Bitcoin (BTC) News: search for yield

Institutional interest in Bitcoin extends beyond passive exposure as infrastructure for yield generation and decentralized finance (DeFi) type activities.

With new platforms like Rootstock and Babylon building bridges between Bitcoin and yield-generating protocols, some asset managers and corporate treasuries have begun to view the asset as something more than digital gold.

“People holding bitcoins “Whether it’s on the balance sheet or as investors, they see it more and more as a pot that just sits there,” said Richard Green, director of Rootstock Institutional, a new team created by the Bitcoin sidechain project to focus on the institutional market. “They still want it to be a used asset. It can’t just sit there and do nothing; it has to add yield.

This mindset marks a notable shift from Bitcoin’s early institutional narratives about preserving value. Green said in an interview with CoinDesk that professional investors now expect their holdings to “work as hard as possible” within their risk mandates, reflecting the return expectations that have long driven adoption in other digital asset ecosystems like Ethereum or Solana.

This change is facilitated by native Bitcoin solutions which make it possible to generate yield without leaving the network. Rootstock, which enables smart contracts secured by Bitcoin’s hashing power, has seen growing demand for collateralized products and tokenized funds that return a Bitcoin-denominated yield.

“Our role is to guide institutions through this,” Green said. “We are seeing demand for stablecoins and BTC-backed credit structures that allow miners, remittance companies and treasuries to unlock liquidity while remaining in Bitcoin.”

For many companies, the matter is as much practical as philosophical. “If you’re a treasury company and you hold bitcoin, you’re losing 10 to 50 basis points on that cost,” Green noted. “You want to undo that. Now the options are secure and safe enough that you don’t have to go into a crazy DeFi loop strategy.”

Such bitcoin-denominated yield opportunities – sometimes offering annual returns of 1-2% – are increasingly seen as acceptable by conservative investors looking to offset the custodial problem without exposure to wrapped or bridged assets.

Bitcoin recovery and yield problem

Still, the yield remains low compared to Ethereum’s staking economy. “We evaluated 19 different protocols or technology platforms that had announced bitcoin staking or yield,” said Andrew Gibb, CEO of Twinstake, a staking infrastructure provider. “The technology is there, but the institutional demand takes time to manifest.”

Twinstake manages the infrastructure for Babylon, a project enabling Bitcoin-based rebalancing for proof-of-stake networks. Although technically functional, Gibb said the often insignificant feedback makes it difficult to sell. “If you hold Bitcoin, are you really holding it because you want an extra 1% return? That’s the psychological hurdle,” he told CoinDesk in an interview.

Some services aim to overcome this problem by treating yield generation as a non-lending activity, using mechanisms such as Bitcoin time locking for yield without rehypothecation.

“You still have it, it’s just time limited,” Gibb said. “That’s how some projects sell it, but then the return has to be significant to justify this hold.”

Even though adoption is gradual, it appears that institutional Bitcoin holders are no longer content with passive appreciation alone. As secure, Bitcoin-native yield products proliferate, the world’s largest digital asset is gradually moving toward productivity – without compromising its core principle of self-preservation.

“It’s about operating in a world where the return on bitcoin is obvious,” Green said. “And receive that yield in BTC.”

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