Binance has presented a product for bitcoin holders looking to get an extra return on their investment without selling anything, joining companies like BlackRock to help them maximize returns.
The product, BTC Yield, is available within Binance Earn and is designed exclusively for people who already own bitcoins.
Users deposit their bitcoins into the product and receive an internal position called BTCY, which tracks their participation in the strategy. Everything remains denominated in BTC and the product cannot be funded with stablecoins or other assets.
Binance keeps the bitcoin deposited as collateral while systematically selling BTC call options, that is, it underwrites insurance against price increases in BTC. The call seller, or caller, is compensated with a premium. Binance collects those premiums and shares most of them with participants.
This covered call approach, common in cryptocurrencies and traditional finance, has typically required in-depth knowledge of options to execute. The Binance version makes it accessible to regular traders by handling everything behind the scenes.
Two types of return
The product generates potential returns in two ways.
First, a portion of the collected premiums is converted to bitcoin and distributed to users’ spot accounts every Friday as a potential weekly payment.
