Institutional interest in Bitcoin is moving beyond passive exposure as infrastructure for yield generation and decentralized finance (DeFi) style activities.
With new platforms like Rootstock and Babylon building bridges between Bitcoin and yield-generating protocols, some asset managers and corporate treasuries have begun to view the asset as more than just digital gold.
“People who have bitcoins “Whether on the balance sheet or as investors, they increasingly see it as a boat sitting there,” said Richard Green, director of Rootstock Institutional, a new team created by the Bitcoin sidechain project to focus on the institutional market. “They still want it to be a used asset. It can’t just sit there doing nothing; it needs to add performance.”
That mentality marks a notable evolution from the initial institutional narrative of preserving Bitcoin’s value. Green said in an interview with CoinDesk that professional investors now expect their holdings to “work as hard as possible” within their risk mandates, reflecting performance expectations that have long driven adoption in other digital asset ecosystems such as Ethereum or Solana.
The shift is facilitated by native Bitcoin solutions that enable yield generation without leaving the network. Rootstock, which enables smart contracts collateralized by Bitcoin hash power, has seen growing demand for collateralized products and tokenized funds that return Bitcoin-denominated yield.
“Our role is to guide institutions through that,” Green said. “We are seeing demand for BTC-backed stablecoins and credit structures that allow miners, remittance companies and treasuries to unlock liquidity while staying in Bitcoin.”
For many companies, the argument is both practical and philosophical. “If you’re a bitcoin treasury and custody company, you’re losing 10 to 50 basis points of that cost,” Green said. “You want to override that. Now the options are safe enough that you don’t have to resort to some crazy DeFi loop strategy.”
These bitcoin-denominated yield opportunities, sometimes offering 1-2% annual returns, are increasingly considered acceptable by conservative investors looking to offset the custodial burden without taking on exposure to wrapped or bridged assets.
Bitcoin recovery and the performance problem
Still, the performance is still small compared to Ethereum’s staking economy. “We evaluated 19 different protocols or technology platforms that had announced bitcoin staking or performance,” said Andrew Gibb, CEO of Twinstake, a staking infrastructure provider. “The technology is there, but institutional demand is slow to arrive.”
Twinstake runs the Babylon infrastructure, a project that enables Bitcoin-based recovery for proof-of-stake networks. While technically functional, Gibb said the often trivial returns make it difficult to sell. “If you have Bitcoin, are you really holding it because you want an extra 1% return? That’s the psychological hurdle,” he told CoinDesk in an interview.
Some services aim to overcome this by framing yield generation as non-credit, using mechanisms such as Bitcoin time-locking to earn yield without remortgaging.
“You still have it, it’s just limited in time,” Gibb said. “That’s how some projects are selling it, but then the performance has to be significant to justify that block.”
Even if adoption is gradual, it appears that institutional bitcoin holders are no longer content with passive appreciation alone. As secure, native Bitcoin performance products proliferate, the world’s largest digital asset is inching toward productivity, without compromising its founding principle of self-custody.
“It’s about operating in a world where the performance of bitcoin is evident,” Green said. “And receive that return in BTC.”
