Crypto custodian BitGo enables institutional Bitcoin yield with Core

Cryptocurrency custody firm BitGo is expanding yield opportunities by integrating institutional-grade Bitcoin staking through the layer-1 blockchain platform Core DAO.

BitGo has become one of the first custodians to enable institutional access to dual staking with Core, allowing the clients to earn scalable Bitcoin (BTC) yields, according to a joint announcement on Dec. 9.

Core’s staking solutions are designed to allow Bitcoin holders to retain full custody of their assets, avoiding counterparty risk.

“BitGo’s integration with Core underscores our commitment to expanding opportunities for institutional clients to securely generate yield from their Bitcoin holdings,” BitGo CEO Mike Belshe said.

Bitcoin staking versus dual staking

Cryptocurrency staking is a crypto process allowing crypto holders to earn passive rewards for holding their assets by locking their coins in wallets.

Though crypto staking is natively supported on proof-of-stake (PoS) blockchains like Ethereum, Bitcoin — which operates a proof-of-work (PoW) consensus mechanism — cannot be natively staked. Still, there are a few methods allowing users to stake BTC indirectly.

Proof-of-work (PoW) blockchains versus proof-of-stake (PoS) blockchains. Source: MyEtherWallet

According to HashKey, there are at least four methods of BTC staking, including custodial lending, wrapping BTC plus applying decentralized finance (DeFi) lending, Bitcoin layer-2 staking and restaking.

Bitcoin restaking is when a BTC holder stakes their Bitcoin with an intermediary protocol, which then restakes it with external client chains to earn yield from activity on those client chains.

Core’s self-custodial Bitcoin staking. Source: Core DAO

Core’s non-custodial Bitcoin staking is a form of BTC staking where stakers lock their BTC on the Bitcoin blockchain to provide security to the Core blockchain in exchange for Core (CORE) tokens. Core’s dual staking grants higher BTC staking rates to those who also stake CORE tokens.

Dual staking on BitGo with Core

“With dual staking, we’ve kind of stepped it up to the next level, where now you can go put your Bitcoin to work, and you can earn even more attractive deals than some of the DeFi opportunities in terms of these Bitcoin ecosystems,” Core DAO’s founding contributor Rich Rines told Cointelegraph.

Related: Staking may come soon for US Ether ETFs: Bernstein

With Core’s dual staking model, BitGo — which has been supporting various types of BTC staking — will now allow its institutional clients to secure extra Bitcoin staking rewards.

“By timelocking client Bitcoin and staking CORE tokens directly from BitGo’s qualified custody platform, institutions can unlock scalable, tiered yield without incurring any slashing, credit, counterparty, or smart contract risks on their principal assets,” the announcement said.

Additional reporting by Ezra Reguerra.

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