CoreDAO has collaborated with Maple Finance, BitGo, Copper.co, and Hex Trust in a major step towards solving the problem of illiquid institutional Bitcoin holdings.
CoreDAO and its partners have created lstBTC -- a yield-bearing Bitcoin token especially suited to institutions and accredited investors. Hosted on the Core blockchain, lstBTC is liquid and offers a performance-oriented alternative to the traditional custody of Bitcoin, all without sacrificing any of the security or original asset exposure that one would expect from an ideal Bitcoin custody solution.
Even as Bitcoin adoption by institutions keeps growing, so does the need for more intelligent and efficient deployment strategies. lstBTC is a significant evolutionary step in the use of Bitcoin at that adoption layer -- moving from just banking the Bitcoin to the generation of yield.
lstBTC (Liquid Staking Token Bitcoin) is a new financial instrument made for institutions that hold large amounts of Bitcoin in cold storage. In the past, these assets offered no return -- they just sat in custodial wallets, quiet and still, because there was no yield-generating infrastructure for native Bitcoin. But once again, lstBTC changes that equation.
A powerful yet simple concept: institutions trust their Bitcoin to custodians like BitGo, Copper, and Hex Trust. In return, they receive lstBTC on the Core blockchain, a token backed one-to-one by the Bitcoin in custody. Unlike wrapped Bitcoin (wBTC), which is exposed to smart contract and bridging risks, lstBTC uses time-locks -- a Bitcoin native solution -- allowing the custodians to maintain secure custody without relying on cross-chain bridges.
What makes lstBTC especially appealing is that its yield is denominated in BTC. The Core's Dual Staking mechanism generates a baseline return of 4% to 6%, with additional potential yield layers from Maple Finance's managed strategies that encompass lending, basis trading, and various opportunities in decentralized and centralized finance. And lstBTC achieves all this while preserving full liquidity. It can be used as collateral, traded, or transferred across platforms that are compatible.
For institutional investors, security is nonnegotiable. LstBTC is built with that in mind. It retains Bitcoin with established custodians and uses native time-lock scripts -- rather than smart contracts -- to eliminate the major risks associated with wrapped tokens. This makes the product particularly well-suited to compliance-focused investors who need to ensure strong risk mitigation and also have reliable audit trails.
In addition, Maple Finance is crucial to the system as the managing entity of lstBTC's yield strategies. With a history in unsecured lending to institutions and in low-risk, high-exposure DeFi operations, Maple ensures that lstBTC is generating nothing but safe, competitive yields that are tailored to institutional-grade standards.
Institutions can at last convert their BTC into passive income thanks to the lstBTC architecture. This is long overdue, and it doesn't disrupt existing structures of custody, existing layers of security, or existing accounting procedures. This mechanism is one of the most promising developments I've seen in a while. If you can make using bitcoin safe without incurring income tax, then why not enable institutions to generate streams of income from bitcoin?
The chance here is vast. More than $500 billion worth of institutional Bitcoin in custodial accounts quietly awaits order. And while upstart custodial firms tout their ability to secure crypto as compared to traditional asset classes, they scarcely mention the growing opportunity cost of that very security -- even though it has become a nonsensical position to argue that Bitcoin is safer when held in a custodial account as opposed to one that is indeed safe but also brings forth a yield. lstBTC offers a way for these institutions to return their assets to them.
Through the secure and regulated framework of lstBTC, custody of traditional finance and the high-speed world of blockchain-based finance can finally exist together. Custody of Bitcoin can now yield returns without compromising security or regulatory compliance.
With lstBTC, CoreDAO, and its partners are providing a glimpse into the future of Bitcoin usage by institutions -- one that does not merely safeguard the asset but also increases its value.
With the adoption of Bitcoin increasing, lstBTC could become the new standard for deploying Bitcoin in institutions. This would be a tremendous shift in the way serious investors see and use Bitcoin. Capital efficiency is all the rage now, and these folks will be utilizing their Bitcoin in an increasingly capital-efficient manner.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.