RootstockLabs has launched a new initiative, Rootstock Institutional, designed to help major financial players put their vast Bitcoin holdings to work. The project aims to unlock an estimated $260 billion in institutional Bitcoin (BTC) for use in Decentralized Finance (DeFi), allowing firms to generate yield on what are currently dormant assets.

As a key contributor to Rootstock, the first layer-2 network built on Bitcoin, RootstockLabs is focused on bridging the gap between traditional finance and BTC’s DeFi potential. The new institutional team will focus on strategies like on-chain lending and borrowing, enabling institutions to earn returns without selling their long-term Bitcoin positions.

“The market has evolved beyond simple Bitcoin holding,” said Richard Green, Managing Director of Rootstock Institutional and Ecosystem at RootstockLabs. “Institutions managing significant Bitcoin treasuries are seeking sustainable, transparent on-chain frameworks without compromising their long-term position.”

The Untapped Potential of Institutional Holdings

According to the Institutional BTCFi Report from RootstockLabs, institutions currently hold approximately 2.6 million BTC across ETFs, corporate treasuries, and mining reserves. The report highlights that a staggering 99% of this Bitcoin generates negative returns, primarily due to annual custody fees that range from 0.1% to 0.5%.

This massive, idle reserve represents a significant financial opportunity. While Bitcoin-native DeFi has seen explosive growth, reaching $8.6 billion in total value locked by March 2025 after a 2,700% year-over-year increase, it still only accounts for 0.79% of the total BTC supply. For comparison, nearly 50% of Ethereum’s supply is actively used within its DeFi ecosystem.

“Bitcoin’s evolution from pure store of value to productive financial asset represents one of the most significant opportunities in digital finance,” Green added. “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.”