BitGo, a leading cryptocurrency custody provider, has unveiled a groundbreaking institutional Bitcoin staking solution through its partnership with Core DAO, a layer-1 blockchain platform.
Announced on December 9, this partnership positions BitGo as one of the first custodians to offer dual staking opportunities with Core DAO, enabling institutions to earn yields on their Bitcoin holdings securely.
What Is Bitcoin Staking?
Unlike traditional proof-of-stake (PoS) staking mechanisms, Bitcoin operates on a proof-of-work (PoW) consensus, which inherently lacks native staking support. However, innovative methods now allow Bitcoin holders to generate yields, including:
- Custodial Lending: Lending Bitcoin via custodians to earn interest.
- Wrapping BTC: Utilizing wrapped Bitcoin (WBTC) in decentralized finance (DeFi) ecosystems.
- Layer-2 Staking: Engaging with staking protocols built on Bitcoin’s blockchain.
- Restaking: Locking Bitcoin in intermediary protocols that stake with external chains for rewards.
Core DAO’s Staking Model
Core DAO introduces a non-custodial staking mechanism where users lock their Bitcoin on the blockchain to enhance the security of the Core ecosystem.
- CORE Token Rewards: Participants earn Core (CORE) tokens as staking rewards.
- Dual Staking Benefits: Higher Bitcoin staking rates are available to users who also stake CORE tokens.
This approach aligns with Bitcoin’s ethos of decentralization while providing a secure avenue for institutions to earn returns.
BitGo’s Institutional Staking Service
Through its integration with Core DAO, BitGo enables institutions to stake Bitcoin securely, maintaining full custody of their assets. This mitigates the counterparty risks often associated with traditional staking methods.
Mike Belshe, CEO of BitGo, emphasized:
“BitGo’s integration with Core underscores our commitment to expanding opportunities for institutional clients to securely generate yield from their Bitcoin holdings.”
The service allows institutional clients to time-lock their Bitcoin and directly stake CORE tokens via BitGo’s robust custody platform, ensuring a seamless and secure staking experience.
Lava Introduces Bitcoin-Backed Dollar Loans
In a related development, Lava, a New York-based Bitcoin lending platform, has secured $10 million in Series A funding from Khosla Ventures and Founders Fund. Lava’s service enables users to borrow U.S. dollars against their Bitcoin holdings while retaining self-custody of their assets.
This approach is a response to the erosion of trust in crypto lending following the 2022 collapses of Genesis, BlockFi, and Celsius, which were plagued by risky practices like rehypothecation.
Lava’s Self-Custody Model
By ensuring users maintain control of their assets, Lava’s model aligns with Bitcoin’s principles of decentralization and self-sovereignty. The platform’s co-founder, Keith Rabois, hailed this as a “technical breakthrough” designed to restore confidence in the crypto lending sector.
The Future of Bitcoin Staking and Lending
BitGo’s institutional Bitcoin staking solution and Lava’s self-custody lending service mark significant strides in bridging institutional trust and innovation in the crypto ecosystem. These developments aim to enhance security, accessibility, and yield generation for institutional investors while adhering to Bitcoin’s foundational values.
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