RootstockLabs Targets $260 Billion in Idle Bitcoin with New Institutional Initiative

RootstockLabs, key contributor to Rootstock, the first and longest-running Bitcoin layer 2, today announced the launch of Rootstock Institutional, a cross-functional team created to explore ways to support professional investors and enterprises in taking advantage of Bitcoin-native DeFi opportunities. 

By leveraging the Rootstock, Bitcoin’s DeFi layer, institutions can tap into opportunities such as BTC-backed stablecoin borrowing and institutional-grade on-chain yield strategies, all anchored to Bitcoin’s security model. 

The announcement, made at Digital Asset Summit (DAS), marks an evolution in Bitcoin’s utility beyond passive storage, enabling institutions to generate returns while maintaining exposure to the world’s premier digital asset.

The launch is supported by new research (“From Digital Gold to Productive Capital: The Institutional BTCFi Report“, showing that institutional Bitcoin holdings have entered a new era, with more than 2.6 million BTC now held in ETFs, corporate treasuries, and mining reserves, yet over 99% generates negative returns due to custody fees ranging from 10-50 basis points annually. At today’s prices, that represents hundreds of billions in capital actively eroding value rather than generating returns.

Rootstock Institutional introduces a two-phase approach designed to meet the sophisticated needs of Bitcoin holders:

Phase One leverages Rootstock’s existing ecosystem of integrated DeFi protocols, including LayerBank, Midas, and Solv. These protocols will directly offer access to composable on-chain mechanisms for liquidity and collateral management. This phase is available immediately, providing institutions with transparent, auditable strategies built on Bitcoin’s security foundation.

Phase Two aims to introduce the deployment of specific vault strategies for institutional participation in Bitcoin-denominated and dollar-referenced yield strategies, aligning with regulatory best practices for tokenized financial infrastructure.

“The market has evolved beyond simple Bitcoin holding. Institutions managing significant Bitcoin treasuries are seeking sustainable, transparent on-chain frameworks without compromising their long-term position,” said Richard Green, Managing Director of Rootstock Institutional and Ecosystem at RootstockLabs. “Our deep connection to Bitcoin’s mining community and Rootstock’s eight-year track record as Bitcoin’s most established sidechain uniquely position us to serve this institutional demand.”

Rootstock Institutional addresses the key challenges institutions face when seeking to activate Bitcoin capital:

• Custody Control: Self-custodial wrapped BTC (rBTC) remains anchored to Bitcoin’s native security, eliminating single-custodian risk

• Established Ecosystem: Over $272 million in assets already deployed across Rootstock’s DeFi protocols, spanning lending, borrowing, liquidity provision, and trading

• Proven Infrastructure: 100% uptime since public launch in 2018, secured by over 83% of Bitcoin’s hashrate through merge-mining

• Transparent Mechanisms: On-chain strategies with auditable smart contracts and verifiable reserves

• Compliance Ready: Comprehensive KYC/KYB frameworks with institutional custody integrations, including Fireblocks, Cobo, Utila and Fordefi.

In addition, the initiative provides education and insights about BTCFi and Rootstock-based opportunities, connects institutions with ecosystem partners such as regulated custodians, liquidity providers, technology integrators, and facilitates due diligence and integration support for enterprise participants and other qualified institutions exploring Bitcoin DeFi use cases.

The institutional BTCFi report reveals a significant market opportunity. While Bitcoin-native DeFi has grown to $8.6 billion in total value locked as of March 2025—a 2,700% year-on-year increase—only 0.79% of Bitcoin’s supply is currently deployed in DeFi, compared to Ethereum’s 48% TVL ratio. Even modest adoption of 5% of idle BTC would unlock over $100 billion in productive capital.

“Bitcoin’s evolution from pure store of value to productive financial asset represents one of the most significant opportunities in digital finance,” said Richard Green. “We’re already seeing this firsthand, family offices, web3 funds, exchanges, and bitcoin-first firms are actively working with us to deploy their Bitcoin on Rootstock. Today’s announcement formalizes our commitment to bringing institutional-grade financial services to the Bitcoin ecosystem, bridging the gap between Bitcoin’s decentralized foundation and the sophisticated needs of capital allocators.”

The December 2025 launch will feature Bitcoin-denominated solutions that maintain full BTC exposure throughout on-chain operations, as well as dollar-denominated solutions utilizing Rootstock’s stablecoin infrastructure. Both offerings, developed in collaboration with duly authorized fund managers, blend on-chain DeFi strategies, including lending, borrowing, and liquidity provision, with tokenized off-chain institutional-grade opportunities.  The company plans to expand to six additional strategies throughout 2026, spanning real-world assets, liquidity mechanisms, and structured products.

Rootstock’s institutional offering leverages the network’s established infrastructure, including its merge-mined security model that harnesses more than 83% of Bitcoin’s hashrate. Rootstock’s existing ecosystem partners provide the foundation for on-chain mechanisms that support liquidity and collateral management. Planned integrations with tier-one RWA protocols and institutional DeFi platforms will further expand available opportunities.