While you can make impressive returns by HODLing bitcoin, those returns could be even higher if you put your BTC to work.
Today’s Bitcoin DeFi ecosystem lets you do just that–deploy your BTC to earn yield.
Put your BTC to work on Liquidium.WTF. Lend native bitcoin against Ordinals and Runes, choose your terms, and earn interest in BTC, with quoted rates of up to 380% APY in selected Runes markets.
Read on to learn everything you need to know about earning yield on your bitcoin.
Yes, You Can Earn Yield on Bitcoin!
Bitcoin doesn’t pay interest natively as the dollars or euros in your bank account do.
Why?
Because you aren’t depositing your coins in a bank account to store them, instead, you hold your bitcoin in your (ideally non-custodial) Bitcoin Wallet. And just holding BTC in your wallet doesn’t generate any interest.
But that doesn’t mean you can’t earn yield on your bitcoin.
Thanks to the growing Bitcoin DeFi ecosystem, you can deploy your BTC across a range of protocols to earn interest or rewards paid in BTC.
Now, let’s look at how you can do just that!
3 Ways to Earn Yield on Bitcoin (That Actually Work)
Let’s see practical, real-life examples of how exactly you can earn a yield on bitcoin that would turn even the most unyielding (no pun intended) nay-sayers into believers.
Bitcoin Lending
One of the most popular strategies to earn a bitcoin yield is lending.
On Liquidium.WTF, you lend native BTC to borrowers who pledge selected Ordinals or Runes as collateral. You choose the assets you want to lend against and the terms that work for you.
Each offer sets the BTC amount, interest, and loan duration upfront. When the borrower repays, you receive your principal plus the agreed interest after applicable fees.
If a borrower defaults, you can claim the collateral. Choose assets you understand and an LTV you are comfortable with: their resale value can fall below the BTC you lent.
As such, Liquidium.WTF’s lending model offers another opportunity for bitcoin aficionados seeking high yields while managing their risks accordingly.
Liquidity Provision
You can also earn bitcoin yield by acting as a liquidity provider in decentralized trading pools.
This can be done by, for example, wrapping your BTC into WBTC and depositing it into a liquidity pool like SushiSwap’s WBTC/ETH pool. There, you are locking your Bitcoin assets into an automated market maker (AMM) smart contract where you provide liquidity for a DEX to receive your share of the pool’s trading fees plus additional rewards (typically paid out in the form of liquidity pool tokens (LPTs).
The process of earning fees and LP rewards as a liquidity provider is often referred to as “liquidity mining,” which has become a popular way to earn yield for DeFi-savvy traders.
Bitcoin Staking
Bitcoin staking is another way you can earn yield on your BTC.
As Bitcoin is secured by a proof-of-work (PoW) consensus mechanism, native bitcoin staking isn’t possible.
However, the good news is that BTC staking has recently become an option thanks to Bitcoin DeFi staking protocols, such as Babylon and Acre, designed to let you stake BTC indirectly and receive staking rewards.
The way it works is that these Bitcoin staking protocols are developing staking-like mechanisms for bitcoin HODLers to earn yield while participating in other network’s security protocols. Typically, that means using BTC in tokenized form in Bitcoin L2 proof-of-stake (PoS) systems, earning rewards paid out in Bitcoin-pegged assets.
How lending on Liquidium.WTF works
1. Open Liquidium.WTF’s Bitcoin app, choose Lend, and select Ordinals or Runes. Connect your wallet and choose the collateral you want to lend against.
2. Set your loan amount, interest, duration, and LTV. For Instant lending, create and fund a BTC vault so borrowers can accept your offers without a separate countersignature. For Manual lending, create an offer and countersign when a borrower accepts it.
Set the interest and duration for each loan. The displayed APY expresses that rate over a year; your earnings depend on fees, repayment, and time spent lending.
Instant-loan vault and signing model
Start earning BTC with Liquidium.WTF
Choose an Ordinals collection or Rune, set your terms, and put your BTC in front of borrowers looking for liquidity. Instant vaults let your funded offers work without you countersigning each loan.
Connect your wallet, choose the collateral asset you want to lend against, set the lending terms you’re looking for, and wait for a borrower to take you up on your offer.
Use the market’s APY, duration, and LTV figures to build an offer that fits your goals. Track active loans and repayments in Portfolio, then put repaid BTC back to work.
Start earning bitcoin yield today by connecting your wallet to Liquidium.WTF!
Disclaimer: This article does not constitute financial advice, and we strongly recommend conducting your own research and consulting with a professional financial advisor before making any investment decisions. We are not liable for any potential losses incurred from applying the strategies discussed. Proceed with caution and at your own risk.
FAQs
What is yield in bitcoin?
Yield in bitcoin represents the returns you can earn on putting your dormant BTC holdings to work for you. These returns can hail from various activities such as lending, liquidity provision, or DeFi staking.
How to earn yield from BTC?
You can earn a yield on BTC in multiple different ways. These include lending your bitcoin on platforms like Liquidium.WTF, facilitating liquidity in DeFi trading pools, or taking part in staking solutions like Babylon or Acre.
Where can you get the highest yields on bitcoin?
Liquidium.WTF offers quoted rates of up to 380% APY in selected Runes markets. Open the lending market to compare offers and see the interest available for your chosen asset and term.
What are the best ways to earn a yield on Bitcoin?
There are several ways you can earn yield on your Bitcoin assets, with the three most established methods being lending your BTC on DeFi lending apps like Liquidium.WTF, providing liquidity to decentralized trading pools, and staking BTC in Bitcoin DeFi staking protocols.
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