Institutional interest in Bitcoin is shifting beyond passive exposure as infrastructure to return generation and decentralized finance (DeFi)-like activity.
With new platforms like Rootstock and Babylon bridging the gap between Bitcoin and return-bearing protocols, some asset managers and corporate treasuries are beginning to see the asset as something more than digital gold.
“People are holding bitcoin – whether on the balance sheet or as investors – increasingly see it as a pot that’s just 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 leveraged asset. It can’t just sit there and do nothing; it must add dividends.”
This thinking marks a remarkable evolution from Bitcoin’s early institutional narrative of store of 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, mirroring the dividend expectations that have long driven adoption in other digital asset ecosystems like Ethereum or Solana.
The shift is facilitated by Bitcoin-native solutions that allow the generation of dividends without leaving the network. Rootstock, which enables smart contracts secured by Bitcoin’s hash power, has seen increasing demand for collateralized products and tokenized funds that return Bitcoin-denominated returns.
“Our role is to guide institutions through that,” Green said. “We see demand for BTC-backed stablecoins and credit structures that let miners, remittances and government bonds unlock liquidity while staying in Bitcoin.”
For many companies, the matter is as much practical as philosophical. “If you’re a financial company and you’re handling bitcoin, you lose 10-50 basis points on that price,” Green noted. “You want to undo that. Now the options are safe and secure enough that you don’t have to go into a crazy DeFi looping strategy.”
Such bitcoin-denominated return options – sometimes with 1-2% annual returns – are increasingly viewed as acceptable by conservative investors seeking to offset custodial resistance without taking on exposure to packaged or bridged assets.
Bitcoin Retaking and the Dividend Problem
Still, the yield remains thin compared to Ethereum’s stake economy. “We assessed 19 different protocols or technology platforms that had announced bitcoin stakes or dividends,” said Andrew Gibb, CEO of Twinstake, a staking infrastructure provider. “The technology is there, but institutional demand takes time to come through.”
Twinstake runs infrastructure for Babylon, a project that enables Bitcoin-based restaking for proof-of-stake networks. While technically functional, Gibb said the often trivial returns make for a tough sell. “If you hold Bitcoin, are you really holding it because you want an extra 1% yield? That’s the psychological hurdle,” he told CoinDesk in an interview.
Some services aim to overcome that by framing dividend generation as non-lending, using mechanisms like time-locking Bitcoin for dividends without rehypothecation.
“You still have it – it’s just time-locked,” Gibb said. “That’s how some projects sell it, but then the yield has to be meaningful to justify that lock-in.”
Although adoption is gradual, it appears that institutional bitcoin holders are no longer satisfied with passive appreciation alone. As safe, Bitcoin-native dividend products proliferate, the world’s largest digital asset moves toward productivity—without compromising its core principle of self-sufficiency.
“It’s about operating in a world where the bitcoin dividend is clear,” Green said. “And to receive that dividend back in BTC.”
