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RootstockLabs has unveiled Rootstock Institutional, with the goal of utilizing $260 billion in institutional Bitcoin for decentralized finance (DeFi).
Summary
- RootstockLabs initiated Rootstock Institutional to investigate institutional applications of Bitcoin
- Currently, major institutions possess $260B in BTC that is not being utilized
- These institutions could leverage their dormant BTC in DeFi to generate returns for investors
There are over 2.6 million Bitcoin (BTC) in institutional hands that are currently inactive, but this situation may be on the verge of change. On Tuesday, October 14, RootstockLabs, a prominent contributor to Rootstock, Bitcoin’s first layer-2 solution, announced the creation of Rootstock Institutional.
The newly formed team will seek methods for institutions to unlock BTC’s potential in the DeFi space. Specifically, institutions may utilize Rootstock, a DeFi layer for Bitcoin, to gain yield on their holdings. They can employ BTC for lending, borrowing, and other on-chain yield-generating strategies.
“The market dynamics have shifted beyond merely holding Bitcoin. Institutions with substantial Bitcoin reserves are in search of sustainable, clear on-chain frameworks that maintain their long-term positions,” stated Richard Green, Managing Director of Rootstock Institutional and Ecosystem at RootstockLabs.
99% of institutional Bitcoin yields negative returns
As highlighted in RootstockLabs’ Institutional BTCFi Report, institutions hold 2.6 million BTC in ETFs, corporate treasuries, and mining reserves. Nonetheless, 99% of that BTC generates negative returns due to custody fees ranging from 0.1% to 0.5% annually.
Despite this drawback, these reserves represent a substantial financial opportunity for the holders. By March 2025, Bitcoin-native DeFi is expected to see a 2,700% year-over-year growth, reaching a total value locked of $8.6 billion. Yet, this still constitutes only 0.79% of the overall BTC supply, in contrast to 50% for Ethereum.
“Bitcoin’s transition from a pure store of value to a productive financial asset signifies one of the most important opportunities in the digital finance sector,” remarked Richard Green. “We are already witnessing this in action, with family offices, web3 funds, exchanges, and Bitcoin-centric firms collaborating with us to deploy their Bitcoin on Rootstock.”
