A new Bitcoin finance protocol named Hashi has launched on the Sui blockchain, backed by major crypto institutions including BitGo and FalconX, aiming to unlock billions in dormant Bitcoin capital for decentralized finance. This development, announced in March 2026, represents a significant push to bring institutional-grade lending and borrowing services to native Bitcoin, addressing long-standing transparency and collateral management issues that have limited BTC’s role in DeFi.
Hashi Protocol Launches to Bridge Bitcoin and DeFi
The Hashi protocol is specifically engineered to enable Bitcoin holders to earn yield on their native BTC through on-chain financial services. Developed primarily by Mysten Labs, the core contributor to the Sui blockchain, Hashi eliminates the need for wrapped or synthetic Bitcoin assets. Consequently, users can now borrow stablecoins directly against their Bitcoin holdings while institutions supply the necessary liquidity. This direct use of native BTC is a foundational shift, as it enhances transparency and reduces counterparty risk inherent in previous systems.
Historically, Bitcoin’s integration into decentralized finance has been minimal. According to on-chain data from DefiLlama, only about 0.22% of Bitcoin’s total supply, valued at roughly $3.07 billion, was deployed in DeFi protocols prior to Hashi’s launch. This underutilization stemmed from structural limitations, particularly a reliance on intermediaries and opaque collateral management practices. The 2022 collapses of crypto lenders BlockFi and Celsius Network, where rehypothecation and poor risk management led to significant losses, further eroded institutional confidence.
Institutional Demand for Transparency
A Sui Foundation spokesperson explained the protocol’s core innovation: “We are replacing ‘trust me’ workarounds with on-chain verification.” Hashi utilizes a combination of multi-party computation custody and smart contracts on Sui to manage collateral programmatically. This system provides automated, verifiable oversight of loan collateral, a non-negotiable requirement for large-scale institutional adoption. Furthermore, the protocol plans to offer insurance coverage for BTC collateral and has outlined future features like Bitcoin-backed bonds.
Backing and Infrastructure Support
The protocol’s launch is supported by commitments from a consortium of established crypto firms. Custodians and infrastructure providers like Ledger and Cubist are participating, alongside Sui-based DeFi protocols that will support lending, custody, and collateral management. This broad backing signals strong industry belief in Hashi’s model. The involvement of BitGo, a regulated custodian, and FalconX, an institutional trading platform, particularly underscores the project’s focus on serving professional and institutional markets.
This development aligns with a broader recovery in Bitcoin-backed lending. After the post-2022 downturn, regulators and companies have increasingly explored models emphasizing transparency. For instance, in June 2024, the U.S. Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to study whether cryptocurrencies could count as borrower reserves in mortgage assessments. Simultaneously, private companies have launched products with clearer safeguards. In June 2024, Strike CEO Jack Mallers publicly stated its Bitcoin-backed loans used segregated wallets and prohibited rehypothecation. Similarly, Coinbase reintroduced U.S. Bitcoin-backed loans in January 2025.
Technical Framework and Security
Hashi’s technical framework is designed for security and auditability. The protocol underwent formal verification and third-party audits before its mainnet launch. By leveraging the Sui blockchain’s object-centric model and high throughput, Hashi can handle complex financial transactions with finality and lower latency. This technical foundation is critical for managing the real-time valuation and liquidation of Bitcoin collateral at scale, especially during periods of high market volatility.
The Evolving Landscape of Crypto Credit
The launch of Hashi occurs within a maturing crypto credit landscape. The table below contrasts the traditional issues with Bitcoin DeFi against Hashi’s proposed solutions:
Traditional Bitcoin DeFi Challenges vs. Hashi’s Approach
- Opaque Collateral: Legacy systems often lacked clear, on-chain proof of reserves. Hashi’s Solution: On-chain verification and programmatic management of all collateral.
- Counterparty Risk: Users relied on the solvency of a central intermediary. Hashi’s Solution: Non-custodial, smart contract-based operations with institutional custodians.
- Asset Wrapping: BTC required conversion to wrapped tokens (e.g., WBTC), adding layers of trust. Hashi’s Solution: Direct use of native Bitcoin through secure custody integrations.
- Limited Institutional Tools: Missing features like insurance and formal audits. Hashi’s Solution: Planned insurance coverage and completed formal verification.
This shift is not occurring in isolation. Other protocols, like Maestro, have also launched mining-backed Bitcoin credit markets targeting institutions. However, Hashi’s specific integration with the Sui blockchain and its focus on native BTC without wrapping represents a distinct architectural choice. The success of this model will depend on its ability to attract sufficient liquidity, maintain robust security, and navigate an evolving global regulatory environment for digital asset lending.
Conclusion
The launch of the Hashi Bitcoin finance protocol on the Sui blockchain marks a pivotal attempt to integrate the world’s largest cryptocurrency into decentralized finance at an institutional level. By addressing critical flaws in transparency and collateral management with on-chain verification and backing from major firms like BitGo and FalconX, Hashi aims to unlock significant value from Bitcoin’s largely dormant $3 trillion market capitalization. Its progress will be a key indicator of whether DeFi can mature to meet the stringent requirements of traditional finance, potentially reshaping how Bitcoin is utilized beyond a store of value.
FAQs
Q1: What is the Hashi Bitcoin finance protocol?
Hashi is a decentralized finance protocol on the Sui blockchain that allows users to lend and borrow using native Bitcoin as collateral, without needing to convert it into wrapped tokens.
Q2: Which companies are backing the Hashi protocol?
The protocol has backing and participation commitments from major crypto institutions including BitGo, FalconX, Bullish, Ledger, and Cubist.
Q3: How does Hashi improve upon previous Bitcoin lending platforms?
Hashi replaces opaque, off-chain collateral management with on-chain verification and programmatic controls, aiming to eliminate rehypothecation and increase transparency for institutional users.
Q4: What happened to Bitcoin lending after the 2022 crypto lender collapses?
The market contracted sharply but has been recovering, with new models focusing on transparency, segregated collateral, and reduced counterparty risk, as seen with products from Strike and Coinbase.
Q5: Can Bitcoin be used in DeFi without being wrapped?
Traditionally, most DeFi protocols required Bitcoin to be wrapped (e.g., as WBTC on Ethereum). Hashi enables the direct use of native Bitcoin through secure, multi-party computation custody integrated with the Sui blockchain.
Updated insights and analysis added for better clarity.
This article was produced with AI assistance and reviewed by our editorial team for accuracy and quality.
