State of Rootstock Q1 2025

Key Insights

• Merged mining participation reached an all-time high. Rootstock’s merged mining participation averaged 81% in Q1 2025, up from 56.4% in Q4 2024, following the integration of Foundry, the world’s largest Bitcoin mining pool.
• Transaction costs dropped 60%. Collaboration from Rootstock core contributors and merge mining partners allowed for transaction fees to be reduced significantly.
• LayerZero integrates Rootstock. LayerZero is a cross-chain messaging protocol that facilitates asset transfers across over 100 blockchains. Users can now more easily transfer assets to and from Rootstock through its Stargate bridge.
• The Lovell upgrade goes live. Rootstock implemented its Lovell 7.0.0 upgrade, which focused on improving its Ethereum Virtual Machine (EVM) compatibility to make building on their network easier.
• Stablecoin ecosystem continued to diversify. USDT retained dominance with a 27.58% market share but continued to cede ground to DOC and DLLR.

Primer

Rootstock is a permissionless Bitcoin sidechain that launched its mainnet in January 2018. It aims to bring smart contract functionality to the Bitcoin network. It does not have its own unique native token; instead, it uses BTC in the form of “Smart Bitcoin” (rBTC), which maintains a two-way peg to Bitcoin. rBTC is a bridged BTC version that is used for gas fees on Rootstock. It allows owners to interact with decentralized finance (DeFi) protocols and applications on the Rootstock network for minting, swaps, and more. rBTC uses a bridging system called Powpeg that connects Bitcoin and Rootstock.

Rootstock secures its network using merged mining and DECOR+ (Deterministic Conflict Resolution) consensus, a Proof-of-Work (PoW) protocol that maintains the Bitcoin block format.

Rootstock has several additional components, such as the Rootstock Virtual Machine (RVM), a forked version of the Ethereum Virtual Machine (EVM) that allows for high compatibility with EVM. Rootstock also features the Rootstock Infrastructure Framework (RIF), a token designed to scale Bitcoin utility by powering governance and grants through the RootstockCollective DAO. It also powers comprehensive blockchain-based infrastructure services such as the RIF Token, RIF Wallet, rBTC Flyover, RNS (RIF Name Service), and RIF Relay.

For a complete primer on Rootstock, refer to our Initiation of Coverage report.

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Key Metrics

Research Contents

Performance Analysis

Financial Overview

Rootstock’s onchain revenue declined in Q1 2025 following the implementation of additional merge mining partners. As more partners join merge mining, the transaction fees continue to decrease on Rootstock. Total revenue, measured in rBTC, fell 24% QoQ, from 4.30 rBTC in Q4 2024 to 3.27 rBTC in Q1 2025.

This drop aligns with a 60% decrease in average transaction fees, a change introduced to improve user affordability and enhance the protocol’s competitive positioning. While the lower fee structure supports broader accessibility and future adoption, it also temporarily reduces native-denominated revenue unless offset by significantly higher network activity.

Network Overview

Rootstock’s onchain activity presented a mixed performance in Q1 2025. While average daily transactions rose modestly by 4.3% QoQ, user participation declined, with active addresses falling 26.5% and new addresses dropping 55.7%. In contrast, the quarter marked a significant advancement in network security. Rootstock’s merged mining rate surged 36.8% following the onboarding of Foundry, the world’s largest Bitcoin mining pool, and SpiderPool, the sixth-largest. This expansion brought merged mining participation to a record-high 81%.

Addresses

Rootstock saw a pullback in user activity in Q1 2025, following a strong Q4 performance. Average daily active addresses declined 26.5% QoQ to 254, down from 346 in Q4 2024. New addresses fell sharply, down 54.7% QoQ from 52 to 23 per day.

While Q1 saw an overall decline in address activity, the quarter featured isolated surges. Daily active addresses peaked at 1,052 on March 28, 2025, likely driven by Meson Finance enabling stablecoin bridging to Rootstock. New address creation reached 233 on Feb. 7, 2025, coinciding with Rootstock’s presence at ETHTaipei during its Hackathon Tour. However, these spikes were short-lived, and broader trends pointed to a cooldown following Q4’s heightened activity.

Transactions

Rootstock maintained steady throughput in Q1, with average daily transactions increasing 4.3% QoQ to 11,524 in Q1 2025, up from 11,048 in Q4 2024. This brought the total transaction volume for the quarter to just over 1.04 million, signaling a steady continuation of network activity.

Transaction volumes fluctuated throughout the quarter, with peak usage recorded on February 25 at 24,107 transactions and the lowest activity on March 21 at 7,781 transactions. The most notable structural shift came with the reduction of gas fees. Rootstock core contributors and merge mining partners worked together to reduce transaction fees on Rootstock by 60%.

Ecosystem and Development Overview

Rootstock experienced modest financial growth in Q1 2025, with the price of rBTC appreciating slightly and total network revenue rising 5.5% QoQ. This uptick, while incremental, reflects improved network fundamentals following the Lovell upgrade and increased transaction throughput.

DeFi TVL

Rootstock’s DeFi ecosystem saw a contraction in BTC-denominated TVL and a more pronounced decline in USD terms during Q1 2025. TVL in BTC dropped 7.2%, from 2,363 BTC on January 1 to 2,193 BTC by March 31, while USD-denominated TVL fell 18% QoQ, ending at $179.9 million.

In late January, USD TVL peaked at $244.6 million. This peak coincided with favorable BTC price momentum but was not sustained. From early March onward, BTC and USD TVL trended downward, closely following overall market trends.

Stablecoins

Rootstock’s stablecoin landscape remained active in Q1 2025, with USDT maintaining its position as the dominant stablecoin, accounting for $3.8 million in value and 27.5% market share. While USDT remains the top stablecoin, its market share has declined from 41.3% in the previous quarter, marking a significant shift towards a more diversified stablecoin ecosystem.

In Q1, we saw a diversification of stablecoins, with no single stablecoin having over a 30% market share.

DeFi TVL by protocol

Rootstock’s DeFi ecosystem saw a notable decline in total TVL in Q1 2025, falling 19.15% QoQ, from $222.5 million in Q4 2024 to $179.9 million in Q1 2025. This downturn reflects a broader contraction in user activity and capital within Rootstock’s protocols.

MoneyOnChain, while maintaining its position as the largest protocol by TVL, experienced a 10.5% decrease, dropping from $111.2 million to $99.5 million..

The contraction in TVL across Rootstock’s leading protocols reflected broader ecosystem dynamics, suggesting that the downturn was not limited to isolated projects. Instead, the drawdown appeared systemic, aligning with overall market trends.

Integrations

In Q1 2025, Rootstock integrated several protocols to enhance network functionality and user experience, particularly focusing on bridging and DeFi solutions.

DeFi protocols:

• LayerZero: LayerZero is a leading cross-chain messaging protocol that facilitates seamless asset transfers across over 100 blockchains. Through its Stargate bridge, users can directly bridge assets like USDC, USDT, and WETH from Ethereum and other chains into Rootstock, enhancing liquidity and onboarding for Bitcoin DeFi. Conversely, this integration enables Rootstock’s native assets, rBTC and RIF, to become multichain. They are now available on Base, Arbitrum, Ethereum, and Solana.
• Meson Finance: A stablecoin bridge and swap protocol. Meson allows users to move stablecoins into the Rootstock ecosystem with near-zero slippage. In Q1, Meson launched an incentive campaign offering 2.0% rBTC rewards for stablecoin bridging.
• AnonMarket: A privacy-focused prediction market built on Rootstock. AnonMarket enables anonymous participation in outcome-based trading while leveraging Rootstock’s low fees and Bitcoin security.
• Eisen Labs: Eisen is a decentralized exchange (DEX) aggregator designed to optimize trade execution by routing transactions through multiple liquidity sources. As a modular protocol bridging Bitcoin and Ethereum ecosystems, Eisen contributes to Rootstock’s trading infrastructure and supports its role in enabling cross-chain DeFi.

Wallets and others:

• Ledger Live: Ledger Live (the app for Ledger hardware wallets) added full support for Rootstock’s native tokens. Both rBTC and RIF can now be securely managed and transacted through Ledger Live.
• Gelato: Gelato is a decentralized Web3 automation platform that enables developers to build gasless and automated applications. With its integration on Rootstock testnet, developers can now leverage Gelato’s Web3 Functions and Relay services to execute offchain logic, automate smart contract interactions, and enable optimized user experiences.

Merged Mining

In Q1 2025, Rootstock’s merged mining operations experienced significant growth with the integration of Foundry and SpiderPool. Foundry’s participation contributed approximately 200 exahashes per second (EH/s), elevating Rootstock’s total hashing power to an estimated 740 EH/s—representing nearly 80% of Bitcoin’s total mining power. SpiderPool’s involvement further diversified the mining pool landscape, underscoring major mining entities’ increasing confidence in Rootstock’s value proposition. This heightened engagement from miners significantly bolstered Rootstock’s security framework. With the additions, Rootstock’s hashing power is now higher than the hashpower of the entire Bitcoin network back in October 2024. Rootstock approaches the upper bounds of feasible merged mining participation at this scale, reaching the “mature phase” of merge mining growth.

Comparatively, in Q4 2024, Rootstock’s hashrate ratio stood at 56.40% relative to Bitcoin’s total hashrate, with a quarterly average of 410.63 EH/s. The top three mining pools during that period were Antpool (38.6%), ViaBTC (24.3%), and F2Pool (16.9%). The subsequent inclusion of Foundry in Q1 2025 markedly shifted this distribution, contributing to the substantial increase in Rootstock’s overall hashing power, averaging 81% over Q1, marking a 24.60% increase QoQ.

Upgrades

Lovell 7.0.0

Lovell Network Upgrade (Rootstock v7.0.0): In March 2025, Rootstock activated the Lovell hard fork on mainnet (at block 7,338,024). This upgrade bundled six Rootstock Improvement Proposals (RSKIPs) targeting security, usability, and Ethereum compatibility. For example, RSKIP-419 introduced a Powpeg Spendability Validation protocol to automatically verify that any updated bridge multi-sig can still release BTC funds, bolstering bridge safety. Several EVM enhancements were also included: RSKIP-445/446 added new EVM opcodes (MCOPY for efficient memory copy and TLOAD/TSTORE for transient storage) to improve smart contract performance and reduce gas costs. Another proposal limited contract code size (RSKIP-438) to align with Ethereum and prevent oversized deployments.

Gas Fee Reduction

In Q1 2025, transaction fees were reduced significantly, driven by protocol-level optimizations in collaboration with merged mining partners. Average gas costs declined by approximately 60% QoQ, enhancing the network’s efficiency and cost-effectiveness. This reduction lowers the entry barrier for routine users and developers, improving the overall user experience for DeFi activity and smart contract deployment. The initiative aims to make the network cheaper and more accessible, positioning Rootstock to better compete within the broader Bitcoin L2 ecosystem.

Node Sync Performance

The Rootstock client (RSKj) introduced a Snap Synchronization mode to speed up initial node syncs. With “snap sync,” a new full node can sync to the network in a few hours, significantly faster than before. This improvement lowers the barrier for community members to run their own nodes since syncing the blockchain is less time-consuming. Faster syncs contribute to decentralization by encouraging more participants to verify the chain. Additionally, a minor RSKj patch (Arrowhead v6.5.1) was released in February to fix synchronization issues encountered after a Java upgrade. The patch reverted the node software’s Docker image back to Java 17 (from Java 21) to resolve those issues, underscoring the developers’ quick response to stability concerns.

Faster Transactions Protocol

Alongside the live upgrades, Rootstock’s team has been designing a new FASTER transaction processing protocol to boost throughput. This protocol will enable safe parallel transaction execution, increasing the block gas limit and transactions per second (TPS) of Rootstock. Although not yet activated in Q1, the research and development for FASTER progressed (RSKIP-144 draft), aiming for deployment later in 2025. Once live, it will complement the Lovell improvements by significantly scaling Rootstock’s capacity for DeFi workloads.

Powpeg

In February 2025, Rootstock executed a scheduled firmware upgrade aimed at enhancing the operational security of its two-way Bitcoin bridge, Powpeg. This process involved existing federation members, including Luxor and Sovryn, updating the key pairs associated with their Hardware Security Modules (PowHSMs) following the installation of new firmware. The upgrade focused on improving signing security and hardware functionality, necessitating a change to Powpeg’s multi-signature Bitcoin deposit address.

The updated address became active at block 7,226,594 approximately on Feb. 9, 2025, following an onchain governance procedure. The federation’s composition remained unchanged; the update was confined to internal key management and did not affect the operational integrity or custody structure of the peg. The upgrade process proceeded without disruption. Peg-in and peg-out functionalities remained intact throughout the quarter, and the federation maintained full continuity.

In addition to the security enhancements, the Powpeg App’s “Fast Mode” went live. Significantly reducing transaction processing times from 17 hours to approximately 20 minutes. This improvement was achieved by integrating the Flyover protocol, allowing quicker peg-in and peg-out operations. Furthermore, the upgrade expanded wallet support to include Enkrypt and Xverse, facilitating broader user access to Rootstock’s DeFi ecosystem.

Qualitative Analysis

Governance and RootstockCollective

During Q1, RootstockCollective launched five key updates to continually improve the experience and streamline processes for the governance structure on Rootstock. Below are the five key updates:

RootstockCollective V3.2: RootstockCollective introduced several UX enhancements, including proposal pagination, improved navigation for long-form content, more efficient gas usage when allocating stRIF, clearer backer reward displays, and integrated usage analytics to inform future updates.

RootstockCollective V4.0: In February 2025, RootstockCollective included streamlined proposal creation, clearer delegation via community-designated Shepherds, enhanced staking and reward tracking with ABI% visibility, and guided onboarding. The update improved scalability on the backend by modularizing smart contracts and deepened integration with Tally to support onchain delegation and governance.

RootstockCollective Shepherds: RootstockCollective introduced a group of five governance-focused delegates known as the ‘Shepherds.’ Arana Ventures, PGov, StableLab, Avantgarde, and Chrono Triggered are tasked with guiding DAO participation and advancing decentralized governance.

Rootstock Collective V4.1: In March 2025, RootstockCollective released V4.1, introducing MVP Rewards Booster, enabling NFT holders, beginning with the Vanguard badge, to earn enhanced Collective Rewards via temporary multipliers. The update also added in-app transparency, including visual cues across proposals, community hubs, and rewards dashboards to help users monitor when and how their NFTs are boosting yield.

RootstockCollective V4.2: In March 2025, RootstockCollective released V4.2 of its governance platform, enhancing accessibility and user experience. The update allowed users to browse Collective proposals, rewards, and community hubs without connecting a wallet, making participation more accessible. Key improvements included streamlined interfaces for proposal voting, treasury insights with visual metrics, and enhanced community navigation. The update also introduced Realized Backers Incentives % (RBI%), providing transparent insights into cumulative backer rewards, reinforcing the value of DAO participation.

In February 2025, RootstockCollective deployed its governance interface on Tally, a leading platform for onchain proposal management and voting. Enabling token holders to participate more transparently in decisions around grant allocations, upgrades, and ecosystem initiatives. RootstockCollective introduced three airdrop campaigns to commemorate six months since the collective’s launch and to reward early governance participants, social advocates, and community referrers.

Community Programs & Developer Initiatives

AI BUIDL Hackathon: Rootstock increased developer outreach in late Q1 through event participation and hackathon planning. The RootstockLabs team announced the upcoming AI BUIDL Lab Hackathon, which is set to launch in early Q2 on DoraHacks in collaboration with partners including Alchemy and thirdweb. The initiative aims to attract developers building AI-integrated dApps on Rootstock.

ETH Denver: RootstockLabs participated at ETHDenver 2025, hosting side events such as the “Bitcoin Renaissance” summit and developer workshops. These efforts targeted Ethereum and multichain builders, promoting Rootstock as a Bitcoin-secured platform with EVM compatibility.

Developer education: In Q1 2025, Rootstock created a “BitVMX Made Easy” series to simplify advanced smart contract techniques. The documentation portal was refreshed alongside the Lovell upgrade to reflect new opcodes and features. The developer relations team hosted workshops on RIF protocols and the Flyover BTC bridge and continued its Hacktivator incubator to support early-stage projects. These initiatives aimed to lower onboarding friction and improve the developer experience across the Rootstock ecosystem.

Rootstock Ecosystem Summit: On Feb. 6, 2025, Rootstock hosted its inaugural Ecosystem Summit, bringing together the community to explore advancements in Bitcoin-powered DeFi. The virtual event featured presentations from new partners, including Alchemy, Stargate, and RedStone, who showcased their latest features and integrations. Additionally, the summit reflected on the achievements of 2024 and provided insights into Rootstock’s roadmap.

Galxe Campaigns: In Q1 2025, Rootstock community members launched a series of Galxe campaigns aimed at deepening community engagement and celebrating key ecosystem milestones. The first, “Unlock Connectivity – Earn 15,000 RIF & Your Extra Entry!” marked Rootstock’s integration with LayerZero. From February 27 to March 12, participants completed tasks such as engaging on social media and adding Rootstock to MetaMask. Fifteen winners received 1,000 RIF each, totaling 15,000 RIF in rewards. This was followed by the “Rootstock Gas Slash Giveaway,” which celebrated the 60% reduction in gas fees on Rootstock. From March 16 to April 6, users who executed at least six mainnet transactions became eligible for a $6,000 rBTC raffle split among 60 winners.

Digital Asset Summit: From Mar. 18-20, 2025, RootstockLabs participated in the Digital Asset Summit. RootstockLabs hosted the Rootstock Rooftop mixer event, speaking on Bitcoin DeFi.

BitVMX

In Jan. 2025, RootstockLabs and Fairgate Labs published the Union Bridge whitepaper, introducing a novel framework for executing arbitrary programs on Bitcoin. This innovation lays the groundwork for developing decentralized bridges and enhances Bitcoin’s functionality without altering its core protocol.

In a recent exploration of BitVMX’s capabilities, Rootstock introduced PKMN_BTTL, a Pokémon-inspired game developed in Zig and executed using the BitVMX protocol. This innovative project demonstrates how arbitrary computations can be securely executed on Bitcoin’s network. In PKMN_BTTL, two participants lock bitcoins in a BitVMX contract. One player selects a Pokémon to battle against Charizard, and if victorious, can claim the locked BTC by verifying the outcome through BitVMX.

Closing Summary

In Q1 2025, Rootstock experienced significant developments across its network and ecosystem. Foundry, the world’s largest Bitcoin mining pool, propelled merged mining participation to an unprecedented average of 81%, enhancing network security as well as helping to reduce transaction costs on the network by 60%

Activating the Lovell upgrade in March introduced protocol optimizations and EVM enhancements.

Despite a 4.3% increase in daily transactions, network revenue declined by 24% to 3.27 rBTC, reflecting the impact of reduced fees. The DeFi sector faced a 19.9% decrease in TVL, with leading protocols like MoneyOnChain and Sovryn experiencing notable drawdowns.

Concurrently, the stablecoin ecosystem diversified further as USDT’s market share declined in favor of alternatives like DOC and DLLR. These developments underscore Rootstock’s ongoing commitment to enhancing network efficiency and security while highlighting areas for growth and diversification within its DeFi and stablecoin ecosystems.

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