Rootstock: A Look at DeFi Developments in Q1 2025
Rootstock has been making waves as the home of decentralized finance (DeFi) on Bitcoin, and the first quarter of 2025 has proven to be no exception. Despite a general cooling in activity, the platform has shown impressive growth in network security and mining engagement.
Surge in Merged Mining Participation
One of the standout achievements for Rootstock during this period has been the remarkable increase in merged mining participation, which leaped to an all-time high of 81%—an increase from 56.4% in Q4 2024. This surge can be attributed to the integration of prominent mining pools such as Foundry and SpiderPool. According to Messari’s inaugural “State of Rootstock” report for 2025 shared with Cointelegraph, this uptick in miner involvement significantly elevated Rootstock’s hash power, eclipsing 740 exahashes per second. This surpasses the total Bitcoin network hashrate recorded in October 2024.
The increased miner interest has positioned Rootstock in a “mature phase” of merged mining growth. This newfound security is pivotal, making the platform more attractive not only for miners but also for users seeking a robust network.
Reduced Transaction Fees
The positive developments in network security coincided with a notable reduction in transaction fees by 60%. This decrease drastically improves user experience, allowing individuals to engage with DeFi applications without incurring prohibitive costs. With lower fees, Rootstock stands out more prominently within the Bitcoin layer-2 ecosystem, enhancing its competitive edge.
Andrew Yang, a Messari analyst, believes these changes will further Rootstock’s position for broader adoption. “As BTCFi continues to grow, Rootstock is well-positioned for broader adoption through core upgrades like a 60% reduction in transaction fees,” he noted, underscoring the platform’s commitment to fostering growth through builder education and incentive programs.
Declining Total Value Locked (TVL)
Despite the mining and fee developments, Rootstock’s DeFi ecosystem did experience a setback in terms of total value locked (TVL). During Q1 2025, Bitcoin-denominated TVL dropped by 7.2%, and US dollar-denominated TVL fell a staggering 20% quarter-over-quarter, resting at $179.9 million. The issue appeared more pronounced as the TVL briefly peaked at $244.6 million in January during a Bitcoin price rally, only to trend downward from March amid broader market cooling.
For context, Ethereum-based DeFi also faced a significant decline, with a 27% drop in TVL during the same period, largely impacted by macroeconomic uncertainties and notable events like the $1.4 billion Bybit exploit.
Shifting Dynamics in Stablecoins
The stablecoin landscape on Rootstock saw marked changes as well. USDt (USDT) remained the leading stablecoin, boasting $3.8 million and a 27.5% market share. However, its previous dominance slipped from 41.3% in Q4 2024, illustrating a shifting dynamic in the market. By the close of Q1, no single stablecoin controlled more than 30% of Rootstock’s stablecoin market, indicating a more fragmented landscape.
Interestingly, active addresses on Rootstock contracted by 26.5%, and new addresses plummeted by 54.7%. Despite these declines, daily transactions saw a slight uptick of 4.3%, averaging 11,524 per day—an encouraging sign in an otherwise challenging environment.
Developments in Ecosystem Enhancements
On the development front, Rootstock activated its Lovell 7.0.0 upgrade, which enhanced Ethereum Virtual Machine (EVM) compatibility and improved smart contract performance. This upgrade is critical as it aligns Rootstock more closely with Ethereum-based systems, allowing developers and users to leverage better interoperability.
In addition to this upgrade, the platform expanded its ecosystem with integrations into LayerZero and Meson Finance. Developer-focused initiatives, such as a new hackathon and enhancements to its governance platform, RootstockCollective, were launched to encourage innovation and engagement.
Alexei Zamyatin, co-founder of the Bitcoin layer 2 Build on Bitcoin, stated that the first DeFi company to offer a user-friendly suite of products on Bitcoin would have a significant advantage in capturing the market, which could potentially encompass 300 million users.
The developments and dynamics unfolding within Rootstock are shaping the landscape of Bitcoin DeFi, positioning it for both challenges and opportunities in the months to come.
