Previously exclusive Bitcoin yield opportunities such as various delta-neutral strategies are becoming accessible to all Bitcoin holders. These sophisticated financial strategies, once reserved for institutional players and high-net-worth individuals, are now being implemented on-chain on Core’s Bitcoin DeFi platform.

Bitcoin DeFi protocols like BITS and BitFi are bringing high-finance infrastructure directly into the hands of everyday users. These products specifically appeal to Bitcoin holders looking to go beyond simple Bitcoin staking yield in pursuit of enhanced returns. Rather than needing to turn to TradFi or Bitcoin treasury companies for supra-spot exposure, these Bitcoin holders can choose from a suite of on-chain products while engaging in the same tactics.

Central to this transformation is lstBTC, which serves simultaneously as infrastructure, beneficiary, and catalyst for the entire Bitcoin asset management ecosystem. Many asset management protocols will convert deposited BTC into lstBTC as their foundational step. This creates two distinct user flows, both of which benefit the Core ecosystem: users can either convert to lstBTC to earn yields from both BTC staking and Core staking rewards, or they can stake BTC and CORE directly without conversion.

However, lstBTC is overwhelmingly favored due to its simplicity, yield efficiency, and, most importantly here, liquidity. It becomes the base asset that earns passive yield while simultaneously being deployed into higher-level strategies. The more protocols that adopt lstBTC as their foundation, the more it becomes the backbone of Bitcoin DeFi infrastructure. This creates a powerful network effect where lstBTC's utility increases with each new protocol integration. That network effect also powers the lstBTC flywheel where every time Bitcoin is converted to lstBTC, CORE is taken out of circulation and staked.

Building on the lstBTC foundation, protocols deploy sophisticated yield strategies that stack returns in layers. lstBTC establishes a baseline yield through the combination of BTC staking and CORE staking rewards. Protocols then deploy these assets into additional yield strategies, often focusing on delta-neutral approaches such as long/short positions, funding rate arbitrage, and basis trades, as well as possible lending and borrowing strategies depending on the specific protocol model.

The result is layered return generation, often instantiated in a liquid token representing exposure to their underlying BTC, lstBTC base yield, and all additional strategy layers combined. That liquid token can then itself be used throughout DeFi by the holder. Depending on its liquidity and perceived reliability, that token could itself be used as collateral on various other protocols.

The composable strategies of the different Bitcoin asset management protocols and their liquid tokens offer various risk and reward profiles, creating a competitive landscape of products that cater to different investor preferences and risk tolerances. This diversity mirrors traditional asset management while maintaining the transparency and accessibility of on-chain protocols.

This development can have profound impacts across the Core ecosystem. Total value locked can increase across the board as both Bitcoin and CORE tokens get locked as part of these strategies. As more CORE is staked to mint lstBTC or boost returns through Dual Staking mechanisms, the circulating supply of CORE naturally declines.

Additionally, lstBTC drives liquidity into Core's broader DeFi ecosystem, enabling enhanced lending, borrowing, trading, and other financial activities. This creates a virtuous cycle where increased activity generates more transaction fees, which flow back to consensus participants, further enhancing the attractiveness of Bitcoin staking and dual staking strategies.

Bitcoin has increasingly become institutionalized through ETFs, corporate treasuries, and cold storage solutions, leaving retail participants somewhat sidelined with limited ways to actively participate in this growth cycle beyond simple appreciation. These new asset management protocols offer accessible, differentiated, and competitive products specifically designed for yield-seeking retail holders. This yield-based competition introduces a dynamic, participatory layer atop passive Bitcoin holding, fundamentally changing how retail users can interact with their Bitcoin holdings.

BITS, BitFi, and similar protocols are building a new class of on-chain Bitcoin yield products, whether they be on-chain asset management or structured products or another methodology for yield-generation.

Each protocol competes on multiple dimensions including yield generation, risk profile management, transparency, user experience, and liquidity provision. The diversity of options that will emerge from this competition will likely mirror the variety found in traditional mutual funds or ETFs in terms of user-facing offerings, but with the added benefits of transparency, composability, and permissionless access that define DeFi protocols.

This represents a fundamental evolution in how Bitcoin can be utilized as a productive asset while maintaining on-chain transparency and efficiency, creating new opportunities for both individual and institutional Bitcoin holders to participate in the growing Bitcoin-native financial ecosystem.