Yield Generation
Last updated
Last updated
PBTC offers high-quality, competitive native yield to Bitcoin through scalable and sustainable yield generation backed by Bitcoin assets.
The yield origination process is multilayered, drawing from multiple sources:
Bitcoin staking income
Income generated from delta-neutral strategies
Ecosystem and partner incentives
Photon Labs' yield generation framework aims to diversify yield sources and their associated risks, thereby enhancing the overall robustness of the system.
Babylon introduces a security-sharing model for securing Proof-of-Stake (POS) chains, with Bitcoin as the primary staked asset. PBTC leverages this model as the initial source of yield.
This new primitive gives rise to Bitcoin liquid staking token (LST) protocols such as pSTAKE, Lorenzo, and Lombard, which generate income from Babylon's Bitcoin staking and offer additional rewards.
While Babylon is not yet fully operational, the income is expected to be denominated in non-Bitcoin assets, referred to as "altcoin yield".
Photon Labs' PBTC will accept Bitcoin LSTs as backing assets, alongside zero-yielding native Bitcoin and Bitcoin wrappers, simplifying the process for users to benefit from this yield source.
Note: More information and yield rate estimates will be released when available.
Photon Labs is developing the next layer of yield source for the backing assets through delta-neutral strategies, which offer a compelling case for their effectiveness, sustainability, and scalability in capturing income and yield.
Delta-neutral strategies aim to generate income regardless of market direction by maintaining a neutral delta through offsetting positions to hedge against market volatility.
Historically, these strategies have been utilized by institutional investors to achieve high-yield returns with minimized risk. Their sustainability lies in their reliance on market inefficiencies and statistical correlations, making them less susceptible to market downturns.
The scalability of these strategies can be found on centralized liquidity venues compared to DeFi venues. Photon Labs plans to implement these strategies in both centralized and decentralized venues to maximize efficiency, yield, and achieve diversification.
Photon Labs democratizes access to these high-yield strategies, making them available to a broader audience where they were previously reserved for large institutions.
Note: While we are actively fine-tuning the strategy implementations, we are committed to transparency. Detailed performance reports of the underlying delta-neutral strategies and associated risks will be released as they become available.
