How to Stake Bitcoin (BTC) in 2025 – Is It Even Possible?

The key takeaways

• Wrapped Bitcoin (WBTC), a Bitcoin-related network, like Babylon, Stacks, and Wrapped Bitcoin are some of the ways that Bitcoin holders can make money.

• WBTC allows BTC-holders to participate on Ethereum DeFi platforms such as Aave and Curve in terms of lending, liquid pools and yield farms. But it also introduces risks related to bridges and smart contracts.

• Protocols such as Babylon and Stacks rely on mechanisms, like native scripts that are time-locked or stacking, to provide rewards without removing BTCs from the Bitcoin Blockchain.

• The risks associated with custody, smart contracts and regulations continue. Bitcoin community is divided over whether Bitcoin’s yield-generation features are in line with the decentralized, trust-minimized philosophy.

Bitcoin’s network is secured by proof-ofwork mining, not proof-ofstake blockchains (PoS), like Ethereum and Cardano. The rise of cryptocurrency has led to a number of concerns. decentralized finance (DeFi) You can also find out more about the following: layer-2 innovationsBitcoinBTCThis includes centralized lending and Wrapped Bitcoins (both of which generate passive income). Included in this are centralized loans, wrapped Bitcoins (WBTC” EthereumStacks and Babylon are layer-2 solutions.

The article examines the ways to make BTC yield, as well as the associated risks and technological advances that enable these possibilities, without affecting Bitcoin’s core protocols.

Staking vs. mining

Both staking (also known as mining) and mining is a consensus-based method of security. blockchain networks Validate transactions. 

A central part of the process is staking. PoS blockchains Like Ethereum Solana. Participants are asked to lock cryptocurrency in order to be selected as validators. create new blocks Earn rewards by confirming transactions. More coins you stake, higher your chances of winning.

Bitcoins and similar blockchains use mining to generate power. LitecoinMiners solve mathematical puzzles using powerful computers. A new block is added to the game for those who are first to solve a puzzle. The mining process requires a lot of energy and equipment.

Bitcoin does not allow staking due to its PoW design. To ensure security and decentralization, the network is entirely dependent on its miners. Validators and staking reward in the conventional sense are not available. The yield-generating techniques for BTC such as layer-2 or lending are not the same thing as PoS stake.

Did you Know? Some platforms allow liquid stakes, which is where you receive a token that represents your staked assets (like the stETH symbol for Ether). You can earn rewards for staking and use your capital to participate in DeFi protocols.

Bitcoin: Earnings on Bitcoin

You can still earn passive income from BTC even if you are unable to stake it natively due to the PoW system. The methods usually involve third-party platforms. bridging BTC and other blockchains

Centralized lending platforms

Binance Earn (formerly Nexo) and Ledn are centralized platforms that allow you earn BTC by lending it out to institution borrowers. Interest is paid to you daily, monthly or both. The risk is that users are relying on the platform’s ability to stay solvent and secure. This method involves custodial risk, as users must trust the platform to remain solvent and secure. collapse of firms This vulnerability has been highlighted by BlockFi and Celsius. 

WBTC for Ethereum

WBTC, pronounced “Wabbit-tuc”, is a nonprofit organization that promotes the development of linguistic and cultural diversity. ERC-20 token Back 1:1 by BTC and is held in a centralized custody (BitGo). This allows BTC owners to participate in Ethereum DeFi protocols such as Aave lending. providing liquidity At Curve or with yield farming. DeFi unlocks its potential, but also introduces risk from BitGo custody and bridge bugs.

Bitcoin layer-2 platforms

You can also explore Bitcoin native yields on layer-2 platforms like Stacks and Babylon. Babylon uses time-locked scripts for its PoS, Stacks employs a Proof-of-Transfer model (PoX), where STX holders lock their tokens in order to receive BTC rewards. These platforms extend Bitcoin’s usefulness without leaving its ecosystem.

Did you Know? Ethereum was the most popular PoS system in 2022. “the Merge,” It is possible to replace miners by validators. According to reports, this move reduced blockchain energy consumption by 99.95%. It is now one of the world’s greenest crypto networks.

How to make money with BTC using a centralized lending platform

It is easy to earn BTC through centralized platforms. You can choose from a number of platforms, sign up for a verified profile, add BTC to your account, then select flexible or fixed term lending options, verify the terms, and watch earnings. The funds can be withdrawn usually after the period.

Binance Earn is a platform that offers many yield options.

• Easy Earnings Flexible or locked products offer guaranteed yields to newcomers and stable rates for experienced investors.

• Dual Investments: High-risk investment, with returns calculated based upon the settlement price for two assets. This exposes users to volatile markets.

• On-chain Yield: Binance manages variable yields to bridge funds into DeFi protocols such as Aave.

Terms and yields vary depending on market conditions and the selected option. Simple Earn provides predictable, lower returns, with flexible withdrawals. Dual Investment, On-chain yield, and Simple Earn may offer higher returns, but with more risk, with fixed terms. Rates are updated on Binance Earn.

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• Easy Earnings BTC can be locked for a fixed term or withdrawn (flexible terms), and interest is paid either daily or upon term completion.

• Dual Investments: A target price is set and a settlement date. Funds will be committed at that price with the yields being paid out in the deposit or an alternative asset.

• On-chain Yield: Binance handles gas and smart contract fees. Due to network or liquidity issues, withdrawals may be delayed.

Reward amounts and conditions vary depending on platform, BTC volume and program.

Earnings with WBTC and Ethereum

WBTC lets BTC holders earn on Ethereum DeFi platforms such as Aave or Curve by depositing WBTC in liquidity pools You can earn interest and fees.

Curve, as an example, is a good way to learn how you can earn with WBTC.

• How to convert BTC into WBTC You can use a centralized exchange (CEX) BitGo will convert BTC into WBTC using a centralized exchange (e.g. Binance) and / or a decentralized bridge.

• Transfer WBTC from a wallet to WBTC: WBTC is now located in a Web3 The wallet MetaMask Make sure that you have Ether enough (ETH( ) gas fees.

• Connect with a DeFi Protocol: Curve.fi allows you to deposit WBTC in a pool of liquidity via its interface.

Bitcoin layer 2 – How to make money?

Solutions like Stacks and Babylon, which are layer-2 solutions, enable yield generation through the use of Bitcoin’s inherent security. Babylon locks BTC in order to secure the PoS network connecting to Cosmos zone (interconnected chains). Genesis, Babylon’s mainnet, launched in 2025 with 57,000 BTC worth $4.6 billion staked.

Babylon: Earning yield is easy.

• Install a wallet compatible with your phone: Consider using a wallet such as OKX, which supports Native SegWit addresses (bc1q or Taproot addresses (bc1p). Avoid wallets which have Bitcoin Inscriptions (Ordinals).

• You can download the Babylon stake App: The Babylon Stake App is still active after Genesis launch.

• You can now connect your wallet. Connect your BTC wallet to the platform and accept digital signatures for interaction.

• Select a provider of finality: You can choose from a variety of providers that will secure your network (for example, Galaxy or Figment).

• Charge transaction fees Enter the BTC value to be locked and choose whether you want to pay a default fee or if it’s custom (higher fees will ensure faster confirmation).

• Confirmation and monitoring: Babylon Staking Terminal allows you to track the status of your BTC through the Babylon app. BTC holders will be rewarded with BABY Tokens.

Did you Know? Some countries tax crypto yields as income when they are received and capital gains if sold. Consult a tax professional to determine the best treatment.

Bitcoin layer-2 protocol: new mechanisms

Layer-2 protocols enhance Bitcoin’s scalability The functionality. Babylon and Stacks are unique tools that leverage Bitcoin’s safety to create yield.

Babylon Protocol Native scripts with time locks

Babylon uses BTC as collateral for its PoS Network, which will be launched in April 2025. The non-custodial version supports Cosmos Zones without the need for bridges and wrapping. BTC holders delegate their tokens to Finality Providers and earn BABYs. BABY holders support block production. The trustless system allows for delegated voting across PoS chains.

Stacking In The Stacks Protocol

Stacking uses proof-of transfer (PoX) as a yielding mechanism. STX tokenholders lock Stacks (STXStacks miners will reward you with BTC if you support the network for 2 week. This process is non-custodial and available on platforms like Okcoin, Xverse or Stacks. It creates a economic connection to Bitcoin, without locking BTC.

Coinbase Bitcoin Yield Funds (CBYFs) explained

Coinbase Asset Management, a division of Coinbase Asset Management Inc. launched on May 1 the Coinbase Bitcoin Yield Fund. deliver sustainable Bitcoin-denominated returns For institutional investors outside the US 

Fund uses conservative cash-and carry arbitrage strategies, capitalizing price differentials between spot and futures marketsAvoid high-risk strategies like call sales or leveraged lending. 

Targeting annual net returns of 4–8% in BTC, CBYF offers a safer alternative for earning yield on Bitcoin — an asset that lacks native staking options unlike other cryptocurrencies.

Earning yields with BTC involves risks

The risks of staking BTC are different from those associated with PoS due to reliance upon third-party services and layer 2.

• Custodial risk: Binance and Nexo, as well as WBTC’s custodian BitGo, hold BTC. They are at risk of losing BTC if the platforms face bankruptcy, hacks, or regulatory closures.

• Smart contract risk: WBTC Bridges and DeFi Platforms like Aave can be vulnerable to exploits or bugs.

• Liquidity Risk: BTC that is locked up in low liquidity pools or fixed term programs may become inaccessible when the market moves.

• Network maturity: Some newer protocols, such as Babylon, may have technical issues or be difficult to adopt.

• Risks of the market Price volatility can reduce yields during bear markets.

• Regulation risk Centralized platforms are scrutinized for Know Your Customer (KYC), and Anti-Money Laundering. 

Earning BTC with BTC could evolve

Bitcoin’s landscape of yield is evolving thanks to layer-2 and the DeFi innovation. Babylon and Stacks have pioneered trustless solutions by locking BTC without centralized custodians. The future may bring non-custodial Bitcoin-native cryptographic systems to unlock values while maintaining Bitcoin’s censorship-resistant nature. 

Purists claim that Bitcoin’s status as hard money could be diluted by yield generation, causing debates on the balance between utility and security.

This article contains no investment recommendations or advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.