Something is fishy in the world of Bitcoin DeFi Indeed, something doesn’t feel right about Rootstock. We’re therefore experiencing a prolific uptick in mining engagement – reaching an all-time record of 81% in Q1 of 2025. Foundry and SpiderPool, big names, are onboard. Hash power is through the roof. Transaction fees even went down 60! Sounds like a party, right?
Then you look at the Total Value Locked (TVL) and the music screeches to a halt. BTC-denominated TVL is down 7.2%. USD-denominated TVL takes a 20% dive to $179.9 million. Active and new addresses are plummeting, too. What gives?
Miners Flock, Users Flee: Why?
The knee-jerk reaction is panic. Is Bitcoin DeFi doomed? Are we all going to zero? Slow down. Let’s not take the good stuff and throw it out with the bad, bathing baby style. The Rootstock story is a multilayered one that needs a little more digging below the surface. Think of your favorite gold rush boomtown. What’s happening Everyone is deep in the trenches, following the shiny gold they’ve found.
One potential culprit? The broader market. But to say that Q1 2025 was a smooth ride for crypto would be an understatement. Ethereum DeFi TVL suffered a blow, down 27%. Macro uncertainty is a real downer. But that doesn’t come close to explaining Rootstock’s truly special situation.
We need to look at what the incentives were. Currently miners are incentivized primarily by block rewards and transaction fees. Much of the credit for this success belongs with the Rootstock team for smartly courting miners. What’s the incentive for users to deposit their Bitcoin into Rootstock DeFi? Are the yields attractive enough? Are the risks worth it? The TVL decline indicates, at least for many, that the answer is no.
Stablecoins Shifting, A Warning Sign?
Unexpected stablecoin dynamics on Rootstock make for a frightening story. USDT, still king, had its market share tank. No single stablecoin dominates. This current patchwork of solutions only serves to highlight the hesitancy surrounding the Rootstock ecosystem. After all, it shows that there’s no high conviction trade on one side or the other asset class. When people are unsure, they pull back. It's basic human psychology.
This reminds me of the early days of the internet. Like back then, when dozens of search engines battled tooth-and-nail until only one emerged—enter Google—the sausage was already made. Rootstock will require a “Google” – a killer app or a dominant stablecoin that inspires confidence and attracts capital.
Bitcoin DeFi Needs Your Help
Rootstock isn't alone in this struggle. The whole Bitcoin DeFi space will be climbing a steep hill. Alexei Zamyatin’s observation that the first intuitive, easy-to-use suite of products becomes the market leader is spot on. Bitcoin maximalists love to preach the virtues of self-custody and decentralization, but if we’re being realistic, convenience is what most users are going to prioritize.
The Lovell 7.0.0 upgrade and ecosystem expansions (LayerZero, Meson Finance) are definitely moves in the right direction. Technology alone won't solve this. We need a community effort.
Here's where you come in. Are you a developer? Build something amazing on Rootstock. Make it easy to use. Make it profitable. Are you a user? Explore the platform. Provide feedback. Demand better. Are you an investor? Engage with and support projects that are truly at the forefront of Bitcoin DeFi.
The mining paradox on Rootstock serves as a reminder. It’s a sobering reminder that attracting capital to Bitcoin DeFi will take more than technical wizardry. Then, you need a really good value proposition to make this all work. In addition, a deep ecosystem and welcoming community are both necessary for creating one. The TVL decline may be a red flag, but it’s not the death knell. It's an opportunity. Let’s join hands and help make this big obstacle ultimately become a big victory for Bitcoin DeFi. The future of decentralized finance may be riding on it.
