pSTAKE BTC Liquid Staking and Yield Thesis

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Dive into the $1 Trillion+ Bitcoin Liquid Staking and Yield Market and 4 thesis points for substantial pSTAKE market share capture.

Cash might be king in traditional finance, but Bitcoin reigns supreme in the world of cryptocurrency and is poised to maintain its dominance in the blockchain sector for the foreseeable future. As the industry’s flagship cryptocurrency, Bitcoin consistently garners the most attention amongst the media, institutions, and retail investors, and this dynamic shows no signs of fading.

Following its momentous introduction to US Financial Markets in 2024—in the form of eleven SEC-approved spot Bitcoin ETFs—institutions and corporations now have a compliant route to investing in the top-ranked crypto. As a result, trillions of dollars are potentially about to flow into Bitcoin over the coming decade, pushing it lightyears ahead of the rest of the industry.

However, one problem remains for BTC holders: the lack of native yield opportunities.

With market returns being reduced each market cycle, the yearning for yield is starting to rise. With trillions of dollars of potential inflows incoming, BTC holders are craving alternative routes to earning additional returns on their holdings besides capital appreciation.

This is where pSTAKE can help. This is where pSTAKE will lead.

pSTAKE is making a giant push into the Bitcoin market as we embark on a mission to bring secure yield to Bitcoin for all through liquid staking, starting with our pioneering collaboration with Babylon.

We’re Bitcoiners at heart. We have a fundamental belief in cashflow for Bitcoin through yields and our expertise in liquid staking provides us with strong reasons to build on Bitcoin, making a bet on the future growth of yield generation demand for Bitcoin.

Let’s look at the increasing need for yield on BTC and how pSTAKE intends to provide it.

Bitcoin and the Ever-Increasing Yearning for Yield

pSTAKE is about to enter the BTCfi world as institutions and BTC holders start to yearn for alternative yields on their idle BTC.

With a $1.1 trillion market cap value, Bitcoin holders are experiencing an interesting dilemma as their market multiples decrease yearly. This has caused them to begin the hunt to earn an alternative yield on their idle BTC assets.

Traditionally, Yield is a measure of profit an individual investor can expect to earn from a particular investment. In the crypto sector, yield can result from capital gains or passive income through what is known as yield farming. For example, on Ethereum, the primary tool used to generate yield on holdings (besides the price going up) are protocols that offer decentralized finance products, such as:

  • Staking rewards for security
  • Borrowing and lending for interest
  • Liquidity provision for trading

Unfortunately, Bitcoin’s yield has been restricted to capital appreciation due to lacking the necessary infrastructure to facilitate BTCfi. Although Bitcoin remains highly secure, with its vast computational power backing its proof-of-work mining algorithm, most BTC sits idle on the Bitcoin network in cold storage, generating zero yields for holders beyond value appreciation. 

One of the primary reasons behind the restricted yield is the lack of reasons to move it elsewhere to earn, a problem that has held BTCfi back for several years. However, that’s starting to change with market multiples decreasing and Layer-2s and sidechains gaining prominence.

The rise of BTC yield: Why has it turned into a hot topic?

While Bitcoin is the oldest cryptocurrency, the conversation surrounding earning a yield on the asset remained relatively stagnant for several years. 

You see, Bitcoin wasn’t built with yield in mind. Instead, Satoshi Nakamoto – the pseudo-anonymous inventor behind blockchain technology – built it as a decentralized currency. As a result, the codebase wasn’t optimized to provide the powerful DeFi capabilities that Ethereum brought to its blockchain. 

For yield to turn into a reality for Bitcoin, the following things had to happen in the right order to make it a possibility;

  • Falling market multiples each cycle
  • Reliable and secure infrastructure being built
  • Trillions of dollars of capital sitting in cold storage

The falling market return cycles created the need to search for additional yield on holdings. During that time, secure Layer 2 protocols and sidechains were being built to provide a route to earning a yield.

Now that institutions are here and trillions are expected to enter cold storage over the coming years, the conversation surrounding yield generation on Bitcoin is shifting. 

Best of all, the yield that’s coming to Bitcoin is not just the regular DeFi yield with wBTC that’s also available to every other token. No. The yield that’s coming are Bitcoin native yield opportunities, completely unique to Bitcoin.

But, why is earning a yield important?

Institutions are all about maximizing profits for their investors, and with trillions about to pour into the industry, they’re not just going to sit on idle capital in cold storage if it can be used elsewhere to earn additional revenues. 

In addition, earning a yield is important as it attracts more liquidity, which catalyzes continued growth. As yield percentages increase, they attract more capital and liquidity, helping yield percentages rise further, which attracts more capital—creating a flywheel effect. 

Routes to Earning Bitcoin Yield.

You might be surprised to learn that multiple non-custodial routes exist to earn a yield on BTC. The following diagram helps to break down the yield opportunities that have emerged over the past few years.

pSTAKE will begin its liquid staking for BTC on top of the Babylon protocol, which is a shared-security project that allows users to stake BTC to share security from PoW to other PoS ecosystems. 

pSTAKE Bitcoin Yield and BTC Liquid Staking Thesis 

After spending years in the Cosmos ecosystem to pioneer liquid staking opportunities, pSTAKE is now using its expertise to make its first play in the Bitcoin ecosystem through BTC liquid staking – helping to provide a yield for BTC holders.

The following explains our stance on the future of BTC yield and liquid staking and why we’re ready to make this move early.

1. BTCfi Will Capture the Largest TVL in DeFi

The DeFi industry is enormous. According to DeFi Llama, the total TVL locked in DeFi protocols in the crypto industry currently sits at $89.5 billion, with Ethereum dominating the sector with a $51.6 billion TVL.

The total capital locked in DeFi protocols is astonishing, demonstrating the ever-increasing necessity for alternative revenue-earning routes for crypto holders.

We believe that BTC DeFi will capture the largest TVL in the sector, quickly flipping the total value locked on Ethereum. 

While Ethereum has over $50 billion TVL, there are over a trillion dollars of unused capital to tap into on Bitcoin – and that figure will continue rising substantially over the coming years with institutional investors here. pSTAKE can help facilitate BTC capturing the largest TVL in DeFi through liquid staking by attracting the BTC holders seeking yield.

2. Institutional Capital Will Keep Flowing Into Bitcoin

The SEC’s approval to introduce spot ETFs into US financial markets changed everything for Bitcoin. Institutions now have the ability to keep pouring funds into BTC efficiently while remaining compliant with financial regulations.

However, it’s not just happening in the US. A handful of countries are launching their own BTC ETFs, allowing citizens to invest in BTC through financial institutions, including:

BermudaHong Kong

As you can see, Bitcoin ETFs are going global. Soon, every country in the world will introduce Bitcoin ETFs into their financial systems, and pSTAKE can provide the security required for institutions to feel confident about liquid-staking their BTC to earn additional yield on their idle assets.

3. Bitcoin Yields Will Grow, and Institutions Want More Yield.

Yields are just getting started on the Bitcoin network. Over time, they’ll continue growing through increased opportunities, becoming more widespread and secure. 

Higher yields will attract more capital, resulting in higher yields.

As market volatility will continue to drop over the coming cycles, institutions will want to increase capital efficiency, and squeezing additional yields from their idle BTC assets will help achieve that. 

As a result, yields will grow as institutions adopt BTC liquid staking, and pSTAKE can provide the perfect solution to make that happen with a liquid staking experience. 

4. Liquid Staking Will be at the Heart of the BTC Yield

With the limited Bitcoin codebase forcing BTC yield hunters to adopt Layer 2s and sidechains to find yield, liquid staking is bound to be the heart of yield for BTC holders moving forward. 

The architecture of the Bitcoin codebase won’t change as it increases the risk of overall network security. Instead, the liquidity will flow from the mainchain to sidechains and Layer 2s as investors move assets from cold storage to find yield.

As a result, the infrastructure behind liquid staking products is what will be adopted by institutions and BTC holders to earn a yield. 

It’s already starting to happen.

For example, Grayscale – which owns the Grayscale Bitcoin ETF – recently added Lido ETH as the second largest asset in its DeFi fund. Lido ETH is a liquid staked derivative of staked Ethererum, providing holders with staking rewards through the rewards-bearing token. 

With Grayscale showing its confidence in liquid staking tokens, other institutions will follow in the Bitcoin ecosystem as they adopt Bitcoin liquid staking tokens to increase their exposure to yield. With pSTAKE’s three years of producing liquid staking tokens, we’re confident we can provide the solid foundation for institutions to adopt liquid-staked Bitcoin. 

pSTAKE Helping Pave the Way Forward to Bring Bitcoin Yields to Holders. 

pSTAKE is on a mission to help pave the way forward to bring yield to the Bitcoin ecosystem through liquid staking. We have the experience, skills, and knowledge necessary to create a reliable source of yield that meets the high level of security we implement for our other liquid staking products.

To understand our position better, take a look at what our co-founder, Mikhil Pandey, has to say about our move into building on Bitcoin;

We’ve been building on Cosmos for the past three years and we’re using that knowledge to start building on BTC, bringing our skillset to the largest market in the crypto industry that’s going to continue growing. We want to bring yield to all BTC holders, whether retail or institutional, through a secure liquid staking utility.

We’ve already started the process and are bringing our first source of yield to Bitcoin through Babylon – the security-sharing protocol. Be sure to follow our social media channels to stay updated when Bitcoin liquid staking through Babylon goes live.

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