Author: Kevin Source: X, @kevinliub
If the demand for BTC yield is real, where exactly does this "yield" come from? Especially, many people hope to obtain native BTC returns.
Before answering this question, please follow my train of thought and accept the following premise assumptions:
Bitcoin L2 can achieve native security, currently we are using the BitVM2 solution, and there may be other viable solutions in the future, but these solutions can achieve Bitcoin's native security at the L2 level.
Bitcoin L2 transactions are verifiable on the mainnet, and when a challenge on L2 is successful (i.e., malicious behavior is discovered), withdrawals from L2 to the Bitcoin mainnet cannot be executed. This means the security mechanism can effectively prevent bad actors.
1 of N assumption, the Sequencer nodes of Bitcoin L2 are sufficiently decentralized and numerous, with at least one honest node always existing. This ensures that your BTC can be safely withdrawn from L2 at any time.
(Take note, these are key points!)
Based on these three assumptions, Bitcoin L2 will have security equivalent to the Bitcoin mainnet. This means that BTC on L2 is equivalent to mainnet BTC and can be safely and freely moved in and out of L2.
Before proposing a native yield method, let's review the existing BTC yield sources.
Currently, BTC native yield mainly comes from centralized exchanges' funding rates. Essentially, this yield source comes from placing your BTC in a centralized exchange and obtaining returns through trading, of course, not everyone is willing to put BTC into a centralized exchange.
When a Bitcoin L2 with mainnet-equivalent security is born, users can participate in Bitcoin L2's economic activities through self-custody, and consequently:
Since Bitcoin L2's security depends on the Bitcoin mainnet, L2 should use BTC as gas fees.
Bitcoin L2 has rich programmability and can support various BTCFi applications, allowing BTC to truly circulate.
Bitcoin L2 should adopt a decentralized Sequencer and introduce competing and cooperating nodes to avoid single points of failure or "trust me, I won't act maliciously" risks.
At this point, Bitcoin L2 has seemingly become an external system inheriting Bitcoin's orange blood and genes, absorbing BTC from the Bitcoin mainnet through a secure zk rollup bridge and using BTC as gas fees.
Specific modes of native yield:
BTC holders can stake their BTC to the decentralized Sequencer on L2 through self-custody, enhancing L2 security and increasing block production probability weight. BTC's control on the second layer remains in users' hands and can be unstaked at any time.
Decentralized Sequencers return income to stakers through transaction fees, MEV, and other revenues, forming native BTC yield.
BTC holders who do not participate in staking can also obtain returns through BTCFi products based on their risk appetite, such as liquidity mining, lending, and options.
Obtaining native BTC yield is not actually complicated; the key is to build an external system that allows BTC to circulate.
The more economic activity in the system, the higher the BTC gas fee yield.
This yield is based on real economic activity, rather than purely relying on inflationary tokens or speculative mining.
As long as such a decentralized, secure, and economically active Bitcoin L2 can be created, the issue of native BTC yield will be solved.
