This report reflects the discussions and views shared during our RA meeting. These are personal opinions of the team members and should not be interpreted as financial or trading advice. Readers should conduct their own research and consult with financial advisors before making any investment decisions.

Introduction

Personally, I think it is a great time to start stacking more BTC. I employ a mix of Perpetual Futures limit orders just above key levels to catch wicks and sudden movements in a capital efficient manner to then later transfer to spot. On top of that, I do spot dollar cost averaging (DCA) as well, aimed to last another 2-3 months (with small adjustments to the dollar amount spent, depending on market conditions).

That being said, this is me building a mid- to longterm position, as in some jurisdictions long-term “hodling” is incentivized (e.g. 0 taxes on holds over 1 year for Germans), or you trigger a taxable event whenever you sell or buy. Furthermore, I tend to just overall make better decisions and more money in my mid-long term trades.

So what to do with the BTC if I don’t actively trade it?

There are several interesting ways to put your BTC to work, depending on your risk profile and level of degeneracy. This 3 part report series will dive into different risk profiles with respect to BTC exposure and present interesting (and some pretty degenarate) strategies.

This first report discusses “Full Exposure” strategies, so strategies where you keep 100% of your BTC exposure while farming. It is all about putting your existing BTC spot bag to work - no more and no less. You just want to hodl and make the most of it.

Where To Begin?

While, unfortunately, there are few tokens live which you can directly farm with BTC, there is no shortage on new protocols launching. They are fighting for capital by offering points programs that will likely result in future airdrops.

Many of these strategies are very composable, enabling you to farm multiple programs at once. They are, in fact, so composable that it is very easy to lose orientation and track of what is what. My personal go-to to find any farms, is to tune out the noise of social media and just start on hard, reliable on-chain data.

I know that Lombard is pretty popular for earning BTC yield and it has a liquid token. Lombard’s LBTC is a liquid BTC staking token built on Babylon BTC staking. By staking your BTC there, you get a 1:1 backed liquid token that already earns you Lombard and Babylon points (for more info on Babylon, check out this report).

So let’s take it from there:

Starting with token god mode for LBTC, navigate to “Balances” to see what people are up to. This provides you an overview of where people park their LBTC, which is usually where you earn good yield.

If this gives results in turn a liquid token to further farm with, you can just plug it into token god mode as well and drill further down the rabbit hole.

Points farms

According to on-chain data, one of the most popular points farms for LBTC (which, on its own, is already a points farm for Lombard and Babylon) is etherfi (despite its ETH-centric name). By staking your LBTC on etherfi, you earn points from an additional four protocols.

While there are also other options for your LBTC (there is also e.g. Concrete), for the sake of staying somewhat concise, we focus on etherfi as an example.

Because etherfi in turn gives you a liquid BTC derivative (eBTC), you can put this to work too. The main strategies are:

• Deposit it in yet another protocol like Corn to earn additional points as well as DeFi yield which will be available eventually.
• Sell all the future points for cash on Pendle for ~9% for short term farms and ~4% for long term farms currently.
• Deposit it in a lending protocol, which is covered in the next section

To summarize:

1. Put BTC or WBTC into Lombard for LBTC
2. Put LBTC into etherfi for eBTC (or use other options like Concrete)
3. Put eBTC to work in e.g. Corn
4. Optional: Sell all the points for “cash” with Pendle PTs

You will earn points and potentially airdrops for various protocols along the way, while keeping your 100% BTC exposure.

Note: You don’t usually have to do all the steps yourself, most protocols will offer a “shortcut”, where you can e.g. enter the Pendle PT directly with WBTC.

Lending

You can further lend out your liquid BTC derivatives at almost any point along the way (WBTC, LBTC, eBTC, …) to earn even more. However, you should check with the individual protocols whether you actually keep earning points while lending, as this can vary- since the asset does leave your wallet, some protocols choose to still reward you and some don’t.

An easy way to make sure that you still earn points is by simply using a strategy advertised on one of the projects you already deposited in, which usually explicitly states whether or not you still earn. One example would be etherfi’s list of DeFi opportunity and vaults.

You can either deposit in an automatic vault, doing the strategy for you, or deposit in a lending protocol yourself and go from there.

Once you collateralized your lending account, you can either reap the lending APY, lever up your points farm by borrowing more points bearing BTC derivatives, or borrow stables against your BTC derivative and keep farming with those (e.g. AO, Ethereal Points, Pendle PTs, …).

Just make sure, that whatever yield you are expecting is higher than your borrowing rate.

To summarize:

1. Put BTC or WBTC into Lombard for LBTC
2. Deposit LBTC …
   1. … directly into e.g. Aave to borrow stables to farm with
   2. … again into etherfi for eBTC and eBTC into a lending opportunity
      1. Automated vault for raw yield
      2. Non-automated
         1. Earn lending APY, borrow nothing on e.g. ZeroLend
         2. Lever up points farm by borrowing more BTC derivatives on e.g. ZeroLend
         3. Deposit it on e.g. Morpho to borrow other assets to farm with

Risks

While looping your BTC through dozens of protocols sounds fun, and every new protocol adds a new layer of rewards, they also add a layer of risk. This can be through smart contracts, exploits or straight up rugs.

Make sure to only include protocols you trust and understand, and monitor the pools closely for suspicious activity, e.g. with Nansen Smart Alerts (highlighted in green below).