How to earn yield on bitcoin and where it comes from

Bitcoin has no staking and lending it pays close to nothing, so most bitcoin yield comes from borrowing against BTC, hedged trades, or securing other networks.

Earning yield on bitcoin is harder than it sounds. Bitcoin runs on proof of work, so there's no staking reward, and lending BTC on the biggest DeFi markets paid almost exactly 0% on 23 September 2026. The yield that does exist comes from using bitcoin as collateral or as the base of a trade, and each route carries a different risk.

"Bitcoin yield" also has a second meaning. Strategy (formerly MicroStrategy) uses BTC Yield as a company metric, the growth in bitcoin held per share, which has nothing to do with income for holders.

Why lending bitcoin pays almost nothing

On 23 September 2026 Aave v3 on Ethereum held $2.85 billion of WBTC paying a supply rate of 0.003%, and $1.53 billion of cbBTC paying 0.001%, according to DefiLlama. BTC on Morpho earned 0%.

The reason is demand. Almost everyone who deposits BTC into a lending market does so to borrow stablecoins against it, and very few people want to borrow BTC itself. With no borrowers, there's no interest to pay suppliers. On Morpho, BTC sits purely as collateral, which earns nothing by design.

Where bitcoin yield comes from

Carry trades

Carry is the most common source of onchain BTC yield. A position deposits BTC as collateral, borrows a stablecoin against a portion of it, and puts the stablecoin into a lending market or strategy paying more than the borrowing cost. The holder keeps full BTC exposure and earns the spread. The borrowed amount has to stay well inside the loan limit, because a sharp BTC fall can trigger liquidation.

Basis trades and covered calls

The basis trade holds spot BTC and shorts the same amount of perpetual futures, collecting the funding rate that long traders pay shorts. It's delta-neutral: the spot BTC and the short future cancel each other out, so a move in the BTC price leaves the position's value unchanged. That also means the holder no longer gains if BTC rises, and the trade only pays while funding is positive. On 23 September 2026 Binance's BTC funding rate was slightly negative, so the trade was costing money that day. Funding resets every 8 hours.

Covered calls sell the right to buy your BTC above a set price. The premium is income, and the cost is any gain above the strike price.

BTC staking protocols

Bitcoin can't be staked on its own chain, but protocols now let BTC help secure other networks. Babylon lets holders lock native BTC from their own wallet to back proof-of-stake chains, and held about $3.4 billion on 23 September 2026 per DefiLlama. Liquid versions such as Lombard's LBTC issue a token for the staked BTC so it can be used in DeFi at the same time. Rewards depend on the networks being secured and aren't published as a single rate.

Wrapped bitcoin

Most of these routes run on Ethereum and other smart contract chains, so the BTC is first wrapped into a token. On 23 September 2026 CoinGecko showed about 116,000 BTC in WBTC, 98,000 in cbBTC, 10,000 in LBTC and 4,000 in tBTC, about 1.1% of all bitcoin in circulation. Each wrapper has its own custody model, and holding one adds the risk of that custodian or bridge.

Centralised lenders

Exchanges and crypto lenders pay a rate on deposited BTC and lend it on or fund it from their own budget. Nexo, for example, advertised up to 5.7% on BTC on 23 September 2026, for fixed terms at its top loyalty tier with interest taken in NEXO tokens. The lender holds your BTC. Celsius and BlockFi both paid rates on deposited bitcoin before freezing withdrawals and filing for bankruptcy in 2022.

Bitcoin vaults

A vault packages one of these strategies. It takes BTC deposits, issues a share token, and a curator runs the strategy within limits set in the contract, so the share token grows in BTC terms as it earns. Upshift runs two BTC vaults on Ethereum:

• Sentora BTC, curated by Sentora, takes WBTC and runs a carry strategy. On 23 September 2026 it held about $3.9 million of WBTC as collateral on Morpho, borrowed RLUSD and PYUSD against part of it, and deployed those stablecoins into yield strategies.
• Upshift Gamma BTC, curated by Gamma Research, takes cbBTC and runs market-neutral, delta-hedged strategies. It held about $3.4 million.

Current rates are on each vault page. The DeFi yield strategies guide explains carry and hedged strategies in more depth.

Risks

• Liquidation: carry positions are liquidated if BTC falls far enough against the borrowed amount
• Wrapper risk: WBTC, cbBTC and other wrappers depend on their custodian or bridge
• Strategy risk: the protocols a vault or trade uses, and funding rates that can turn negative
• Counterparty risk: with a centralised lender, its solvency. With a vault, the contract and the curator. Upshift's contracts have had 10 smart contract audits by 6 independent firms

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

Can you stake bitcoin?
Not on Bitcoin itself, which uses proof of work. Protocols like Babylon let BTC help secure other proof-of-stake networks for a reward.

How can I earn interest on my bitcoin?
Through a centralised lender, a carry trade against BTC collateral, a basis trade, covered calls, a BTC staking protocol, or a vault that runs one of these strategies.

Why does lending BTC on Aave pay almost 0%?
Few people borrow BTC. Most deposit it as collateral to borrow stablecoins, so there's little interest for suppliers.

What does BTC Yield mean for Strategy?
It's Strategy's company metric for growth in bitcoin held per share. It isn't income paid to bitcoin holders.

Does bitcoin pay a dividend?
No. Bitcoin pays holders nothing. Any return comes from what you do with it.

Is bitcoin yield safe?
Every route adds risk on top of holding BTC, from liquidation to custodian failure. The rate is compensation for that risk.

Keep reading

• What are DeFi yield vaults. How vaults allocate deposits and how to compare them.
• Where USDC yield comes from. The same question for dollar stablecoins.
• How onchain yield vaults are secured. Audits, access controls and policy engines.
• The Bitcoin whitepaper. How proof of work secures the network.