Definition ∞ Btcfi Capital Efficiency refers to optimizing the utilization of Bitcoin within decentralized finance environments to maximize returns or functional output. This concept evaluates how effectively Bitcoin, often in a wrapped form, generates value through lending, borrowing, or liquidity provision. It measures the ratio of output or gain relative to the Bitcoin capital deployed in these protocols.
Context ∞ Enhancing capital efficiency for Bitcoin in decentralized finance is a central discussion point for expanding Bitcoin’s role beyond a store of value. It directly influences the growth and stability of Bitcoin-centric decentralized applications. News often covers advancements in protocols aiming to improve this efficiency, alongside discussions on associated risks like protocol security and market liquidity.
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