Ledger Wallet Launches 'BTC Yield' Feature in Partnership With Lombard and Figment

Ledger Wallet has launched a new 'BTC yield' feature, offering users access to yield-bearing LBTC through integrations with Lombard and Figment according to The Block. The feature is accessible through the Discover section of Ledger Wallet and is part of a broader effort to integrate bitcoin into DeFi platforms according to The Block. This move is significant given that only 1.5% of total BTC is currently active onchain according to The Block.

The new feature allows users to convert their BTC into yield-bearing tokens. This is facilitated through Figment's support of the Babylon Bitcoin Staking Protocol and Lombard's LBTC token according to The Block. Users deposit BTC via the Figment app, which is then converted into LBTC after two transactions: an Ethereum message specifying the destination account and a BTC transfer to a Lombard address according to The Block.

Despite the novelty of the feature, key details remain undisclosed. Ledger has not provided information on expected yield rates, risk profiles, fee structures, or jurisdictional availability according to The Block. Additionally, the company has not clarified how it defines self-custody after BTC is converted into LBTC according to The Block.

Why the Move Happened

The integration marks a milestone in activating bitcoin's onchain supply, according to Jacob Phillips, co-founder of Lombard. With 1.5% of BTC currently active, the feature aims to increase participation and utility for long-term holders and traders according to The Block.

Jean-Francois Rochet, executive vice president of consumer services at Ledger, noted that the company's scale positions it to address a fragmentation gap in the bitcoin ecosystem according to The Block. He emphasized that the feature expands how BTC holders can interact with DeFi without selling or moving assets according to The Block.

How the Integration Works

Users deposit BTC into the Figment app through the Ledger Wallet interface according to The Block. Once deposited, the BTC is converted into LBTC, which generates yield by supporting network validation on the Babylon Bitcoin Staking Protocol according to The Block.

This setup does not involve staking on Bitcoin's base layer but relies on bitcoin-backed economic security mechanisms tied to other networks according to The Block. The LBTC tokens preserve exposure to BTC while generating yield according to The Block.

What Analysts Are Watching

Analysts are watching how this feature affects the broader DeFi and BTC markets according to The Block. With Ledger's user base and the integration of institutional-grade tokens like LBTC, the feature could influence how BTC is used and valued in DeFi contexts according to The Block.

The lack of transparency around yield rates, risk, and jurisdictional availability raises questions for investors according to The Block. Analysts are also monitoring whether this initiative aligns with Ledger's broader strategy, which includes potential listings on public markets and expansion into enterprise security solutions according to The Block.

The integration of BTC into DeFi remains a work in progress, with challenges around risk, return, and economic sustainability still to be resolved according to The Block. As Ledger moves forward, continued clarity on these factors will be crucial for user adoption and long-term success according to The Block.