TheBlock
Bitcoin-based decentralized finance projects are narrowing their focus to niche user groups as liquidity continues to drain from the broader DeFi sector, according to Richard Green, director of institutional and ecosystem at Rootstock Labs. Speaking with The Block at BTC Prague, Green said the crypto-native traders and hedge funds that used to be the easiest customers to pitch Bitcoin DeFi products to have mostly stepped back as capital exits DeFi markets.
Green cited total value locked across DeFi protocols falling from roughly $180 billion last October to around $70 billion today. "The liquidity's gone," he said.
Why it matters
The pullback has reshaped how Rootstock and its peers think about growth. Rather than targeting the full spectrum of crypto users, the company is zooming in on specific cohorts: bitcoin treasury firms, miners, and long-term BTC holders interested in BTC lending and yield-generating products. Green framed the strategy as "not shallow and wide, it's very narrow and deep" — a survival posture for a sector where headline TVL has lost more than 60% of its value in nine months.
The shift comes less than a week after Bitcoin Layer 2 project Botanix announced it was winding down its network, citing dwindling demand for Bitcoin-native DeFi and insufficient fees to keep operations going. Green said he does not view the closure as evidence that Bitcoin DeFi has disappeared, but as a signal of where the remaining demand actually sits.
Market impact
Inside the surviving pockets, Green pointed to mining companies seeking bitcoin-backed loans and institutional investors exploring tokenized fund strategies tied to bitcoin. As spot Bitcoin ETFs continue absorbing new capital, Bitcoin DeFi projects face a harder educational sell: convincing holders of passive BTC exposure to deploy those coins onchain for lending or yield. The narrower addressable audience raises the bar on product-market fit but also concentrates the remaining flow into fewer venues.
Frequently asked questions
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What did Rootstock's Richard Green say about Bitcoin DeFi demand?
Green said Bitcoin-based DeFi projects are narrowing their focus to niche user groups like bitcoin treasury firms, miners, and long-term holders, calling the strategy "not shallow and wide, it's very narrow and deep."
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How much has total value locked in DeFi fallen?
According to Green and The Block's data, TVL across DeFi protocols has dropped from roughly $180 billion last October to around $70 billion today.
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Why did Bitcoin Layer 2 Botanix shut down its network?
Botanix announced it would wind down operations, citing dwindling demand for Bitcoin-native DeFi and insufficient fees to keep the network running.
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Who is still using Bitcoin DeFi products?
Green pointed to mining companies seeking bitcoin-backed loans and institutional investors exploring tokenized fund strategies tied to bitcoin as the active pockets of demand.
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How do spot Bitcoin ETFs affect Bitcoin DeFi growth?
Green said ETFs have become the primary gateway for new bitcoin investors, forcing Bitcoin DeFi projects to work harder to educate users and give them a reason to move from passive ETF exposure to deploying BTC onchain.
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