Integration of Dogecoin into DeFi: opportunities and risks
Dogecoin is one of the earliest blockchain projects in the crypto industry, which is why its ecosystem has remained as closed as that of the first cryptocurrency, Bitcoin.
However, with the development of Web3 technologies and the emergence of cross-chain solutions enabling decentralized networks to connect, the situation has changed significantly, and DOGE is no longer "locked" inside its own ecosystem.
Thanks to these new technological solutions, Dogecoin has transformed from a meme coin into a full-fledged financial instrument, becoming part of the global decentralized finance (DeFi) market. As of August 2025, the DeFi market is estimated at $148.5 billion, so the benefits of Dogecoin's integration into DeFi are more than obvious.
Tokenization — the main tool for Dogecoin's integration into DeFi
The ability of Dogecoin to move beyond its native ecosystem became possible with the appearance of "wrapped" tokens. A key role in this was played by the cross-chain protocol RenVM.
Through specialized smart contracts, wrapped versions of Dogecoin were created: renDOGE on the Ethereum blockchain and wDOGE on BNB Smart Chain (BSC). At its 2021 peak, the total value locked (TVL) in the RenVM protocol exceeded $1.75 billion.
The token "wrapping" process works as follows:
- The user sends original DOGE coins on the Dogecoin network to a special protocol address, providing a return address to receive the wrapped token in another network (e.g., Ethereum or BSC).
- The sent coins are locked in a smart contract, after which an equivalent amount of wrapped DOGE tokens is issued in the chosen network and sent to the user's specified address.
The primary function of wrapped versions of DOGE has been to provide liquidity in DeFi protocols, including:
- Decentralized exchanges (DEXes)
- Lending/borrowing protocols
- Restaking and liquid staking protocols, among others
However, according to experts, Dogecoin may also become a tool for real-world assets (RWA). For example, blockchain oracle leader Chainlink is testing the integration of DOGE within its Cross-Chain Interoperability Protocol (CCIP).
The goal of integrating Dogecoin into Chainlink CCIP is to enable settlements in DOGE, such as for the tokenization of commercial real estate, as well as using the meme coin in NFT marketplaces. For example, Blur already accepts DOGE via cross-chain bridges.
The problem of integrating DOGE into DeFi
Despite its closed nature and other shortcomings, the Dogecoin ecosystem remains reliable and decentralized, thanks to its Proof-of-Work (PoW) consensus algorithm and miners, just like Bitcoin.
In addition, Dogecoin is the most liquid meme coin on the market, with a daily trading volume exceeding $2.4 billion as of August 2025. However, the same cannot be said for wrapped versions of DOGE.
According to analysts, the main problem of bringing Dogecoin into DeFi lies in the centralization of cross-chain bridges, which are used to transfer the asset between different networks, and this contradicts the very essence of decentralized finance.
Analysts from DeFi Alliance note that by the end of 2025, the share of wrapped DOGE assets in DeFi may grow to $200 million, but 70% of TVL will be concentrated in just 2–3 cross-chain bridges. This makes the ecosystem vulnerable and leaves a high risk of failure if even one of these bridges experiences issues.
Does Dogecoin have other solutions for integration into DeFi?
Dogecoin developers have released their own solution for DeFi integration — Dogechain, a sidechain compatible with the Ethereum Virtual Machine (EVM). EVM compatibility means that users can use DOGE tokens to pay gas fees, while developers can integrate DOGE into their decentralized applications (DApps), such as Aave, Venus Protocol, and Uniswap.
Despite its potential, Dogechain has not yet gained significant traction: according to DeFi Llama data as of August 2025, its TVL is under $2.5 million. Analysts believe this is because Dogecoin is still used more as a "cultural digital asset" and payment method than as a DeFi instrument.
Nevertheless, Dogechain has a developed ecosystem that includes well-known DeFi protocols, such as decentralized exchanges Quickswap and Frax Finance.
The prospects of Dogecoin in DeFi
If the Dogechain ecosystem continues to develop, in the near future, it could capture a significant share of the DeFi segment, reducing the dominance of centralized bridges. Analysts predict that Dogechain's TVL could reach $150 million, but only if it partners with major CeFi platforms such as Coinbase or Binance.
Experts estimate that with regulatory support, DOGE could occupy 1–2% of the RWA market in DeFi by the end of 2025. However, in the short term, Dogecoin is unlikely to become a dominant asset in this segment due to the lack of native smart contracts and the high concentration of coins in "whale" wallets: according to BitInfoCharts, 2% of holders control 75% of the DOGE supply.
At the same time, according to a CoinGecko survey, only 12% of Dogecoin holders use DeFi tools. Even Shiba Inu surpasses Dogecoin in the DeFi segment across key indicators such as liquidity and trading activity.