Bitcoin Yield Protocols Emerge to Unlock Idle BTC and Expand the DeFi Ecosystem

In the past year, the namesake 16-year-old blockchain has seen the new arrivals of features such as Ordinals, Runes, and BRC-20 tokens. Even so, developers are undeterred at the sight of a market correction, speaking of a bourgeoning ecosystem ahead.

SolvBTC, a Bitcoin yield protocol, is currently working on Liquid Yield Tokens, which will enable Bitcoin holders to deposit their holdings and generate income from decentralized finance (DeFi) in a manner analogous to that of liquid staking tokens on the Ethereum blockchain. The project, which was launched earlier this year, has since attracted a total value locked (TVL) of $1.3 billion among 292,000 users.

"I'd like to use SolvBTC Ethena Vault as an illustration to explain how Solv provides Bitcoin users with a stable base yield and a wide range of earning opportunities," Chow explained. "The Vault uses Bitcoin as collateral to borrow stablecoins, which are then used to mint and stake Ethena's USDe. This strategy generates funding rates from delta hedging derivatives positions, which are then distributed as yield to users. In this strategy, users can earn a net APY of about 15%."

"Both Solv and Ethena, he continued, are offering bonus token incentives for this Vault, which could further increase the overall yield. Additionally, Solv is creating a wide range of DeFi integrations for SolvBTC.ena, enabling users to pursue further yield opportunities across multiple networks."

SolvBTC will soon integrate with the Ethereum mainnet, enabling its users to directly access wrapped Bitcoin (wBTC) liquidity and generate yields within the Ethereum DeFi ecosystem.

Master Yield Market is a recently launched Bitcoin yield protocol that aggregates all yield-bearing assets within the Bitcoin ecosystem. The protocol enables users to directly purchase Bitcoin yield assets from blockchain-native DeFi protocols using Tether, Ethereum, and wrapped Bitcoin.

Sunny Fung, core developer of MetaID, believes that Bitcoin "cannot solve the problem of congestion and high fees in the short term." However, layer solutions on top of Bitcoin can mitigate the issue by bundling individual transactions into one application to save time and effort.

"MetaID introduces the concepts of Unified UTXO Chain and Unified Bitcoin Address, which effectively solves Bitcoin's congestion problem and fully unleashes the potential of Layer 2 networks that are homogeneous with Bitcoin," Fung told Cointelegraph, "As long as it is a Bitcoin sidechain, Layer-2, or even BCH that is homogeneous with Bitcoin, MetaID can theoretically support it seamlessly."

Fung also noted that despite Bitcoin being "designed the earliest and lacking smart contracts," it remains the "best carrier for Web3 applications" due to its strong consensus, decentralization, security, and on-chain data storage capabilities through satoshis.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-yield-protocols-emerge-unlock-idle-btc-expand-defi-ecosystem.html

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