Rootstock Labs' Richard Green said thinner liquidity is pushing Bitcoin-based DeFi teams toward miners, treasury firms and long-term holders instead of broad crypto-native audiences.
Bitcoin-based decentralized finance projects are shifting toward smaller, more targeted user groups as liquidity dries up across the wider DeFi market, Rootstock Labs Director of Institutional & Ecosystem Richard Green said at last week's BTC Prague conference. Green said crypto-native traders and hedge funds, once the easiest audience for Bitcoin DeFi products, have largely retreated as capital leaves the sector. He cited a sharp contraction in total value locked (TVL, assets deposited in protocols), which he said has dropped from roughly $180 billion last October to around $70 billion today, in line with The Block's data. In response, projects including Rootstock are focusing more narrowly on bitcoin treasury firms, miners and long-term bitcoin holders interested in BTC lending and yield-generating products. The comments came days after Bitcoin Layer 2 (network built atop Bitcoin) project Botanix said it would shut down its network because of weakening demand for Bitcoin-native DeFi and fees that were too low to sustain operations. Green argued that does not mean demand has vanished, saying it remains concentrated in smaller but committed segments such as mining firms seeking bitcoin-backed loans and institutional investors exploring tokenized fund strategies linked to bitcoin. He added that as ETFs become the main entry point for new bitcoin investors, Bitcoin DeFi projects will need to do more education and offer stronger reasons for users to move from passive exposure into putting BTC onchain.