RootstockLabs has launched Rootstock Institutional, aiming to tap into $260 billion in institutional Bitcoin for decentralized finance (DeFi) applications.
Summary
- RootstockLabs unveiled Rootstock Institutional to explore the application of Bitcoin in institutional settings
- Large institutions currently hold $260B in unused BTC
- These entities could channel their inactive BTC into DeFi, providing returns for investors
At present, over 2.6 million Bitcoin (BTC) owned by institutions remains inactive, but this situation is poised to change. On Tuesday, October 14, RootstockLabs, a key player in Rootstock—the inaugural layer-2 for Bitcoin—announced the launch of Rootstock Institutional.
The new initiative aims to help institutions unlock BTC’s potential within DeFi. Specifically, institutions can utilize Rootstock, a DeFi layer tailored for Bitcoin, to earn yields on their BTC. This encompasses using BTC for lending and borrowing, in addition to various on-chain yield-generating strategies.
“The market has progressed beyond simply holding Bitcoin. Institutions with large Bitcoin reserves are seeking sustainable and transparent on-chain solutions that support their long-term goals,” mentioned Richard Green, Managing Director of Rootstock Institutional and Ecosystem at RootstockLabs.
99% of institutional Bitcoin yields negative returns
As outlined in RootstockLabs’ Institutional BTCFi Report, institutions own 2.6 million BTC across ETFs, corporate treasuries, and mining reserves. However, 99% of this BTC yields negative returns due to custody fees, which generally range from 0.1% to 0.5% annually.
Despite this, these reserves signify a substantial financial opportunity for their custodians. By March 2025, Bitcoin-centric DeFi is projected to see an annual growth of 2,700%, reaching $8.6 billion in total value locked. Yet, this amount accounts for only 0.79% of the total BTC supply, compared to 50% for Ethereum.
“Bitcoin’s evolution from a simple store of value to a productive financial asset represents one of the most significant opportunities in the digital finance landscape,” noted Richard Green. “We are observing this shift firsthand, as family offices, web3 funds, exchanges, and Bitcoin-centric firms collaborate with us to deploy their Bitcoin on Rootstock.”
