Since the emergence of smart contracts and DeFi, many have dreamt of integrating BTC into the mix. Conversely, just as many, if not more, contend that this asset’s greatest attributes only manifest when it stays on the Bitcoin network.
Regardless of your position, BTC’s reputation as the most secure blockchain, coupled with its significant price appreciation over multiple cycles, makes it difficult to persuade holders to use their BTC for an extra 5-10% yield — typically requiring them to forfeit direct custody of their valuable BTC.
This article provides a brief overview of the yield landscape for BTC and presents Core’s Bitcoin staking as an alternative to traditional strategies.
How to earn yield on BTC?
BTC offers no intrinsic yield. However, several DeFi options exist to generate yield, such as lending, staking, and providing liquidity on decentralized exchanges (DEXes).
To participate in most DeFi protocols, you typically need to use a wrapped version of Bitcoin, which entails depositing your BTC into a bridging protocol that locks your coins and mints an equivalent amount on supported blockchains such as Ethereum and Solana.
Unlike simply staking your BTC on a Bitcoin Layer 2 platform like Core, which doesn’t introduce any new trust assumptions, participating in lending or liquidity provision requires you to trust both the bridging protocol (such as wBTC or tBTC) and the lending protocol.
This increases the risk as it involves relying on the integrity of smart contracts, which are susceptible to hacks.
Now that we've addressed the disclaimer, let’s get into the choices you have.
A brief glance at DefiLlama reveals that the top leading lending options by TVL provide zero yield on BTC. While many wish to lend their BTC, significantly fewer are ready to fulfill that demand.
To obtain any meaningful yield, we must turn to lesser-known and less-established protocols that offer token incentives in addition to the lending APY.
Lending protocols like Morpho and Avalon generally offer modest yields, frequently falling under 5%. Morpho, which has formed a direct partnership with Coinbase, currently provides around 4% APY on cbBTC, enhanced by token incentives.
Meanwhile, Avalon caters to different wrapped Bitcoin types across several chains, with interest rates varying from 0% to 4%.
In the last 30 days, one of the top returns was recorded on Colend, the leading lending product on Core, which offered depositors a notable yield of 8.7% APY for wBTC.
For those willing to take on more risk, providing liquidity on a DEX can potentially yield higher returns.
For example, due to the volatility the market has experienced during the last 30 days, some LP pools containing BTC have skyrocketed to up to 264%. However, this method poses significant risks, such as impermanent loss, especially during volatile market conditions.
On the one hand, the yields for lending your BTC barely sit above the 0% mark, and on the other, they can go up to 500% but carry a very real risk of losing a portion of your precious BTC due to impermanent loss.
However, both strategies share a common requirement: you must entrust your BTC to custodians.
The approach we'll cover next tackles both of these challenges. It will enable you to retain complete custody of your BTC while securing a steady and dependable yield.
Imagine earning returns without relinquishing ownership of your Bitcoin and without the need for constant position monitoring. Only possible on Core.
Core’s dual staking solution
We’ve already covered Core’s Bitcoin staking product, where your Bitcoin stays securely on the Bitcoin network, and you earn yield without taking on new risks. Still your keys, still your coins — now your yields.
This product unlocked maximally secure yields for Bitcoin holders, far surpassing the meager 0.02% APY offered by Aave for wBTC, all without needing to bridge Bitcoin off-chain.
But two challenges linger:
- Bitcoin holders are always looking for higher yields.
- Staking Bitcoin on Core rewards you with CORE tokens, but what do you do with those rewards? How do Bitcoin stakeholders become incentivized to hold and stake CORE?
This is where dual staking comes in. Dual staking enhances Core’s Bitcoin staking by rewarding users who also stake CORE tokens. The more CORE you stake relative to your Bitcoin, the higher the yield tiers you can unlock.
There are four reward tiers available: Base, Boost, Super, and Satoshi. Base is the standard yield tier and requires no CORE staked, whereas Satoshi is the highest tier, with a staking ratio of 8,000 CORE to 1 BTC.
Dual staking effectively aligns the incentives of Bitcoin and CORE holders, giving Bitcoin stakers a way to amplify their yields while integrating CORE’s utility into the BTC-Fi ecosystem.
With dual staking, Bitcoin holders can turn rewards into compounding opportunities, maximizing both their Bitcoin and CORE holdings.
But what do you do if you own BTC but not Core, or vice versa?
This is where b14g’s ‘merge staking’ comes into play.
BTC merge staking with b14g
It’s completely understandable that the BTC holder may want to try Core's staking but has not committed to staking CORE yet, so they can do it through b14g and pay fees to their complementary CORE staker without foregoing the extra rewards from dual staking.
On the flip side, a fellow CORE connoisseur may be so bullish on the CORE token that they don't even want to diversify into BTC, and now they can access even higher staking yields by helping a Bitcoin holder to dual stake and then take a sizeable cut.
The mechanism is straightforward: BTC holders can stake their BTC in a non-custodial manner to create merge orders and indicate how they want to share the rewards, while CORE holders fulfill those orders by staking CORE.
When the BTC:CORE ratio in a merge-order reaches a specific tier (e.g., 1:8000), enhanced dual-staking rewards are unlocked for all participants within that particular order.
Concluding thoughts
When catering to the wealthiest segment in the crypto — Bitcoin holders — two non-negotiable principles must be respected to appeal to this group.
First and foremost, BTC holders value maintaining custody of their assets at all times. This emphasis on self-custody is a fundamental principle of crypto that is particularly important to them.
Secondly, while typical altcoin enthusiasts may not concern themselves with questions like “Where does the yield come from?” or “What risks am I taking with this strategy?” these inquiries are paramount for Bitcoin holders.
Considering these two non-negotiables, Core has developed an optimal solution for unlocking BTC yield. This solution allows BTC holders to earn a safe and predictable (APY) without losing custody of the most precious digital asset.
Additionally, it creates a genuine incentive for these holders to acquire the CORE token, enabling them to unlock even higher yields. This system reinforces the value of both the CORE token and BTC, allowing the CORE token to evolve beyond being merely a farming token.
