Binance taps into Bitcoin holders hunger for yield with new covered call yield play

Summary

• Binance debuts a bitcoin yield product exclusively for BTC holders.
• The product runs a systematic covered call strategy, bringing yield-generation strategies to a wider pool of potential investors.
• Returns are not guaranteed, especially if bitcoin's price rises and the call options are exercised.

Binance has introduced a product for bitcoin holders looking to earn extra yield on their investment without selling any of it, joining the likes of BlackRock in helping them maximize returns.

The product, BTC Yield, is available inside Binance Earn and is designed exclusively for people who already hold bitcoin.

Users deposit their bitcoin into the product and receive an internal position called BTCY, which tracks their share in the strategy. Everything remains denominated in BTC, and the product cannot be funded with stablecoins or other assets.

Binance holds the deposited bitcoin as collateral while systematically selling BTC call options, that is, it writes insurance against price rallies in BTC. The call seller, or writer, gets compensated with a premium. Binance collects those premiums and shares most of them with participants.

This covered-call approach, common in crypto and traditional finance, has typically required deep options knowledge to execute. Binances 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 possible weekly payout.