7 Ways to Earn Interest on Bitcoin, Plus the New Exploration by the Founder of Curve

Bitcoin's interest-bearing mechanism is becoming more complex and professional, from quantitative trading to DeFi liquidity farming, each strategy comes with risks and opportunities. This article is based on an article written by @ruiixyz and was compiled, compiled and written by wublockchain. (Synopsis: Usual raid lowers exchange rate "USD0++ decoupling" pin 0.9 US dollars, Curve pool is heavily tilted, community: fundamental scam) (Background supplement: Bitcoin can be used as a mortgage? Financial Regulatory Commission: Taiwanese banks are difficult in the early stage, the value and stability of cryptocurrencies are still to be verified) As previously reported, Michael Egorov, founder of Curve Finance, is working on a new project, Yield Basis, which aims to help tokenized bitcoin and Ethereum holders earn market-making gains by reducing impermanent losses. The project has successfully raised $5 million and raised at a valuation of $50 million and is expected to leverage Curve's CryptoSwap AMM to centralize liquidity. BTC life may sound tempting, but it could be a house of cards built on layers of altcoin incentives that could collapse at any moment. Are earnings paid in BTC or altcoins? What risks do you face? How much can I lose my principal? Are these gains sustainable? Will yields dilute as TVL grows? This article focuses on sustainable, BTC-denominated interest-bearing in CeFi and DeFi: Original Interest-Bearing Sources: Quantitative Trading, DEX Liquidity Provision (LP), Lending, Stake, Collateral, LSTs (Liquid Staking Tokens) and Pendle A New BTC Interest-Bearing Venue: An Introduction @yieldbasis Looking to the Future Small mistakes can lead to catastrophic failures Scarcity of elite quantitative teams TradFi (traditional finance), the convergence of CeFi and DeFi, and IPOs Opportunity Raw BTC Yielding Sources Although there are multiple ways of circulating and compounding yields, we can divide raw yielding sources into 5 broad categories: quantitative trading, DEX liquidity provision (LP), lending, staking, and collateral. 1) Quantitative Trading Strategy: A "zero-sum game" ensures that your alpha strategy is net profitable. Arbitrage strategies include funding rate arbitrage, spot-futures basis arbitrage, cross-exchange arbitrage and lending arbitrage, and sometimes event-driven trading. Quantitative trading requires deep liquidity – currently focused on TradFi and CeFi. In addition, TradFi-to-DeFi arbitrage lacks cross-site infrastructure. BTC-denominated yield: Varies based on asset size, risk appetite, and execution. A market-neutral strategy might target a 4-8% BTC-denominated annualized yield (APR) with a stop loss of around 1%. The top quantitative team even pursues APR above 200-300% while keeping the stop loss at 10-30% through sophisticated risk control. Risk: Risk is highly subjective and involves model risk, judgment risk, and execution risk – even a neutral strategy can evolve into a directional bet. Real-time monitoring, robust infrastructure (e.g. low latency, escrow and delivery agreements), loss insurance, and risk control of trading venues are required. 2) DEX Liquidity Provision (LP): Limited by supply and demand DEX (Decentralized Exchange) also facilitates real trading volumes beyond arbitrage. Currently, only about 3% of wrapped BTC is in DEX, due to limited supply and demand. When providing liquidity in volatile trading pairs such as WBTC-USDC, supply is limited by impermanent loss, while demand faces the friction of wrapping Bitcoin and limited utility in DeFi. BTC-denominated yield: volatile, @Uniswap is currently 6.88% APR, sometimes in double digits. Risk: Due to impermanent losses, simply holding BTC usually performs better than providing liquidity. However, new LPs are often misguided, reflecting a common psychological bias: fee gains and APRs are highly visible indicators that induce LPs to pursue short-term gain maximization while ignoring less obvious long-term capital losses. Standard DeFi risks also apply. 3) Lending: BTC loans BTC is primarily used as collateral to borrow US dollars or stablecoins for revolving income or leveraged trading, rather than focusing on the APR of lending BTC – as borrowing demand is currently low. BTC-denominated yields: CeFi and DeFi typically have lower lending rates of around 0.02%-0.5% APR. The LTV (loan-to-value ratio) of loans varies: TradFi is 60-75% LTV and the current benchmark interest rate is 2-3%; CeFi is 33-50% LTV and the current USDC rate is around 7%; DeFi is 33-67% LTV and the current USDC rate is around 5.2%. Risk: Liquidation risk, although a lower LTV ratio helps reduce risk, comes at the cost of capital inefficiencies. Hedging strategies can provide additional protection. CeFi and DeFi risks also exist. 4) Stake: Earn altcoin rewards @babylonlabs_io in a unique position where staking contributes to the security of the associated PoS (Proof of Stake) chain. Altcoin-denominated yield: denominated in altcoins, APR unknown. Risk: The Babylon protocol should undergo multiple security audits and disclose the expected staking yield once its system goes live. If the Babylon token offering is unsuccessful, the sustainability of its ecosystem will be at risk. 5) Collateral: Liquidity Farming When you offer BTC to DeFi, BTC L2 (second layer), etc. as TVL (Total Value of Lock-up) to earn altcoins. Altcoin-denominated yields: vary, some 5-7%, but large players always get a better rate. Risk: Different agreements have varying reliability and history, and each has different regulations on lock-up periods and capital requirements. On top of the above 5 sources, there are LSTs (Liquid Staking Tokens) and yield tokenization platforms: 6) Liquid Staking Tokens (LST): Compound Returns BTC "LSTs" like @Lombard_Finance, @Pumpbtcxyz, @SolvProtocol, @Bitfi_Org BTC "LSTs" originated in the Babylon ecosystem and are now cross-chain, interest-bearing BTC with complex yield strategies. @veda_labs is like an aggregate interface. Yields denominated primarily in altcoins: varied, combining Babylon staking rewards, points on different chains, $Pendle rewards, and some quantitative strategies conducted through third parties. In addition, their own tokens are offered as incentives. Risk: The low liquidity of LSTs may trigger cascading liquidation risk. There is a single point of failure during minting, redemption, staking, and cross-chain bridging. Being highly dependent on the yields of itself and other altcoins indicates that returns are highly volatile. 7...