A growing number of smart contract networks are attempting to capitalize on Bitcoin’s growing DeFi and asset ecosystem.

On August 13, Aurora Labs launched a Bitcoin light client and relayer, paving the way for interoperability between Near Protocol, a Layer 1 network, and Bitcoin for the first time.

The Light Client consists of a smart contract on Near that allows native decentralized applications to access the state of the Bitcoin network and verify Bitcoin transactions. The Relayer service ensures that Aurora’s Light Client stays synchronized with the Bitcoin network and continuously updates the contract with the latest Bitcoin transactions.

“The integration paves the way for new DeFi use cases and expands Web3 interoperability,” Aurora Labs said. “The launch of the Bitcoin Light Client is a critical step toward a unified Web3 experience that enables seamless asset transfer between Bitcoin and Near.”

The deployments follow Proximity Labs’ launch of a chain signature service for Near last week. Chain signatures allow developers to create native Bitcoin bridges that allow BTC to move to and from the Near network.

“The BTC Light client is an important part of the Bitcoin stack that NEAR now enables,” said Kendall Cole, founder of Proximity Labs. “Combined with chain signatures, developers can build an entirely new set of applications for Bitcoin users, including money markets, DEXs, launchpads, stablecoins, and more, all with a seamless user experience.”

Aurora said the light client forms the basis for a future bridge that will allow Bitcoin assets to be moved to the Near network.

“In addition to providing BTC on NEAR, the bridge enables the integration of Rune and Ordinals and opens the door to the creation of new DeFi applications that combine the best of Bitcoin and Near,” Aurora said.

Aurora Labs handed over control of the light client to Near One, a research and development team that is building the infrastructure for Near.

NEAR’s price is trending sideways and last changed hands at $3.97 after rising 0.2% over the past 24 hours.

Bitcoin’s DeFi ecosystem is growing

The news follows a strong year for Bitcoin’s DeFi ecosystem. Total value locked (TVL) on the network stands at $630.4 million, according to DeFi Llama, after increasing 92% year-to-date. Bitcoin’s TVL peaked at over $1.13 billion in early June.

Bitcoin’s sidechain and Layer 2 ecosystems have also performed well, currently boasting a TVL of $1.57 billion. The increase has been fueled by the growth of Bitlayer, BounceBit, Merlin Chain, Stacks, and Rootstock.

In response, smart contract networks are attempting to achieve interoperability with Bitcoin and Bitcoin-based assets.

In April, Omnity, an interoperability protocol based on the Internet Computer Protocol (ICP), integrated support for runes, the popular inscription standard for creating Bitcoin-based fungible tokens.

Omntiy enables the transfer of Bitcoin-based assets between the Internet Computer and Bitcoin without the use of trusted asset wrappers or centralized bridging services.