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Bitcoin DeFi’s challenge is not primarily technical or security-related, but one of concentration: demand appears to be coming from a limited set of participants rather than a broad retail user base. The picture emerging from Rootstock—an EVM-compatible Bitcoin sidechain—suggests the sector is being driven by a handful of serious players in relatively small, deep markets.
Rootstock has made notable progress on the security front, capturing 84.01% of Bitcoin’s total hashrate through merged mining in Q1 2026. This is up from 81% as recently as May 2025, meaning miners that already secure Bitcoin are also securing Rootstock with minimal additional cost.
Despite this strong security profile, the total value locked (TVL) across Rootstock’s ecosystem remains comparatively modest at roughly $235 million to $267 million.
Rootstock has increasingly oriented its strategy toward institutions through its Rootstock Institutional initiative, which targets an estimated $260 billion in idle institutional Bitcoin holdings.
Richard Green, Rootstock’s Director of Institutional and Ecosystem, has discussed how institutions are seeking Bitcoin-backed financial products. The core thesis is that institutions want yield on Bitcoin without moving away from Bitcoin’s security model—specifically, they are not interested in bridging to Ethereum or relying on alternative consensus mechanisms. Instead, they want Bitcoin-native solutions.
One example cited is a $20 million tokenized private credit deployment by Mercado Bitcoin on Rootstock.
Richard Green has highlighted that institutions are increasingly seeking yield and lending solutions backed by Bitcoin’s security, without the need to move assets off-chain or onto alternative networks.
Rootstock’s network includes over 150 partners. The article also notes recent integrations, including Aori for cross-chain activity, completed in April 2026.
In contrast to Rootstock’s trajectory, Botanix, another project building DeFi infrastructure on Bitcoin, announced its shutdown around June 10, 2026, citing weak demand for Bitcoin DeFi.
The divergence between the two projects is presented as instructive: Rootstock has continued by leaning into merged mining security and targeting institutional clients, while Botanix appears to have struggled to attract enough users.
From a positive perspective, Rootstock’s security metrics continue to improve, with an 84.01% hashrate share positioning it as one of the most secure sidechains in crypto by piggybacking on Bitcoin’s mining infrastructure.
The key risk highlighted is that Bitcoin DeFi may remain a niche within a niche. A TVL range of $235 million to $267 million suggests the market has not yet identified a breakout catalyst for broader adoption.
The Botanix shutdown is framed as a reminder that survival in this segment is not assured. Rootstock’s approach—choosing an institutional path deliberately rather than assuming mass adoption—may be more sustainable than strategies built on expectations of rapid retail growth.
For monitoring progress, the article argues that investors should not look at TVL alone, but at the relationship between institutional capital and total TVL. It suggests that if Rootstock can convert even a small portion of the $260 billion opportunity into active deployments, current TVL figures could change materially over time.
