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The world’s largest cryptocurrency, with a market of over $1 trillion, Bitcoin has become a favorite asset of both retail and institutions alike seeking to preserve their wealth in the most secure and economically sound asset in human existence. Now, Bitcoin is stepping into an even more intriguing and rewarding phase.
Historically, Bitcoin hasn’t been known for yielding returns beyond price appreciation. As a robust Proof of Work chain, Bitcoin has offered no native yield opportunity, unlike Proof of Stake chains like Ethereum.
For over a decade, Bitcoin has excelled as a store of value, reinforced by its network effects, resilience, and uniquely secure Proof of Work consensus. At the same time, it has reimagined a passive asset—you acquire it to HODL and nothing else. However, that is now changing.
Over the past few years, demand for greater Bitcoin utility and growth opportunities has grown tremendously. Ordinals, BRC-20, Bitcoin L2s, and Bitcoin sidechains have all emerged to address this need. While turning satoshis into NFTs and bringing basic smart contract functionality to Bitcoin are tremendous developments, a potentially even greater prize can be found in unlocking sustainable Bitcoin yield opportunities.
Leveling up the Bitcoin asset, the Core blockchain is delivering the benefits of Proof of Stake to the original Proof of Work chain, without altering Bitcoin at all. Core serves as the Proof of Stake layer for Bitcoin, delivering new yield opportunities with no new trust assumptions for the first time in history.
The introduction of zero new trust assumptions may be the most important feature of Core’s Bitcoin staking opportunity. With Core, you don’t have to give up custody of your Bitcoin or entrust your coins to a centralized platform like the now-defunct BlockFi, Celsius, or Voyager. These centralized platforms ultimately drove home the first lesson in Bitcoin: Not your keys, not your coins.
Core’s new solution offers self-custodial Bitcoin staking, meaning you don’t have to entrust your hard-earned Bitcoin to anyone else. Your Bitcoin never leaves your wallet; you time-lock yourself. This way, you earn a healthy yield on your Bitcoin while maintaining full custody—essentially earning a risk-free yield on your Bitcoin.
When you stake your Bitcoin, you’re essentially committing to ‘diamond hands’ as the time-lock for staking prevents you from panic selling your Bitcoin during volatile times. If you believe in the long-term value of Bitcoin, it’s pretty well known that holding and forgetting about your investments tends to outperform typical active trading strategies. So, it makes sense to lock in both your Bitcoin and its yield.
By adopting ‘diamond hands’ and locking your Bitcoin, you earn the right to participate in securing the Core blockchain, which hosts Bitcoin DeFi activity that ultimately powers the yield. Thus, unlike centralized black boxes, the yield’s source and utility are transparent.
In addition to Bitcoin-native staking, much like in Ethereum, liquid staking derivatives (LSD), like LstBTC, are being explored to expand BTC staking yield capability to other DeFi protocols. Eventually, it’s expected that all of Ethereum’s competitive advantages will be adopted by Bitcoin and Bitcoin scaling solutions.
As Bitcoin grows in utility, it is also gaining traction in the world of traditional finance. With the approval of Spot Bitcoin ETFs, institutional money has already been pouring in. Now that BTC is becoming a yield-bearing asset—something institutions strongly prefer—the capital inflows are expected to grow even larger and more robust.
All of this is just the beginning, though, as Bitcoin’s DeFi ecosystem is still small compared to Ethereum’s established ecosystem. Given Bitcoin’s status as the most widely adopted cryptocurrency, it could quickly become the true foundation of decentralized finance (DeFi), offering an incredible opportunity to earn attractive yields via self-custodial Bitcoin staking.
Overall, the future of Bitcoin DeFi is bright and promising, with Core introducing a new era of what it means to be a Bitcoin holder.
Image by Gerd Altmann from Pixabay
