• Core's Non-Custodial Bitcoin Staking lets users delegate to validators and earn CORE rewards, offering sustainable, protocol-driven yields and enabling re-staking solutions on this foundation
• Core's Dual Staking mechanism is attracting significant institutional interest, offering enhanced yields for Bitcoin treasuries
• The Fusion upgrade is expected to catalyze additional products leveraging Core's dual staking technology and lstBTC.

Bitcoin staking and re-staking have emerged as ways for Bitcoiners to earn passive income, but they differ significantly in their approaches. While Bitcoin staking secures a chain directly using staked Bitcoin, re-staking involves intermediaries who stake Bitcoin on external clients for additional yield. The source and sustainability of yields are crucial factors to consider, as staking offers endogenous rewards from the protocol itself, while re-staking relies on finding external chains for rewards.

The long-term success of Bitcoin staking models depends on maintaining consistent demand. Platforms offering built-in demand are positioned for sustainable growth, while many re-staking solutions will be built on top of staking solutions like Core's Non-Custodial Bitcoin Staking.

Core, the PoS Layer of Bitcoin, unlocked non-custodial Bitcoin staking in April. It empowers stakers with direct yields from Core blockchain activity without any counterparty risk.

Understanding Bitcoin Staking vs. Re-Staking

“Bitcoin staking” is the process in which a Bitcoin holder stakes their Bitcoin to secure a chain and earn yield from activity on that chain. “Bitcoin re-staking” is the process where a Bitcoin holder stakes their Bitcoin with an intermediary protocol, which then re-stakes it with external client chains in order to earn yield from activity on those client chains.

Core’s Non-Custodial Bitcoin Staking is a form of Bitcoin staking whereby Bitcoin stakers lock their coins on the Bitcoin blockchain in order to provide security to the Core blockchain in exchange for CORE tokens, all without taking on counterparty risk.

When a Bitcoin holder stakes with Core, they are locking up their Bitcoin on the Bitcoin blockchain in order to participate in the election of Core validators. When a staker’s designated validator is elected to the set, it helps to secure the Core blockchain in exchange for CORE token rewards, which are then largely allocated back to the Bitcoin stakers that elected it.

Yield Sources and Sustainability

Bitcoin Staking has "endogenous yield," meaning the staking rewards come directly from the protocol being staked to. It’s like having an apple tree in your backyard—you know exactly where the fruit is coming from, what kind of fruit you are getting, and you can count on it season after season.

The yield for Bitcoin Re-Staking providers is less clear. Re-Staking requires external “purchasers” of their staked Bitcoin security offering, which necessitates extensive business development efforts to find external clients or AVS’s (Application Validator Services). These AVS’s must (1) need bootstrapped security, (2) be willing to pay for their security, and (3) will continue to pay for that security even after reaching scale. The challenge in finding these AVS’s is the “eigenlayer problem,” which refers to the Ethereum re-staking leader. However, Eigenlayer benefits from the subsidization of existing Ethereum-native yield via Proof of Stake, a privilege that Bitcoin re-stakers don’t inherently have.

Ultimately, the viability of Bitcoin Staking and Re-Staking comes down to supply and demand dynamics. Since earning yield with Bitcoin is so attractive, Bitcoin Staking and Re-staking shouldn’t suffer from a lack of supply. Thus, long-term success of Bitcoin staking models hinges on their ability to establish and maintain consistent demand to balance out that supply. Otherwise, the source of yield risks being uncertain and unreliable.

Bitcoin Staking has a native ecosystem that requires staked Bitcoin to exist. Platforms with proven, built-in demand for their staking services are well-positioned for sustainable growth. This inherent demand creates a stable ecosystem where supply and demand naturally balance. For example, Core's approach has built-in, proven demand for staked Bitcoin to secure the network. The Core blockchain requires staked Bitcoin for its security and pays out yield to Bitcoin stakers for their services. Core’s BTCfi ecosystem with ~$375M in TVL and 50k+ daily active users help to subsidize the yield earned by Bitcoin stakers.

Bitcoin Re-Staking solutions provide the supply of staked Bitcoin, but do not have built-in demand. The viability of these models often depends on their ability to continuously onboard new clients and maintain these relationships over time. This approach carries inherent uncertainties about long-term sustainability if it is not bolstered by base-layer staking yield.

Additionally, in the case of an AVS willing to pay for Bitcoin staking, payment for that security provision comes from the exogenous chain in the form of an altcoin. While this can offer a diversity of rewards, it also necessitates due diligence on the staker’s side to determine the value and sustainability of such rewards. Additionally, because some L2s act as a service provider connecting the Bitcoin staker with an AVS, it can be expected that the intermediary service provider, the L2, will take a cut of these rewards in addition to any other security providers to that client.

In contrast to AVS rewards, Core staking rewards come in the form of the native gas and governance token of the Core network, CORE, which will soon also unlock higher Bitcoin staking rates. This closed loop upholds a sustainable, end-to-end system.

Building on a Sustainable Foundation

Proof of Stake and Delegated Proof of Stake are time-tested mechanisms within the blockchain space. Core has been live since January 2023 and its Bitcoin staking feature has been live since April 2024.

Conversely, Re-Staking is a novel mechanism popularized by Eigenlayer and is largely still in the testing phase of its development. Bitcoin Re-Staking is in an even earlier stage of development.

Naturally, Bitcoin Staking solutions like Core can expand into Bitcoin Re-Staking. In fact, Bitcoin Re-Staking can only be successfully implemented on top of a successful Bitcoin Staking apparatus. Already, projects are building re-staking protocols on top of Core’s base yield layer. Without the base yield layer, Bitcoin Re-Staking faces a cold-start problem. With Core’s Bitcoin Staking already building supply and proving demand, that model can be applied to external clients seeking to align with Core both for security and user demand.

Institutional Interest in Core's Bitcoin Yield Solutions

Institutions that hold Bitcoin want to earn yield on their Bitcoin. Today, the supply and demand dynamic explained above results in an inverse relationship between Bitcoin staked and yield, which is a major challenge for institutions. If an institution sitting on billions of dollars in Bitcoin deploys that capital, their supply would significantly outstrip demand, leading to diminishing yields. To keep Bitcoin staking yields high and better align Bitcoin with CORE, the Core blockchain is soon adopting Dual Staking.

Dual Staking addresses the economic dilemma by granting higher Bitcoin staking rates to those also staking CORE tokens. The percent of yield will be rewarded based on how many CORE tokens are also staked alongside Bitcoin. This mechanism increases economic alignment between the two networks and promotes sustainable yield dynamics for both Bitcoin and CORE.

By enhancing sustainable yield for Bitcoin, Dual Staking accelerates Core’s unlocking of $1.25T in trapped Bitcoin liquidity.

Since its announcement in April 2024, Core's innovative Dual Staking mechanism has been attracting significant institutional attention. Institutions are already staking their Bitcoin, and are now looking forward to Dual Staking for greater rewards.

Key Developments

• Valour's Yield-Bearing Bitcoin ETP: In May 2024, Valour introduced the world's first yield-bearing Bitcoin ETP powered by Core's technology.This product offers investors exposure to Bitcoin with a 5.65% annualized yield, without requiring the sale or trade of Bitcoin holdings. The ETP simplifies Bitcoin investment by delegating Bitcoins to Core validators and attributing yield to the Net Asset Value daily.
• CORE Token ETP Launch: June 2024 saw the launch of the first exchange-traded product for CORE, the native token of the Core blockchain, on Sweden's Spotlight Stock Exchange.
• Copper's Dual Staking Integration: In September 2024, Copper, a major digital asset custodian, integrated support for Core's Dual Staking mechanism, further expanding institutional access to Core's yield-generating capabilities.

Core’s upcoming Fusion upgrade will catalyze the release of additional products leveraging Core's dual staking technology and lstBTC. These developments are making Core increasingly accessible to traditional investors, particularly institutions seeking innovative ways to generate yield from their Bitcoin holdings.

By offering non-custodial Bitcoin staking and higher yields for Bitcoin treasuries, Core is positioning itself as a key player in the institutional crypto landscape, bridging the gap between traditional finance and DeFi.

About Core

Core serves as the Proof of Stake layer for Bitcoin as the first enabler of Non-Custodial Bitcoin Staking, which secures a fully EVM-compatible BTCfi ecosystem. Since April 2024, over 5,000 BTC valued at more than $315 million have been staked with Core, enhancing Bitcoin’s utility and security. Core is the most Bitcoin-aligned EVM blockchain with ~55% of Bitcoin mining hash power contributing to the network’s security. This breakthrough has amassed millions of Core adopters - over 21M unique addresses, 279M+ transactions, and over 411M TVL since its mainnet launch in January 2023.