Bitcoin (BTC) is no longer just a store of value, but is also on its way to becoming a yield-generating asset. Developments in Bitcoin's layer-2 (L2) and decentralized finance (DeFi) ecosystems are creating significant changes in BTC yields.

While Bitcoin mining is the only way to earn meaningful BTC rewards, this situation is changing for users who have to settle for centralized finance (CeFi) platforms and low DeFi yields. Innovations in L2 networks and DeFi protocols are increasing BTC yields.

L2 networks aim to capture a significant portion of Bitcoin's $1 trillion market value. L2s such as Core Chain, Babylon, and Spiderchain are exploring staking methods that earn rewards by locking BTC as collateral. In addition, liquid staking derivatives (LSD) protocols are also increasing BTC staking yields.

Bitcoin L2s are not limited to just staking. Networks like RSK, Merlin, and Stacks host Bitcoin-native DeFi ecosystems like decentralized exchanges and lending protocols. Payment protocols like the Lightning Network also earn 5.62% APR to node operators who provide BTC liquidity.

Institutional interest is also increasing. Institutional staking services like Kiln and Figment support tokens like STX and offer BTC rewards. Additionally, asset managers like Valour and 21.co are launching BTC staking products and regulated BTC wrappers.

BTC opportunities on Ethereum are also notable. Protocols like EigenLayer and Synthetix provide yield by re-staking BTC. EigenLayer allows you to re-stake BTC and earn a share of the protocol’s revenues.

As a result, holding BTC is now becoming more attractive. Be careful not to miss out. Share your thoughts in the comments!