Institutional attitudes toward Bitcoin yield are starting to change and there is now renewed interest in BTC rewards after years of skepticism driven by the risk of smart contracts, leverage and opaque strategies, GlobalStake co-founder Thomas Chaffee told CoinDesk on Thursday.
Products that allow users to monetize their bitcoin holdings often require integrating BTC into protocols, involving smart contract risks or strategies that are not scalable, so institutions have not seen “a logical risk-return profile,” according to Chaffee.
That reluctance is starting to change, Chaffee said, not because institutions suddenly want more risk, but because the types of strategies available to them have evolved. Rather than protocol-based returns or token incentives, allocators are increasingly turning to fully collateralized, market-neutral approaches that resemble traditional financial strategies already familiar to hedge funds and treasuries, he said.
“The change in behavior we are seeing is not about institutions chasing yield,” Chaffee said. “It’s the institutions that finally commit once the strategies and controls and infrastructure seem like something they can actually deploy capital into at scale.” »
This renewed interest comes after years of failed or short-lived attempts to generate yield on bitcoin, many of which collapsed during the 2022 market downturn as major lenders froze withdrawals and ultimately collapsed amid liquidity stress, including when crypto lending service Celsius Network indefinitely suspended withdrawals and transfers citing “‘extreme market conditions'” in mid-2022 and subsequently goes bankrupt.
Chaffee is not the only one to see renewed institutional interest in Bitcoin returns. “People holding Bitcoin, whether on their balance sheet or as investors, increasingly see it as a pot that just sits there,” Richard Green, director of Rootstock Institutional, recently told CoinDesk. “He can’t just sit there and do nothing; he has to increase output.” Green said professional investors now want their digital assets to “work as hard as possible” within their risk mandates.
Chaffee explained that GlobalStake, which provides staking infrastructure on proof-of-stake networks, began hearing the same question repeatedly from its clients over the past few years: whether there were similar institutional-grade yield opportunities for bitcoin.
GlobalStake on Thursday unveiled its Bitcoin Yield Gateway, a platform designed to bring together multiple third-party Bitcoin yield strategies behind a single integration, compliance and integration layer.
The co-founder explained that the company expects around $500 million in bitcoin to be allocated within three months. “We expect bitcoin to be allocated during the Q1 gateway rollout period, sourced from a Canada-based custodian partner, party-generated demand through our partner MG Stover, and our clients, which include family offices, digital asset treasuries (DATs), corporate treasuries, and hedge funds.”
Other companies approach the problem from the infrastructure layer. Babylon Labs, for example, is developing systems that allow native bitcoin to be used as non-custodial collateral in financial applications, an effort aimed at expanding the utility of BTC rather than directly generating yield.
