Bitcoin DeFi Witnesses Astonishing Mining Surge Amidst TVL Decline
The world of Bitcoin DeFi is presenting a fascinating paradox. While market metrics like Total Value Locked (TVL) and user activity show signs of cooling, the underlying infrastructure supporting these platforms is experiencing robust growth, particularly in mining participation.
Rootstock’s Merged Mining Reaches Astonishing Highs
Rootstock, a prominent smart contract platform for Bitcoin DeFi, reported a significant increase in network security during the first quarter of 2025. This surge was primarily driven by a dramatic rise in merged mining participation.
- Merged mining allows Bitcoin miners to simultaneously mine Rootstock without expending additional hash power.
- Participation hit an all-time high of 81% in Q1 2025, a substantial jump from 56.4% in the previous quarter.
- Key mining pools like Foundry and SpiderPool integrating with Rootstock contributed to this growth.
- The network’s hash power exceeded 740 exahashes per second, surpassing Bitcoin’s total hashrate recorded in October 2024.
- This growth phase is described as ‘mature’ by analysts.
The increased security from high merged mining rates coincided with user experience improvements, including a 60% reduction in transaction fees, making Rootstock more competitive within the Bitcoin layer-2 space.
Bitcoin DeFi TVL Experiences Q1 Downturn
Despite the positive developments in crypto mining and security, Rootstock’s DeFi ecosystem saw a decline in financial value locked on the platform.
- Bitcoin-denominated TVL dropped 7.2% quarter-over-quarter.
- US dollar-denominated TVL fell by 20% to $179.9 million.
- While TVL briefly peaked in January during a Bitcoin price rally, the trend turned downward from March, reflecting broader market conditions.
- For context, Ethereum-based DeFi also experienced a significant TVL decline in Q1.
The stablecoin market on Rootstock also saw shifts. While USDT remained the largest stablecoin by value, its market share decreased significantly from 41.3% to 27.5%, indicating a more fragmented stablecoin landscape.
User Activity Cools, Development Pushes Forward
User engagement metrics on Rootstock showed a mixed picture during Q1 2025:
- Active addresses dropped by 26.5%.
- New addresses saw a sharper decline of 54.7%.
- Daily transactions, however, increased slightly by 4.3%, averaging over 11,500 per day.
On the development front, Rootstock continued to build and expand its capabilities for Bitcoin DeFi. The Lovell 7.0.0 upgrade enhanced EVM compatibility and smart contract performance. Integrations with LayerZero and Meson Finance expanded the ecosystem, alongside new developer programs and governance platform enhancements.
Conclusion: A Mixed Picture for Bitcoin DeFi
The first quarter of 2025 presented a complex narrative for Bitcoin DeFi platforms like Rootstock. The significant surge in merged mining participation underscores growing confidence and investment in the network’s security and infrastructure by the crypto mining community. This foundational strength, coupled with reduced fees and ongoing development, positions Rootstock for future growth. However, the decline in TVL and user activity reflects the challenges posed by broader market trends and highlights the need for continued focus on user adoption and compelling dApp experiences to fully capitalize on the robust underlying network.
