Rootstock has become a key player by bridging the gap between how stable Bitcoin is and how flexible smart contracts are. Let's see what Rootstock has to say about their findings by the end of Q2 2024.
Rootstock, a permissionless Bitcoin sidechain launched in January 2018, aims to infuse Bitcoin with smart contract functionality without introducing a unique native token. Instead, it utilizes “Smart Bitcoin” (RBTC), a 1:1 bridged version of BTC used for gas fees on the Rootstock network. This approach allows Bitcoin holders to engage seamlessly with decentralized finance (DeFi) protocols and decentralized applications (dApps) for activities such as minting and swapping.
Rootstock experienced a lot of growth and consolidation in the second quarter of 2024. It had record-breaking activity, strategic partnerships, and technological advances that showed its dedication to making the Bitcoin ecosystem better.
Here are the main takeaways from the recent Messari report dedicated to the State of Rootstock Q2 2024.
Financial Results and Network Activity
In terms of money, Rootstock showed strength during a time of market consolidation. In the first quarter of 2024, the platform's revenue, which mostly came from transaction fees, grew by 92.9% from the previous quarter. In the second quarter, it stayed stable with only a 2.7% QoQ drop.
This stability is due to a large base of strong users and the popularity of merged mining mechanisms, which allow Bitcoin miners to make more money without having to pay for more computing power.
In Q2, there were big jumps in network activity and new accounts. This was caused by Rootstock's efforts to grow its ecosystem. Working with platforms like SushiSwap and Galxe was a big part of getting people to use it. Even though the average number of daily active accounts dropped 19.7% from Q1 to Q2, they were still more active than they were in the last few quarters of 2023. Total transactions went up by 2.9%, and even though average transaction fees have gone up 82% since Q4 2023 (which is in line with Bitcoin's price rise), user engagement has stayed high, showing that the network is still valuable.
Rootstock reached an all-time high of 34 average daily verified contracts on June 7, 2024. This was a major milestone in Q2. Rootstock's ecosystem is getting stronger, and this milestone shows that activity on the chain is growing.
The platform's DeFi total value locked (TVL) dropped 17.7% from the previous quarter to the current quarter. This came after a big 73.6% rise in the previous quarter. Even though there was consolidation, Rootstock's DeFi TVL stayed strong, with only a small drop compared to previous gains. In RBTC terms, the TVL dropped by only 6.7%.Let's see what Rootstock has to say about their findings by the end of Q2 2024.
Partnerships and Roadmap
Strategic partnerships were a cornerstone of Rootstock’s Q2 activities.
It was announced that more than 20 groups would work together on bridging protocols and decentralized exchange (DEX) aggregators. SushiSwap, OpenOcean, and Rubic were some of the most important additions, which made Rootstock easier to use and more compatible with other DeFi systems.
The goal of these partnerships is to make it easier for assets to move between networks, giving users the best rates, liquidity, and transaction speeds.
With four themed quarters—The Revelation Phase (Q2 2024), The Advancement Phase (Q3 2024), The Scaling Phase (Q4 2024), and The Decentralization 2.0 Phase (Q1 2025)—Rootstock's roadmap showed big plans for the coming year. The BitVMX framework, an open-source project meant to let Bitcoin do complex calculations without needing major infrastructure changes or hard forks, was a big deal when it was released in Q2. This framework is very important for creating decentralized bridges that require little trust, which improves the decentralization and functionality of networks.
Rootstock wants to make the network better in the Advancement Phase by improving the Powpeg protocol, adding new virtual machine opcodes to make Ethereum more compatible, and connecting the Lightning Network to make the peg-in and peg-out processes faster. The planned Bitcoin Native Assets Bridge will make it easier for Bitcoin assets to move between the Bitcoin mainchain and Rootstock. This will improve user experience and liquidity.
Three Arrowhead updates were released in Q2 to improve Ethereum compatibility, node performance, and network functionality. These updates made changes to the consensus, made the JSON-RPC API better, and made peer discovery better. This shows that Rootstock is still committed to making the network work better and improving the user experience.
Rootstock's "Mature Phase" was marked by a 61.5% hashrate in Q2, which shows that merged mining has been a big success.
This means that Bitcoin miners representing over 61% of the total Bitcoin mining power are securing the Rootstock network using the same hardware and energy inputs. Big Bitcoin mining pools like Antpool, Luxor, and Binance Pool have started using merged mining, which makes both Bitcoin and Rootstock safer.
In April 2024, IOVLabs changed its name to Rootstock Labs, which showed a renewed commitment to advancing the Rootstock blockchain and helping developers through the RIF framework. Rootstock wanted to grow its global community, so they relaunched the Ambassador Program to give ambassadors a reason to host meetups, make content, and go to community events.
Rootstock Labs also made a big difference at the EasyA Hackathon in Austin, Texas, during Consensus 2024. With a prize pool of $50,000, the event encouraged new ideas on the Rootstock network, and Tap2Pay won the grand prize.
The goal of this project is to bring contactless payments up to date without using NFC technology. This could change how people buy things in emerging economies and the entertainment business.
Final Thoughts
Rootstock went through a time of strategic consolidation and foundational growth in the second quarter of 2024.
Even though the market as a whole is consolidating, the platform's steady financial performance shows how strong it is and how strong its user base is. Rootstock is ready to take advantage of the growing DeFi space thanks to strategic partnerships and technological advances that have made it possible for its users to access more of Bitcoin's liquidity.
Rootstock has a big advantage in the market because it was one of the first Bitcoin Layer 2 solutions. Rootstock is no longer in the "maturing" phase like other Bitcoin Layer 2 platforms are. Instead, it is focusing on expanding its ecosystem and making adoption go more smoothly. The platform's future success will depend on how well it can keep adding new technologies and explain their benefits to people who might want to use them.
Rootstock's progress in Q2 shows that it is playing a bigger part in the blockchain ecosystem. Through smart contracts and DeFi applications, it is making Bitcoin more useful and easier to use.
As the platform keeps building on its solid base, it will be able to connect Bitcoin to the rest of the world of decentralized finance even more.