The following is a guest post and analysis from Vincent Maliepaard, Marketing Director at Sentora.
These two solutions provide a viable route to earning stable yield on your Bitcoin. Let’s dive into what this entails and how it works.
Babylon went live on mainnet in late‑2024, letting BTC holders time‑lock coins on the Bitcoin chain and delegate them to so‑called Bitcoin‑Secured Networks. The networks pay out fees in BTC, producing a yield of roughly 1 – 2 % currently.
The idea has caught on quickly: Babylon reports more than $4 billion in BTC staked on the protocol since last year.
Key features
Lock‑ups are a deal‑breaker for many traders. Liquid‑staking tokens fix that by issuing a transferable asset that represents the underlying stake plus its future rewards.
An example of such a liquid staking token for Bitcoin is LBTC from Lombard Finance
While LBTC inherits the base staking reward, its real super‑power is capital efficiency: users can post LBTC as collateral, spin it into DeFi pools or simply sell it on a DEX while the original BTC keeps working.
While this sounds enticing, earning a notable return with your Bitcoin LST can be complicated. As a retail user, you have to understand complex dynamics in DeFi related to risk and return of different protocols and strategies.
Even if you do have a basic understanding of these factors, users must still actively manage their positions, as returns often fluctuate depending on the markets. That means that to sustain a notable APY, users have to occasionally switch strategies or take action to keep their position profitable.
Fortunately, there are other options. Lombard offers a variety of vaults that aim to simplify this process and keep earning yield on Bitcoin as straightforward as possible. Let’s take a look at one recently launched vault; the Sentora DeFi vault.
The vault automatically executes several different strategies in different capacities depending on the market conditions. This is all automated and requires no manual action from users or vault managers. Some of these strategies include the following:
Holding Bitcoin can finally pay off beyond price appreciations. With different options available for different needs and risk appetites, Bitcoin holders can finally benefit from advancements in DeFi. And with the recent increases in LBTC volume, it is becoming feasible for larger institutional trading desks to utilize these strategies, likely further pushing innovation in the Bitcoin staking area.
