Following the institutional market trends, Core provides a typical example of the new challenges facing BTCFi.
Written by: ChandlerZ, Foresight News
In 2025, the main narrative surrounding Bitcoin reached a significant turning point. Traditional financial channels continued to increase their acceptance of Bitcoin, and with the systematization of custody, disclosure, risk control, and compliance processes, Bitcoin increasingly resembled a configurable asset. Throughout 2025, US Bitcoin spot ETFs saw net inflows exceeding $21 billion. Furthermore, the US crypto market saw the emergence of a crypto ETF options market in 2025, allowing 401(k) retirement plans to invest in alternative assets including cryptocurrencies, and the Financial Accounting Standards Board (FASB) approved fair value accounting rules for Bitcoin.
As funds become more mature, more practical operational issues arise. After institutions buy BTC, the market is no longer only concerned with the paper profits from price increases, but also with where the profits come from, whether the cash flow can be explained, whether the risk boundaries can be quantified, and whether auditing and disclosure can be completed.
Changes in on-chain funds are also amplifying this contradiction. DeFiLlama data shows that DeFi's total TVL (TVL) approached $172 billion in early October 2025, essentially recovering from the lows since 2022. In this phase where funds are reassessing on-chain returns and capital efficiency, Bitcoin's long-standing shortcomings are more easily magnified. While its store-of-value properties are strong enough, its sustainable returns and explainable cash flow remain relatively weak.
The emergence of BTCFi turns a weakness into an opportunity. It aims to integrate BTC into collateralized financing, asset management portfolios, and payment distribution systems, allowing Bitcoin to evolve from a static holding model to a productive asset model. As long as Bitcoin continues to be a significant component of institutional balance sheets, there will be a long-term genuine demand for improving BTC's capital efficiency while managing risk.
Early BTCFi relied heavily on annualized narratives driven by subsidies and incentives. Short-term interest rate spreads and arbitrage opportunities could quickly attract liquidity, but long-term stability was difficult to achieve. Entering 2026, the focus of competition shifted. With institutionalization, the market's preference for cash flow is closer to a fee- and service-driven revenue structure. Yield can attract attention, while revenue determines sustainability and valuation anchors.
Yield, more commonly found on-chain, comes from incentive subsidies, inflation release, interest rate spreads, and short-cycle opportunities. It is more volatile, and its sustainability depends more on the market and incentive policies. Revenue is closer to fees and service income, derived from sustainable cash flows such as management fees from asset management protocols, enterprise-level service fees, payment distribution, transactions, and clearing. Its structure is easier to disclose and audit, and it is also closer to institutional valuation frameworks.
From this perspective, the key to success in 2026 is unlikely to be determined solely by higher annualized returns. The core variable is closer to the ability to move from yield to revenue, that is, from profit to income.
"The Light Bulb Moment" vs. "The Electric Grid Moment"
The history of DeFi is replete with "light bulb moments." Certain technologies or protocols illuminate the market with astonishing annualized returns, attracting massive amounts of capital. However, such high returns often rely on token incentives, protocol subsidies, or short-lived interest rate windows. Like a dazzling incandescent light bulb, while proving the technology's feasibility, its high energy consumption and short lifespan make it difficult to generate lasting commercial value. Yield was precisely such a light bulb in the early days of BTCFi; its high volatility and uncertainty kept institutional investors seeking manageable risk cautious.
Many BTCFi products have achieved their "light bulb moment" in the past two years, proving that BTC can generate on-chain revenue, participate in lending and trading, and build on-chain financial activities around BTC. However, lighting a light bulb does not equate to industry scale. In his analysis in December 2025, Rich Rines, a contributor to the Core Foundation focusing on the development of the BTCFi ecosystem, used the light bulb analogy to emphasize that while early innovations proved value, a distribution system that could bring widespread adoption and sustained economic impact was still lacking.
Revenue is the "grid" model of BTCFi. It represents a mature, stable, and scalable infrastructure system whose value stems from sustainable costs generated by real economic activities, such as asset management fees, transaction fees, enterprise-level service fees, and payment network revenue sharing. Before the grid moment arrives, high-yield narratives tend to fluctuate with the cycle; after the grid moment arrives, fees, transactions, asset management, and payment activities form a stable load, and revenue and security will form a closed loop.
The trend of BTCFi moving towards the "grid moment" in 2026 is rooted in the fundamental needs of institutional funds. When financial giants managing trillions of dollars in assets integrate Bitcoin into their products, they primarily focus on several core elements. These include risk control explainability; institutions need transparent mechanisms and clearly defined risk boundaries to explain the sources of returns and risk exposures to clients and regulators. Secondly, there is the need for a compliant platform; BTCFi products need to be able to be purchased, custodied, and disclosed in financial reports by the traditional financial system, such as ETPs listed on mainstream exchanges. Finally, there is sufficient on-chain performance and stability; industrial-grade financial activities require the underlying network to have efficient transaction finality, low transaction costs, and continuous online operation capabilities.
The competition in the Bitcoin grid is therefore more like a battle for infrastructure; a single-point breakthrough model is no longer sufficient to support the next stage of BTCFi. Future industry leaders will inevitably be infrastructure projects capable of building a "grid," simultaneously providing robust security, a yield engine, a thriving application ecosystem, and compliant access to traditional finance. The "Bitcoin grid" model built by Core DAO is precisely a practical application of this direction.
Core's "Bitcoin Grid" model: What does it try to solve?
From its inception, Core's L1 public chain ecosystem has positioned itself as the power grid for BTCFi. Its core logic is to transmit, amplify, and distribute the security and value of Bitcoin to a wide range of financial scenarios through a multi-layered infrastructure, and then, through mechanisms such as gas consumption, revenue demand, and value buyback, to bring economic value back to the network itself, forming a positive cycle.
A robust power grid requires reliable power plants and a widespread transmission network. Core demonstrates a unique industry advantage in this regard. The network's security is tightly coupled to Bitcoin itself through the innovative Satoshi Plus consensus mechanism. At its peak, over 90% of Bitcoin miners' hash power participated in maintaining the Core network's security, providing a high level of security for on-chain financial activities. This deep integration resulted in a powerful network effect, attracting over 9,000 Bitcoins to participate after the introduction of non-custodial Bitcoin staking in 2024.
As of 2025, the TVL of the BTC DeFi ecosystem based on Core once exceeded $900 million, which is enough to demonstrate the attractiveness of its ecosystem and represents a sustainable economy that has reached a certain scale and has real users and trading activities.
The most direct implementation of institutionalization comes from yield-based ETPs. Valour announced the launch of its Bitcoin staking ETP on September 18, 2025, and listed it on the London Stock Exchange. The product emphasizes 1:1 physical Bitcoin backing and cold storage custody, and offers an estimated annualized staking yield of approximately 1.4%. In January 2026, it further opened trading to retail investors in the UK. The product's yield is generated by a staking mechanism based on the Core blockchain, and the yield is distributed by increasing the net asset value. This is a landmark event for BTCFi's move towards a traditional financial scalable asset model, proving that Core's infrastructure meets the standards of mainstream financial markets in terms of technology and compliance structure, opening the door for BTCFi to enter asset management and wealth management channels.
According to the Core Foundation's 2026 roadmap, the core objective of revenue-driven CORE buybacks is clearly defined. Its strategy is shifting from a push model requiring all activity to occur on the Core chain to a model that uses sophisticated mechanisms to attract value from the entire Bitcoin ecosystem to Core. This model will create value within existing user activity scenarios, significantly expanding the scale of BTC accessible to them, and ultimately pulling value generated by external activities back into the Core ecosystem.
The three modules push Yield towards Revenue
To drive revenue towards sustainability, Core has built a composable system of multiple core modules. These modules work together to transform one-off, volatile revenue into sustainable, predictable income.
The first module is the yield product matrix. As the "generator" of the Core grid, it is responsible for transforming the static value of Bitcoin into a dynamic, composable yield stream, which revolves around the combination of the Asset Management Protocol (AMP), Liquidity Staking Tokens (LST), and Dual Staking.
AMP is a simplified path to combining CORE with Bitcoin yield products. Users deposit CORE, BTC, or both, and the protocol allocates the funds to a transparent strategy aimed at generating returns while generating transaction fee revenue, which is then further converted into CORE buybacks.
At the top layer of AMP, LST is responsible for assetizing yield-generating capabilities and improving capital efficiency. Core considers liquid BTC with yield attributes as an important direction for BTCFi and has proposed the LST model based on Core. When LST enters application scenarios such as lending markets and DEXs, activity and trading volume will bring more gas and fee repatriation, further strengthening the revenue loop. Core also links LST with the possibility of yield-generating BTC ETFs, structured products, and savings accounts, attempting to make LST the underlying asset form for larger-scale funds entering BTCFi.
The double-staking market attempts to resolve long-standing frictions among BTC-only participants. A large number of BTC holders are willing to stake BTC but lack the willingness to hold CORE, making it difficult to expand participation in double-staking. Core's proposed market-based matching logic involves BTC stakers paying fees to CORE holders, who then acquire and stake CORE on their behalf. This allows BTC-only participants to also obtain higher overall returns, while CORE holders receive fees and higher yields.
For example, holding $100,000 of BTC individually yields $50 at a 0.05% return, while $20,000 of CORE yields $1,300 at a 6.5% return. Combined, this creates $120,000 worth of CORE, which, at a 5% return, could yield $6,000. The proposed distribution is 3% to BTC holders and 15% to CORE holders. This yield increase is decoupled from inflation; the annual CORE issuance rate is approximately 2.5% of the circulating supply. Additional returns come from market mechanism optimization and the synergistic scale of BTC and CORE.
The second module is new banking services. Its flagship product, SatPay, integrates BTCFi into real-world consumption and payment scenarios. If the revenue-generating products are like "generating electricity," then SatPay is the "distribution network" that delivers that "electricity" to every household.
Core positions SatPay as a new Bitcoin bank, aiming to transform CORE's gas usage and Bitcoin revenue into a consumer-grade financial experience, and further into sustained demand and revenue for CORE. SatPay is expected to launch in the first quarter of 2026. Core disclosed its partnership with banking infrastructure provider Mobilum, emphasizing Mobilum's tens of millions of dollars in annual revenue.
SatPay's core experience revolves around yield-generating BTC-collateralized lending: users borrow stablecoins using yield-generating BTC or LST as collateral, top up their debit cards, and make purchases. Simultaneously, the BTC continues to generate yield, which is used to gradually repay the loan, creating a self-repaying BTC loan. The value of this payment scenario lies in the sustained activity generated by high-frequency use. Deposits, LST minting, loans, repayments, transactions, and strategy execution all generate gas consumption and protocol fees, thereby continuously increasing the usage and buyback pressure of CORE.
The third module is the enterprise-level solution. As the "high-voltage transmission network" of the Core grid, it directly serves large institutional and enterprise clients. The enterprise and institutional ends determine whether the grid can handle larger long-term loads. The next stage for institutional holdings often involves answering the same question: after custodying BTC, how to obtain auditable returns without increasing additional custody risks? Core likens itself to a pluggable Bitcoin capital efficiency stack, attempting to provide institutions with a standardized return path through a combination of validator nodes, yield strategies, AMP, LST, and enterprise tools.
Regarding digital asset vaults, Core mentioned that BTCS SA, one of Europe's largest digital asset vaults, has integrated Core and is running a validator node, generating revenue on corporate balance sheets as an early example. If this model continues to spread, BTCFi's revenue streams will become closer to traditional asset management and corporate financial services, and its upper limit will increase as institutional fund pools expand.
summary
Returning to the core issue, the institutionalized market rally of 2025 propelled BTC into the era of configurable assets. In 2026, the more crucial task for the BTCFi ecosystem is to scale its profitability and convert it into sustainable income. The story of the "light bulb" repeats itself in every crypto cycle; it attracts attention with its fleeting brilliance but ultimately fades due to its unsustainability. The story of the "electric grid," however, concerns the underlying structure and long-term value of the industry. It focuses on building a system that allows thousands of applications, institutions, and users to securely, efficiently, and cost-effectively utilize "electricity" (the value of Bitcoin).
Core DAO's practices provide a typical example: establishing a security foundation with non-custodial staking, assetizing and charging for yields with AMP and LST, bringing yield capabilities to the payment distribution end with SatPay, and finally establishing institutional channels in enterprise solutions and digital asset vaults.
When more products and users rely on the same composable infrastructure, the cycle of fees, revenue, buybacks, and security can have a chance to continue. The next phase of BTCFi will be determined by who can connect the power source—the ability to light a light bulb—to the grid and ensure its long-term stable operation.
