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How It Works: Yield Generation Mechanism

When users deposit BTC assets (in the form of YBTC.B) into the Vault, the protocol — either directly or through trusted partners — allocates these funds into a diversified set of yield strategies. These strategies are designed to generate BTC-denominated returns, which are later distributed back to users as principal plus interest upon completion of the yield cycle.

Primary Sources of Yield​

On-chain DeFi Strategies​

Yield is generated through participation in DeFi primitives such as:

  • Liquidity provisioning on DEXs (AMMs)
  • Lending/borrowing spreads
  • Yield farming and reward token incentives

Off-chain Quantitative Strategies​

BTC capital is deployed into market-neutral or low-risk trading strategies such as:

  • Spot-futures arbitrage
  • Delta-neutral hedging using perpetuals or options
  • Funding rate capture in centralized or decentralized derivative markets

Fixed-income Structured Products​

In cooperation with real-world asset (RWA) protocols (e.g., Plume), capital may also be invested in:

  • Tokenized short-term treasury notes
  • On-chain fixed-rate bond-like instruments
  • Time-locked principal-protected products with predictable BTC returns

Key Partners​

Blockin Capital​

Blockin Capital is a specialized quantitative trading firm in the cryptocurrency space, founded during the 2021 DeFi Summer. The company focuses on secondary market algorithmic strategies in crypto. Its core team comes from globally renowned financial institutions.

  • Strategies include delta-neutral, risk-managed tactics like liquidity mining, AMM participation, and high-frequency arbitrage.
  • Currently manages over $100 million in AUM.
  • Backed by notable institutions such as Antalpha, Matrixport, and Time Research.
  • In this partnership, Blockin powers DEX market-making strategies combined with dynamic hedging techniques.
  • Proprietary algorithms adjust hedge exposure in real time using both on-chain and off-chain data, maximizing yield while minimizing slippage and risk.

Jupiter​

Jupiter is the largest DEX aggregator in the Solana ecosystem:

  • Facilitates over 70% of organic Solana trading volume.
  • In 2024, processed $66.5B in trading volume.
  • By Q1 2025, its perpetual contracts TVL exceeded $1.49B.
  • Offers:
    • Efficient trade routing with minimal slippage.
    • A perpetual futures protocol using an AMM model with LP collateralization and liquidation mechanisms (similar to GMX).
    • Supported assets include SOL, ETH, and WBTC.

Jupiter Project Details​

Jupiter’s perpetual contracts architecture includes:

  1. AMM layer
  2. Liquidation mechanism
  3. JLP collateral pool

LPs deposit assets like SOL, ETH, WBTC, and USDC to receive JLP tokens, entitling them to 70% of protocol fee revenue.

Folks Finance​

Folks is a cross-chain DeFi protocol offering:

  • Lending and liquidity provisioning.
  • Cross-chain asset management.
  • Operates across Avalanche, Algorand, and the Monad testnet.
  • Provides unified access to DeFi yield opportunities across blockchains.

Plume​

Plume is a Layer-1 blockchain focused on Real World Assets (RWAs):

  • Offers Vault strategies linked to fixed-term structured products.
  • Connects users with tokenized assets such as government bonds and corporate debt instruments.
  • Integrated capital flows from institutions like Blackstone and Invesco.
  • Supports over $150 million in tokenized RWA exposure.
  • Bridges TradFi with DeFi-native access to deliver predictable yields.

Sui​

Sui is a high-performance Layer 1 blockchain developed by Mysten Labs, featuring:

  • Architecture built on the Move programming language.
  • Object-centric model and resource-oriented security.
  • High throughput and low latency, ideal for:
    • Gaming
    • Social applications
    • DeFi
  • Unique parallel execution and native asset ownership model improves on-chain performance and asset safety.

Navi is a decentralized lending protocol on the Sui network:

  • Supports lending and liquidity services for assets like SUI, USDC, and CETUS.
  • Leverages Sui’s architecture to offer:
    • Flexible interest rate models
    • Liquidity incentives
  • Quickly becoming a foundational part of the Sui DeFi ecosystem.