The Next Frontier for Bitcoin Holders: Generating BTC-on-BTC Yield

In today’s crypto for advisors, Todd Bendell from Amphibian Capital breaks down bitcoin yield products as a strategy to grow bitcoin holdings beyond price appreciation.

Then, Rich Rines, an initial Core DAO developer, provides guidance to Bitcoin developers in Ask an Expert.

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The Next Frontier for Bitcoin Holders: Generating BTC-on-BTC Yield

Bitcoin was never meant to sit idle.

For over a decade, bitcoin has served as a digital store of value, a hedge against monetary debasement and more recently, a core allocation in institutional portfolios. As the asset matures and infrastructure improves, long-term holders are asking a new question: How do I put my bitcoin to work — without leaving the Bitcoin ecosystem?

The answer lies in a growing but underexplored category of strategies: BTC-on-BTC yield.

Let’s be clear: this isn’t about lending your BTC on unregulated platforms or chasing high annual percentage yields (APYs) à la BlockFi. That playbook collapsed under the weight of counterparty risk and opacity. What’s emerged over the last two years is a more institutional alternative — diversified, risk-managed access to systematic arbitrage and quantitative strategies, all denominated in bitcoin.

Why BTC-native yield matters

For most assets, it’s a given that money should work for you. We don’t keep dollars under a mattress or tucked away on a thumb drive — we invest them. Yet in the bitcoin world, the dominant narrative has long been “hold and wait.”

That mindset made sense when bitcoin was fighting for legitimacy. But in today’s environment — where BTC is being adopted by sovereign wealth funds and traded on major exchanges — long-term holders need better tools.

BTC-on-BTC yield solves this. It aligns with the ethos of accumulating more BTC but does so through institutional-grade strategies that aim to generate returns in BTC, not just on BTC. That distinction matters.

Cold storage isn’t a strategy

There’s also a myth that simply holding bitcoin in cold storage is the safest option. The phrase “not your keys, not your coins” has become dogma — but it deserves a second look.

In reality, cold storage comes with its own risks: human error, hardware failure, loss of keys and in many cases, an inability to generate any yield whatsoever. Meanwhile, professional custodians — regulated, insured and audited — are now standard infrastructure providers in digital asset management.

For allocators managing material BTC positions, yield-generating custody isn’t a tradeoff. It’s an upgrade.

How these strategies work

Today’s BTC-native yield opportunities span a wide range — from delta-neutral basis trades and statistical arbitrage to DeFi yield farming and machine learning-driven quant execution — but all settled in BTC.

Returns are calculated and distributed in kind. The objective is simple: accumulate more BTC over time, without needing to rely solely on price appreciation.

By allocating across a diversified mix of strategies and managers, investors can pursue consistent BTC growth while mitigating single-strategy or single-manager risk.

Why BTC-on BTC yield is timely

Several forces are converging right now:

• Volatility has returned. Major liquidation events — like the $10 billion flush in February — create dislocations that sophisticated funds can capitalize on.
• Infrastructure is stronger than ever. Custody, execution and risk tools have matured significantly since the last cycle.
• Institutional interest is real. ETFs have opened the floodgates — but most capital is still under-allocated and under-deployed.

In short, bitcoin is growing up. The question is whether the strategies around it will grow with it.

Rethinking HODLing

BTC-on-BTC yield and long-term holding aren’t mutually exclusive. Allocators can continue to hold core BTC positions while using active strategies to pursue steady accumulation.

That requires moving beyond cold storage maxims and exploring yield strategies that reflect the sophistication of today’s markets. With proper risk controls, BTC-native yield offers a pragmatic path to accumulate more BTC without abandoning its core principles.

The bottom line is that bitcoin doesn’t have to sit on the sidelines. It can move with the market — and grow with it.

For allocators thinking in decades, BTC-on-BTC yield opens the door to a more productive bitcoin strategy — one that matches conviction with action.

– Todd Bendell, Managing General Partner, Amphibian Capital

Ask an Expert

Q. What’s the best way to align early developer incentives with long-term protocol value?

A. The key is to reward real product-market fit and real users — not short-term speculation. That starts with building tight relationships and solving problems for real communities. From there, it’s about fostering an “eat what you kill” ecosystem, in which builders who ship products people actually use are rewarded with real economic upside — not just points, grants or temporary incentives. When developers are compensated based on the value they create for users, long-term alignment takes care of itself.

Q. When just starting out in crypto, how can developers filter for signal over noise?

A. Don’t just chase the hot thing — look for what will still matter in 5 to 10 years. That’s one of the key reasons Bitcoin remains a compelling foundation for builders. It has dedicated users, immense value and a clear product-market fit. Developers should focus on real usage and demand instead of short-term token price action. If you’re building something that keeps people engaged because it’s useful — not because it’s yield-farming season — you’re already filtering signal from noise.

Q. What lessons from Bitcoin’s design philosophy are still underutilized?

A. Bitcoin is dominant not because it does the most, but because it does one thing better than anyone else. Its product-market fit as digital gold is crypto’s most proven use case — and yet it’s still underrated. Too many forget that simplicity with real utility wins. Building around Bitcoin and extending its utility without compromising its foundation remains one of the most underrated opportunities in the space today.

– Rich Rines, an initial contributor, Core DAO

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