaler could reverse this trend by making Bitcoin a viable settlement layer for on-chain activity. With Bitcoin’s active address count rising and tokenized RWAs expanding capital efficiency, the stage is set for a renaissance in Bitcoin-based financial infrastructure.
Portal to Bitcoin’s $50 million raise and BitScaler’s technical breakthroughs signal a paradigm shift in Bitcoin’s role within decentralized finance. By enabling non-custodial cross-chain liquidity and reducing on-chain friction, BitScaler addresses Bitcoin’s scalability and programmability limitations, positioning it as a universal settlement layer. As institutional adoption and layer-2 innovation converge, Bitcoin’s TVL could surge into the hundreds of billions, transforming it from a digital reserve asset to the backbone of a multi-chain DeFi ecosystem.
**Source:[1] Portal to Bitcoin (PTB) - Technical Architecture and BitScaler [2] A Bitcoin Startup Raised $50M to Allow Users to Trade with Bitcoin-Grade Security [3] The State of BitcoinFi in Q2 2025: Research [4] Bitcoin DeFi Market in 2025: Growth, Potential, and Key ... [5] Expert Predicts New Bitcoin Layer 2 Will Kill Solana in DeFi ...