Interest from institutions in Bitcoin is evolving from merely passive holding to embracing yield generation and DeFi-style activities.
With new platforms like Rootstock and Babylon creating pathways between Bitcoin and yield-producing protocols, some asset managers and corporate treasuries are beginning to see the asset as more than just digital gold.
“Individuals holding bitcoin — whether on balance sheets or as investors — are increasingly recognizing it as an asset simply waiting to be harnessed,” shared Richard Green, director of Rootstock Institutional, a recently formed team focused on the institutional market for the Bitcoin sidechain project. “They want it to be an active asset. It can’t just remain idle; it should be generating yield.”
This perspective represents a significant shift from Bitcoin’s original narrative centered on value preservation. Green mentioned in a CoinDesk interview that professional investors now seek their assets to “perform as effectively as possible” within their risk profiles, echoing the yield expectations that have historically fueled growth in other digital asset ecosystems, such as Ethereum and Solana.
The transition is being enabled by Bitcoin-native solutions that facilitate yield generation without exiting the network. Rootstock, which supports smart contracts secured by Bitcoin’s hash power, has experienced rising demand for collateralized products and tokenized funds that provide Bitcoin-denominated yield.
“Our mission is to guide institutions through this process,” Green noted. “We’re observing a growing interest in BTC-backed stablecoins and credit frameworks that allow miners, remittance companies, and treasuries to release liquidity while adhering to Bitcoin.”
For many corporations, the rationale is as much practical as it is philosophical. “If you’re a treasury management firm holding Bitcoin, you’re effectively losing 10–50 basis points,” Green explained. “You want to counteract that. Nowadays, the available options are secure and viable so you don’t have to resort to elaborate DeFi strategies.”
These opportunities for Bitcoin-denominated yield — occasionally yielding 1–2% annually — are increasingly deemed acceptable by conservative investors looking to mitigate custody fees without having to engage with wrapped or bridged assets.
Bitcoin Restaking and the Yield Challenge
However, yield levels are still modest compared to Ethereum’s staking landscape. “We evaluated 19 different protocols or technology platforms that have promoted Bitcoin staking or yield,” stated Andrew Gibb, CEO of Twinstake, a staking infrastructure provider. “The technology is available, but institutional interest takes time to develop.”
Twinstake operates infrastructure for Babylon, a project allowing Bitcoin-based restaking for proof-of-stake networks. While the technical functionality exists, Gibb mentioned that the often minimal returns make it less appealing. “If you own Bitcoin, do you genuinely hold it for an additional 1% yield? That presents a psychological barrier,” he informed CoinDesk.
Some services are attempting to address this by representing yield generation as non-lending, utilizing methods like time-locking Bitcoin for yield without rehypothecation.
“You still have ownership — it’s merely time-locked,” Gibb explained. “That’s the selling point for some projects, but the yield must be significant enough to warrant that lockup.”
Even if uptake is slow, institutional Bitcoin holders appear increasingly less satisfied with mere passive appreciation. As secure, Bitcoin-native yield offerings expand, the leading digital asset is gradually moving toward enhanced productivity — while upholding its fundamental principle of self-custody.
“It’s about functioning in a realm where Bitcoin yield is tangible,” Green concluded. “And receiving that yield back in BTC.”
