Rootstock plans unlock $260b in idle institutional Bitcoin

RootstockLabs launched Rootstock Institutional, aiming to deploy $260 billion in institutional Bitcoin into DeFi.

Over 2.6 million Bitcoin (BTC) held by institutions remains idle, but this could soon change. On Tuesday, October 14, RootstockLabs, a key contributor to Rootstock, the first Bitcoin layer-2, announced the launch of Rootstock Institutional.

The new team will focus on ways that institutions can tap into BTC’s DeFi potential. Namely, institutions could use Rootstock, a DeFi layer for Bitcoin, to obtain yield on their BTC. Specifically, institutions can use BTC for lending and borrowing, together with other on-chain yield strategies.

99% of institutional Bitcoin generates negative returns

According to RootstockLabs’ Institutional BTCFi Report, institutions hold 2.6 million BTC in ETFs, corporate treasuries, and mining reserves. However, 99% of this BTC generates negative returns, as firms have to pay custody fees, which range from 0.1% to 0.5% annually.

Despite this, these reserves present a significant financial opportunity for holders. By March 2025, Bitcoin-native DeFi grew 2,700% year over year to $8.6 billion in total value locked. However, this figure still amounts to just 0.79% of the BTC supply, compared to 50% for Ethereum.