DeFi
DeFi Technologies CEO talks about the industry’s first yield-bearing Bitcoin ETP
Crypto.news sat down with Olivier Roussy Newton, CEO of DeFi Technologies, to explore the Valor Bitcoin Staking ETP, the first product to merge Bitcoin with yield-generating staking mechanisms.
Bitcoin holders have traditionally missed out on staking opportunities available for other cryptocurrencies due to Bitcoin’s dependence on Bitcoin. Proof of Work (PoW) consensus mechanism. PoW requires miners to solve complex mathematical puzzles to validate transactions and secure the network.
Due to the size of the Bitcoin network, significant computing power is required, which consumes significant amounts of electricity.
As an alternative, Proof of Stake (PoS) allows users to validate transactions based on the number of coins they hold and put up as collateral. In a PoS system, validators are chosen based on the amount of cryptocurrency they hold and are willing to “stake” as collateral.
This approach allows participants to earn returns simply by holding and staking their tokens. The process is more energy efficient and more accessible.
In contrast, Bitcoin’s PoW system rewards miners with newly minted coins and transaction fees for solving computational puzzles. However, reward generation is limited to those who can afford the inherent expenses associated with the Bitcoin approach.
Therefore, Bitcoin holders rely on price appreciation for returns, thereby missing out on the yield generation mechanisms available in PoS networks.
Recent innovations are filling this gap by introducing ways to stake Bitcoin. For example, blockchain networks like Basic chain enable Bitcoin staking via mechanisms that combine PoW and PoS elements.
Core Chain’s protocol, known as Satoshi Plus, allows Bitcoin holders to earn returns by staking their BTC non-custodially, maintaining control of their assets while participating in network operations to earn rewards .
Through this, Bitcoin holders gain a way to generate passive income from their holdings without compromising the fundamentals of Bitcoin’s PoW-based security model.
The Valor Bitcoin Staking exchange-traded products (ETP) capitalizes on this technological advancement, providing investors with a secure and regulated way to earn staking rewards directly through Bitcoin.
Newton explains how this could transform the Bitcoin investment landscape.
Can you provide an overview of the Valor Bitcoin Staking ETP and discuss the inspiration behind its launch?
Valor is at the forefront of regulated crypto products, accessible to a wide audience. They recognized that one of the problems with BTC products is that they either fail to generate returns or have to take major risks to do so. After seeing the benefits of Core Chain’s non-custodial BTC staking, Valor realized it could offer its users BTC with a yield without involving new risk assumptions.
How does the BTC staking program work on Core Chain? What guarantees its safety and effectiveness?
BTC staking allows the most valuable digital asset to be used to secure the Core blockchain. Importantly, BTC staking uses native Bitcoin features, such as absolute time locks, to ensure that staked BTC never leaves the Bitcoin chain. Users simply lock their BTC on the Bitcoin blockchain, use that locked BTC to vote for validators on Core Chain, and then earn rewards from the validators securing Core Chain while their BTC is still locked. Thus, BTC secures Core Chain without ever leaving the Bitcoin chain. BTC staking is part of Satoshi Plus, which is Core Chain’s consensus mechanism. When Valor stakes BTC with Core Chain, they participate in the election of trusted validators who then create blocks on Core Chain.
Given the challenges faced by other yield-generating platforms such as Celsius and BlockFi, what sets the Valor Bitcoin Staking ETP apart from these offerings?
First, skepticism is always necessary when it comes to crypto, and everyone should do their own research. It is important to note that Valor has a very different profile than entities like Celsius and BlockFi. Valor is a regulated and publicly traded company with many existing ETPs. Additionally, the source of the performance of this particular product is very clear. Valor’s Bitcoin Staking ETP yield can be found in Core Chain’s non-custodial BTC Staking. “Non-custodial” BTC staking means that BTC held by Valor never needs to change hands. There is no additional counterparty risk. The only counterparty risk comes from Valor, which is the same as a Valor BTC ETP with no yield.
How do Bitcoin miners contribute to the Core Chain network and what impact does their participation have on the security and rewards structure?
Just as BTC stakeholders delegate their BTC to elect validators on Core Chain, Bitcoin miners and mining pools can delegate their hashing power to Core Chain to elect validators. In exchange for participating in Satoshi Plus, Bitcoin miners and mining pools earn CORE rewards. As Bitcoin miners are the decentralized defenders of Bitcoin itself, their involvement in Core Chain further decentralizes validator election and aligns Core Chain with the Bitcoin blockchain.
Finally, can you tell us how the “Satoshi Plus” consensus mechanism refines traditional Bitcoin proof of work, particularly in terms of security and efficiency improvements for stakeholders?
Satoshi Plus provides tangible value to Bitcoin stakeholders through various means. First, Satoshi Plus rewards Bitcoin miners for delegating their hashing power, thereby providing additional incentive for Bitcoin miners to secure the Bitcoin network. Second, Satoshi Plus’ BTC staking brings native yield to Bitcoin for the first time in history. Bitcoin now offers rewards like Ethereum without compromising any of its design principles.