With BTCFi in its early stages of development, there is so much going on and many opportunities to take advantage of. Now, protocols are creating use cases for BTC, an asset typically known for being a store of value. To help explore the yield opportunities that have presented themselves, Mantle's Jowella (@speicherx) hosted an AMA featuring some of the most prominent protocols in the BTCFi space. She was joined by Zuki (@alittlezuki), Seraphim (@marcromate8), JP (@JPthor89), and Mikhil (@PandeyMikhil). Here's a recap of all the BTCFi alpha that was shared.

Please provide more details on what your protocol is currently building on Bitcoin.

J: THORchain is aiming to offer Bitcoin L1 swaps. All Bitcoin deposits on the protocol are held in its MPCVaults, so they're not wrapped, they're actually held in its own liquidity protocol. The protocol achieves yield through on-chain liquidity fees from users swapping assets.

M: For pStake, the focus is straightforward, it's all about staking. Our primary concern has always been staking yields and cash flows. BTC as an asset has been significantly underutilized, mainly being used for speculation. To address this, we are building liquid staking on top of BTC, allowing you to use your BTC to stake with protocols like Babylon, which secure other POS chains and earn yield. However, this approach still locks your BTC, preventing it from generating additional yield. Our solution is to issue a derivative, or a liquid staking token (LST), in return for your BTC deposits. This LST accrues yields from the POS chains being secured and can also be used in other products within the space.

Z: FBTC is an omnichain Bitcoin asset designed to be a channel for native Bitcoin holders interested in on-chain yield. We aim to provide many DeFi use cases for BTC by initially integrating with various Mantle and Ethereum DeFi protocols. Following this, we plan to expand to multiple chains, including Solana, Arbitrum, some newer Bitcoin L2s, and several new EVM L2s. Additionally, we are exploring CeDeFi yield options, such as those provided by Ethena, which offer innovative ways for retail users to put their Bitcoin into various yield-generating options.

S: The general thesis is that Bitcoin has typically been used as a store of value, often termed "digital gold." Now, with many investors having made profits on BTC and recognizing its value, they are seeking ways to generate yield. Ethena offers solutions to meet this demand, providing yield opportunities for Bitcoin holders.

What strategies will be most effective for onboarding new institutions into the Bitcoin DeFi space?

S: For Ethena specifically, having a well-known institutional player like Brevan Howard back us from the early days helped us onboard many institutions. This endorsement attracted other institutions as well. Therefore, having an institutional partner from the start and relying on institutional custody can be very effective in gaining trust and onboarding additional institutions.

Z: In terms of how to onboard more institutions to the Bitcoin ecosystem, there are some core considerations they are looking into. The first is security. Many Bitcoin maximalists, even within institutions, do not want to move their BTC out of their control. Security concerns are a major factor holding them back from using their BTC for on-chain yield.

Second, institutions are looking for transparency regarding where their Bitcoin is, how it is being staked, and how it is generating yield. We aim to make this process more transparent.

Third is the know-how. Many institutions lack knowledge about DeFi concepts. They hold Bitcoin without understanding much about staking, restaking, or other DeFi mechanisms, despite the DeFi space being well-established. Therefore, it is important to provide proper education and channels for them to understand how on-chain yield works and how to access these opportunities through various projects.

Do you think BTCFi is a passing trend, or is there substance to it?

M: It's definitely more than just a trend. In the past, not many people cared about this. Now, we have working products that fulfill the promise of BTCFi. The real question is whether it can sustain itself, and if we will see the development of proper BTC chains and innovative products. This is crucial because, without innovation, I don't see BTCFi becoming a significant part of the Bitcoin network ecosystem.

Z: In this cycle, we are seeing more builders come into the space, and as time goes on, the developers and mechanisms will mature and evolve. We have extensively tested the EVM ecosystem with various yield options and financial mechanisms, and have already discovered and developed a great deal. Additionally, we see many people trying different versions of Bitcoin assets on-chain. This competition is healthy because it will spur innovation as protocols compete with one another and develop more innovative solutions.

Will we see a Bitcoin summer similar to the DeFi summer we saw in the previous cycle?

Z: From my point of view, yes, there will be a “Bitcoin summer”. If you look at the circulating supply and market value, WBTC is around $10 billion. However, WBTC has yet to do much in terms of building liquidity in centralized exchanges, on-chain, and in DeFi integrations, especially with new players and top teams in the space. Despite this, there is still significant demand. So, we are just at the starting point of building on-chain Bitcoin assets. For FBTC and other new Bitcoin assets entering the space, we will definitely do more to boost liquidity, both on-chain and on centralized exchanges.

That's a wrap. In what was an information-packed AMA, you want to make sure you didn't miss out on any of the details that were shared. This is only a brief recap of what was discussed. To check out the entire recording, visit here:

• Yield on Bitcoin: Why Does It Matter?