In July 2025, Fineqia launched a first-of-its-kind Bitcoin Yield ETP (YBTC) on the Vienna Stock Exchange. The fully regulated bitcoin-backed ETP offers investors the opportunity to earn approximately 6% annual returns while utilizing their investment in DeFi yield farming strategies, albeit behind the scenes. After fetching yield, those added rewards are added back into the investors’ balance.
What’s new? It’s the first time a regulated investment product offers BTC returns using DeFi without the stock exchange, and users directly interacting with DeFi yield farming platforms. Unlike older crypto ETPs that used complex derivatives and limited potential profits, this one gives full Bitcoin exposure along with real DeFi-generated yield without introducing something unfamiliar to the investors.
What Powers Bitcoin Yield?
Bitcoin holding, however, doesn’t have an intrinsic yield product or staking, but DeFi yield farming makes it possible. Bitcoin (or its tokenized equivalent) is put to work in smart contract protocols that generate income in many ways. Any emerging Bitcoin ETP provider planning DeFi Yield Farming Development must be aware of how these ETPs can generate income.
DeFi Strategies for Generating BTC Yield in ETPs
- Lending Liquidity to a DeFi Protocol : Tokenized BTC (e.g., WBTC, tBTC) is deposited into platforms like Aave or Spark to earn interest from borrowers.
- Providing Collateral to Borrow Assets for Reinvestment : BTC is used as collateral to borrow stablecoins or other assets, which are then reinvested into DeFi yield farming opportunities.
- Earning Fees in Decentralized Markets : These BTC or Tokenized BTC are invested in DEX liquidity pools (e.g., Uniswap, Curve) to earn a part of trading fees provided by the exchange platforms in return.
- Providing BTC to Cross-Chain Bridges or Wrapping Services : Bitcoin yield ETP providers can also earn a share of fees by supplying BTC to protocols that wrap it into ERC-20 tokens or use it in omnichannel liquidity provisioning.
- Staking BTC in Synthetic BTC Staking Protocols : Some platforms (e.g., Stacks via sBTC or Babylon) offer staking-like yields on BTC via proof-of-transfer or BTC-native smart contracts.
- Earning Incentives from DeFi Yield Farming Protocols (Liquidity Mining) : These BTC or BTC-paired tokens are also staked in DeFi yield farming protocols to earn rewards early LPs with governance tokens (e.g., CRV, BAL, BADGER).
- Participating in DeFi Aggregator Vaults : These Bitcoin holdings are deposited into vaults (e.g., Yearn, BadgerDAO) that automatically optimize and rotate through the best yield strategies.
- Depositing into BTC-Backed Stablecoin Protocols : These BTC holdings can be used to mint overcollateralized stablecoins (e.g., via Sovryn or BitDAO) that generate yields.
- Participating in Options Vaults or Structured Yield Products : BTC can be deposited into smart contract-based options strategies (e.g., Ribbon Finance) to sell covered calls or puts, earning a premium.
- Flash Loan Arbitrage or Automated Yield Strategies : BTC can be deployed into programmatic trading strategies that capture arbitrage or leverage delta-neutral trades for low-risk APY.
By partnering with a Defi development company, Bitcoin ETP yield providers can create self-executing smart contracts that power these activities automatically and transparently. This results in enhanced earnings for the holders, as any yields produced other than the BTC price benefit over time will be added to the investor’s holdings.
Building a Bitcoin Yield ETP: Essential Components
Deploying an innovative Bitcoin ETP like Fineqia’s YBTC with the help of a DeFi development company entails working on multiple layers of technology, compliance, finance, etc.
Key Components Include:
Secure Custody and Asset Management
Bitcoin yield ETPs on stock exchanges attract enormous retail and institutional investments. Since huge funds are at stake, all BTC backing the ETP must therefore be held securely with:
- Licensed custodians
- Multi-signature protected wallets
- Insurance coverage
Smart Contracts and DeFi Integration
Under the hood, the BTC is deployed into vetted DeFi protocols via smart contracts. These meticulously created and audited smart contracts (by leading DeFi development companies) automate lending, borrowing, staking, liquidity provisioning, or any activity required to generate yield. Since huge funds are involved, it is essential to ensure that the code is clean and secure and that the picked protocols are reputable.
Yield Strategy
A sound yield-generating strategy is pivotal to Bitcoin yield ETP’s performance. The provider must, therefore, carefully pick the DeFi strategy for generating BTC yields in ETPs, as it will directly impact its profitability. The end goal is to target a competitive APY with controlled risks. The benefit from BTC’s appreciated price and proceeds from DeFi yield farming activities are converted into BTC and fed back to the ETPs. The result? Investors see their Bitcoin stack grow over time.
Regulatory Compliance and Reporting
A bitcoin yield ETP must be built within a compliant framework. It must therefore:
- Obtain a license for an exchange-traded product.
- Adhere to all relevant laws, including market regulations, tax considerations, etc.
- Ensure transparency, complete disclosures wherever and whenever required, and investor protection policies or practices in place.
Investor Experience and Frontend:
Since the BTC holdings are deployed to DeFi yield farming activities on the backend, there are no major UX enhancements required for building a compliant Bitcoin yield ETP. BTC exchange-traded product providers can still coordinate with a DeFi development company to enhance transparency by building a dashboard or reports showing:
- The yield accrued
- The current BTC holding
- Strategies employed to generate yield
Any complex DeFi mechanics must still be kept behind the scenes to avoid any investors leaving due to product complexity. Remember, the end motive of Bitcoin yield ETP is allowing traders to enjoy “interest” or yield without any direct exposure to the complexity of DeFi. This implementation can result in investors feeling more confident about the investment product and entering and exiting easily and well-informed about its performance.
Hire A Leading DeFi Development Company
DeFi yield farming is ready for institutional prime time. Compiling all of the above elements into an investment product requires professional technical expertise and experience. Being a leading DeFi development company, Antier has got you covered with the best custom and white-label DeFi yield platform development solutions tailored to your needs.
Whether you are exploring the launch of a regulated BTC yield product or building a fully-fledged DeFi platform for such investment products, we have all the institutional DeFi infrastructure you need.
Share your requirements with the best DeFi development company today!
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