Bitcoin treasuries are no longer just about HODLing — they can now earn more Bitcoin. According to Willem Schroé, the next frontier for corporate and institutional investors is actively compounding their BTC holdings through on-chain yield strategies and decentralized financial tools. Instead of watching balance sheets sit idle, Bitcoin treasuries can now participate in secure lending, liquidity provisioning, and yield-generating networks built directly on Bitcoin’s layer-2 infrastructure.
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00:00Welcome back to The Deep Dive. We're here again, digging through the noise to figure out what's really shifting gears in finance. Today, it's all about Bitcoin. But we're looking beyond just the price action. We're zooming in on the corporate balance sheet. Yeah, this isn't your typical retail HO dealing story anymore. We're seeing something pretty fundamental changing with the big institutional players. Bitcoin, it seems, is moving, moving away from just being, you know, a passive thing, digital gold sitting there towards something active and an asset that actually generates
00:29income. So our mission today for you listening is to really grasp this difference, the gap between, let's call it, trapped institutional money, like in those huge Bitcoin ETFs, and this emerging productive Bitcoin world being built by corporations. And crucially, how the tech actually makes that split possible.
00:48And the scale really tells the story, doesn't it? It shows why this shift is, well, so important right now. If you look at the publicly listed companies, plus private ones, together, they're holding something like 1.33 million BTC. Just to put that in context, that's around 6.3% of all the Bitcoin out there. Sitting right there on company books, we're talking big names, you know, MicroStrategy, Marathon Digital, Tesla even. These firms are actually running their own large Bitcoin funds internally.
01:16And this isn't just money sitting idle. It's a core part of their treasury thinking. And look, long term for shareholders, that capital needs to be working. It can't just sit.
01:25That idea, putting the asset to work, that seems like the core psychological shift we need to unpack. I mean, companies, fundamentally, they can't just let huge piles of cash or assets do nothing, right? But is it just about chasing yield? Or is it something more structural, built into how corporations operate?
01:42I think it's necessity, really, but also ambition. Willem Schroe from Botanics Labs put it quite well. He mentioned there are just tons of private companies, high net worth people too, holding Bitcoin and actively looking into lending and yield opportunities.
01:57It's not just about earning a few extra dollars on the side, though. The real goal, maybe the philosophical one for these committed corporate holders. It's about earning more Bitcoin.
02:07Many see Bitcoin's next big step as turning BTC into genuinely productive capital, where Bitcoin isn't just the asset you hold, it's also what you earn back. And that, well, that changes how you need to think about the tech itself.
02:19OK, I get the financial drive, but that brings up a huge technical hurdle. How do they actually do this safely? Normally, earning yield means lending or staking, right? Which historically meant giving up your keys, giving up control. How are companies getting around that need for self-custody? That seems non-negotiable.
02:36That is the crucial innovation. This whole move towards productivity, it absolutely depends on new decentralized tech. Solutions that minimize trust. We're seeing development, serious development in Bitcoin sidechains and layer two networks specifically for this reason.
02:51May you think of it like this. In the old CeFi world, you wanted yield. You sent your Bitcoin to, say, a Celsius or a BlockFi. You trusted them to give it back. Huge risk there.
03:01Yeah, we saw how that ended. Exactly. But Bitcoin sidechains, they use these specialized bridges designed to minimize trust. They work by locking the actual BTC on the main Bitcoin blockchain, maybe using fancy cryptography or multi-sig setups. And then they issue a kind of representative token on the sidechain.
03:17Ah, OK. So the original Bitcoin, the BTC itself, it never actually leaves the company's own control, their own wallet or custody setup.
03:24Precisely. The core asset stays put, secured by the company's keys. But that token on the sidechain, that's the productive capital. That can then interact with DeFi protocols. So it lets them earn yield. But critically, they keep that self-custody guarantee. They're basically building a DeFi layer for Bitcoin just off the main chain.
03:44OK. And when you say participating in DeFi protocols, let's be really clear about the kind of yield, because we absolutely have to draw a line between this and the lending disasters of the last cycle. What is this protocol level yield exactly? How's it different?
03:59That's the critical point. Yes. The blowups in 2022, they were all about opaque credit-based lending happening off-chain. A central company took your Bitcoin, then made hidden, often leveraged bets with it. You were trusting their credit worthiness, essentially.
04:12Which turned out to be misplaced trust, often. Right. Protocol level yield is different. It's governed by code, you can see. Audited smart contracts. The yield usually comes from things like providing liquidity to decentralized exchanges, or maybe being the lender in an over-collateralized pool, or even staking for network security in some systems. The rules, collateral, yield rates, they're set and enforced by the code itself, not by some hidden credit committee.
04:39That transparency is meant to be the safeguard.
04:42OK. That clarity in the structure, that makes a difference conceptually. But here's where things get, well, complicated. Because while corporations might be pushing towards this productive use, there's this other enormous pool of institutional money that's legally blocked from doing any of it. I'm talking about this bought Bitcoin ETFs.
05:00And the scale there is just mind-boggling. They actually hold more Bitcoin than the corporations combined. Around 1.7 million BTC.
05:07Yeah, it's huge.
05:08BlackRock's IBIT alone, what is it, over 800,000 BTC now? That's just billions and billions flowing into Bitcoin. Massive institutional validation. But it's totally tracked liquidity, isn't it?
05:19It is. The regulations around those ETFs are the absolute bottleneck. It creates this really strange situation. You have BlackRock, right?
05:28Yeah.
05:28One of the biggest financial innovators on the planet, forced into complete passivity with this asset. It's because these ETFs fall under these really old laws, the Securities Acts of 1933 and 1934. And those rules are explicit.
05:42They absolutely forbid lending, staking, or doing something called rehypothecation with the underlying asset, the Bitcoin, in this case.
05:51Rehypothecation. Can you break that down quickly? What does that mean in plain English for someone listening?
05:55Sure. Simply put, rehypothecation is when a financial firm takes an asset someone gave them, maybe as collateral, and then uses that same asset again for its own purposes, maybe as collateral for its own borrowing.
06:04In the bad old crypto lending days, some platforms were doing this with customer Bitcoin, basically reusing it multiple times without clear permission or risk disclosure.
06:13Ah, okay.
06:14ETF rules totally ban that. The fund has to hold the physical Bitcoin, one-to-one backing, with no other claims or liabilities attached to it.
06:21Got it. So the contrast couldn't be starker, really. You've got the ETFs, massive scale, huge legitimacy, but totally passive because of the law.
06:31And then you have the corporate treasuries, maybe like a micro strategy. They have the financial wiggle room, the technical potential, to actually be the pioneers here, to build this yield economy because their roles are different from an SEC-registered fund.
06:45That's exactly it. And that's why the corporates are likely to drive the innovation here.
06:49We have seen some experiments elsewhere, sure, like that DeFi Development Core, DFDV on Solana, running validators and doing DeFi stuff.
06:58But the really big corporate players, they're going to demand solutions that are purely Bitcoin native and meet incredibly high safety and compliance bars.
07:07Right. Let's talk about those safety bars because we have to mention the ghosts of Celsius and BlockFi. It hangs over everything.
07:13Given those huge failures built on hidden leverage and opacity, how high is the hurdle for a company like MicroStrategy, a public company, to actually feel okay putting any treasury funds into a yield protocol?
07:24How do they justify that risk to shareholders?
07:26That is absolutely the core challenge. The risk calculation is completely different for a public company with reporting duties compared to, say, a retail investor.
07:34For a corporate treasurer to sign off on yield generation, the system has to tick several boxes, non-negotiable ones.
07:41Full self-custody, as we said. Regulatory clarity, or at least a very strong argument for it.
07:46And mechanics that are demonstrably transparent. Protocol level. Auditable mechanics.
07:51This is why the focus is really shifting away from any kind of custom lending deal and entirely towards established audited protocols, probably built on these layer twos.
08:02I mean, look at protocols like a DAZE or Compound or Dolomite.
08:05Okay, they're not on Bitcoin L2s yet, but they prove the model can work.
08:09They've been around for years, secured billions, shown that sustainable DeFi built on clear collateral rules can function over time.
08:15So the argument is, basically, yield is never zero risk. Nothing in finances, but the type of risk has shifted.
08:23It's moved away from trusting a company's promises, which is counterparty and credit risk, and often hidden, towards trusting the code.
08:30Smart contract risk, technological risk. But at least that's open source. It's auditable.
08:34Absolutely. The risks are ideally known up front. They're embedded in the code, visible to anyone who audits it, not buried in some off-chain spreadsheet.
08:43That difference is everything for a corporate compliance department.
08:48It's the maturity of this infrastructure, this thinking, that makes this potential shift viable now in a way it just wasn't, say, three years ago.
08:56Okay, let's pivot to the bigger picture. Macro implications.
08:59If this model yield generation on corporate Bitcoin really catches on, what does that do to how investors think about Bitcoin generally?
09:06You know, the classic mindset was just HODL, buy it, sit on it, wait for the price to go up.
09:10Yeah, the psychology shifts completely from just passive holding to active deployment.
09:15It becomes deploy and compound. Think about it. If you believe in Bitcoin long term, and now you can potentially earn, say, a 2% or 3% yield in Bitcoin on your holdings safely, your whole strategy changes.
09:28You're not just banking on the next halving or bull run for gains.
09:31You're actively growing your Bitcoin stack day by day, regardless of the dollar price.
09:35And connecting that out further, if those 1.33 million corporate Bitcoins start getting put to work, earning yield, what does that flood of activity do for the whole Bitcoin ecosystem?
09:47It could create a huge positive feedback loop. Generating yield transparently on chain, it massively increases liquidity where that activity happens.
09:55It draws developers to build more tools and protocols on those Bitcoin L2s and side chains, because that's where the action is.
10:02It drives transaction volume, network usage.
10:04You could really transform Bitcoin from being seen as this somewhat static asset into a much more dynamic financial engine.
10:09That really crystallizes the philosophical change we've been discussing, doesn't it?
10:14It's potentially redefining Bitcoin, moving it beyond just digital gold, the store value narrative, towards something more like digital capital, an active, working, income-producing part of the new financial system.
10:26And the examples we've touched on really paint that picture.
10:29You've got BlackRock's IBT, huge, legitimate, institutional grade, but passive, zero yield, legally boxed in.
10:37And then you look at a company like MicroStrategy, already all in on accumulation.
10:41They seem perfectly positioned to jump on compliant, safe yield products as soon as that tech meets their very high treasury standards.
10:48They have the perfect incentive, right? Earn more Bitcoin without just hoping the price goes up.
10:51Exactly. And that kind of brings us towards wrapping up this deep dive.
10:55We've seen how corporate treasuries might be shifting from passive holders to active yield earners.
11:00And the key takeaway on the tech side is these solutions, like side chains and L2s, they are the potential unlock.
11:06They offer a way for companies to use their Bitcoin holdings productively, navigating around the ETF restrictions, while crucially maintaining that all-important self-custody that corporations demand.
11:18Okay, before we give you our final thought to chew on, just a quick note.
11:21If you found this discussion useful, if you appreciate us trying to unpack these pretty complex tech and regulatory threads,
11:28please do consider hitting subscribe, maybe dropping a comment, or sharing this deep dive.
11:33It genuinely helps us out, helps the channel get seen, and lets us keep bringing you this kind of analysis.
11:39We really appreciate the support.
11:40All right, so here's something to mull over.
11:41A final provocative thought for you.
11:43If the main goal of owning Bitcoin increasingly becomes about earning more Bitcoin,
11:48and if the infrastructure for doing that safely through protocol-level yield keeps getting better and more robust,
11:54does that whole distinction between simply O-dealing and actively deploying your Bitcoin start to blur?
11:59Does it maybe become financially kind of obsolete over the long run?
12:01And perhaps even more significantly, could we see a productive Bitcoin DeFi ecosystem running on these L2s
12:07actually start to rival Ethereum's established DeFi space in terms of value-locked and real utility,
12:12maybe within the next five years?
12:14Something to think about.
12:31You're happy to be.
12:44This can be.
12:51This can be.
12:58This can be.
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