Bitcoin Yield Strategies Surge as Institutions Seek Liquidity
1min read The demand for yield-generating strategies around Bitcoin (BTC) is surging, particularly among firms seeking liquidity without liquidating their BTC holdings. According to ryan Chow, co-founder and CEO of Solv Protocol, this trend is driven by institutional interest in Bitcoin yield products, which has grown exponentially over the past few years.
Chow highlighted that generating Bitcoin yield was once nearly impossible. However, recent innovations such as staking via proof-of-stake (PoS) protocols and delta-neutral trading strategies have made it feasible. Layer-1 and layer-2 advancements, like Babylon, have further enhanced the viability of these strategies. Babylon allows BTC holders to earn yield on their assets, which are used to provide security and liquidity for PoS networks. Chow emphasized that staking Bitcoin to secure the network brings utility and use cases to the asset.
Institutions primarily focus on Bitcoin when entering the crypto market due to its dominance in portfolios. Once they purchase Bitcoin, they lend it out to gain liquidity without selling. Companies like coinbase now offer up to $1 million in borrowing against Bitcoin, and platforms like Aave and Compound enable instant borrowing. Chow praised public firms like Strategy (formerly MicroStrategy) for helping normalize BTC as a treasury asset, noting that their use of Bitcoin derivatives is a significant development in Bitcoin finance.
Looking ahead, Chow expects over 100,000 BTC to enter ecosystems like Solana, predicting that more use cases will emerge. Solv Protocol has also launched a Sharia-compliant Bitcoin yield product called SolvBTC.core. This product generates yield by securing the Core blockchain network and engaging in onchain DeFi activities while adhering to Islamic finance principles. Chow mentioned that Sharia compliance is a long-prepared aspect of their platform, ensuring that it meets the regulatory and cultural requirements of their users.
With over 25,000 BTC already locked in Solv’s protocol, worth more than $2 billion, the firm is now building infrastructure tailored to institutional needs. This infrastructure emphasizes regulatory and cultural requirements, ensuring that it meets the demands of institutional investors seeking liquidity through Bitcoin yield products.
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