When Wall Street Meets HODL: Bitcoin is Performing the Most Hardcore Transformation of Returns

Original title: Bitcoin yield without the leap of faith

Original author: Hong Sun

Source of the original text:

Compiled by: Daisy, Mars Finance

Secure Bitcoin yield solutions allow institutional users to achieve appreciation returns while maintaining control over their assets.

This article is a guest commentary written by Hong Sun, the head of institutional business at Core DAO.

Traditional financial institutions have begun to benefit from the rise in Bitcoin prices—but their methods are far from optimal. Most institutions hoard Bitcoin like cash, satisfied with price exposure while ignoring its appreciation potential. This state of affairs will not last, and Wall Street will eventually seek more efficient ways to utilize Bitcoin assets.

But in the cryptocurrency field, caution is crucial. We have witnessed how chasing profits without understanding the underlying risks can backfire. Fortunately, secure and sustainable Bitcoin yield products that can minimize principal risk are no longer just theoretical; they are now available for real use.

Lessons from 2022: There are distinctions in profits.

Institutions holding Bitcoin should reflect on the recent history of the cryptocurrency industry. The market crash of 2022 exposed the dangers of profit strategies built on fragile foundations — former giants like Voyager, BlockFi, Celsius, Three Arrows Capital, and FTX have now been buried in the crypto graveyard, all due to poor risk management and unsustainable profit promises.

What is the lesson? Not all returns are created equal. Many so-called yield products introduce new layers of risk: counterparty risk, custody vulnerabilities, clawback mechanisms, and smart contract flaws. These factors can be fatal for institutions that misjudge the risks.

The core issue is that Bitcoin differs from Ethereum in that its proof-of-work model does not provide native staking rewards. As a result, holders have historically been forced to generate returns through lending, re-mortgaging, or providing liquidity—each of which comes with trust compromises.

Bitcoin holders face a dilemma: on one hand, they enjoy self-custody and absolute security, while on the other hand, they are tempted by yields. However, bridging this gap should not require people to bet on faith.

Time Lock: Bitcoin's native HODL functionality

Bitcoin, unlike Ethereum, does not support smart contracts, but it has a powerful native feature: time locks. This feature was originally designed to allow users to achieve "HODL" through mathematical certainty—locking BTC so that it cannot be moved until a specified block height is reached—but it has not been fully utilized over the long term.

Today, the same HODL mechanism is opening new frontiers: generating income without giving up custody.

The innovation lies in a new type of staking model that directly uses Bitcoin (rather than a wrapped version) as the staking asset. Through the Bitcoin "CheckLockTimeVerify" (CLTV) feature, holders can lock BTC and participate in securing the blockchain network to earn rewards while retaining full control. Their Bitcoin always remains in their own wallet, cannot be transferred, re-staked, or lost—yet can generate rewards.

This is exactly the level of security required by financial institutions. There is no need for additional trust assumptions, no risk of forfeiture, and no involvement of smart contract complexity. It is used purely according to the design principles of Bitcoin, with just an added incentive layer.

The organization is already in action.

The institutional adoption of this model is underway. Valour Inc., a subsidiary of DeFi Technologies, recently launched the world's first yield-bearing Bitcoin ETP that utilizes this mechanism—combining the immutability of Bitcoin custody with the performance advantages of secure staking.

These solutions enable institutions to move beyond high-risk lending and speculative trading strategies. Bitcoin can not only serve as a store of value for the first time, but also become an asset class that can generate returns.

From passive holding to active participation

For institutions holding Bitcoin through custodians or ETFs, Bitcoin is currently a negative-yielding asset. Custody and management fees erode returns, contradicting the core argument of Bitcoin as an inflation hedge and store of value.

Secure Bitcoin yields have changed the equation. Institutions can now generate returns while supporting decentralized networks—this has become an important bridge between traditional finance and blockchain-native systems.

This evolution is still in its early stages, but the direction is clear: the future of Bitcoin is not idle, but active, integrated, and aligned with institutional demand.

Key Insights

The correct Bitcoin yield scheme no longer requires new trust assumptions or engaging with unverified products. It is rooted in Bitcoin's own security model, utilizing the time-lock feature originally designed as a HODL mechanism to generate returns while protecting the principal.

As financial institutions gradually understand this development, those who act swiftly will gain a competitive advantage. The question is no longer "Is institutional-grade Bitcoin yield feasible?" but rather "How will you utilize it?"