Earning BTC interest, or yielding crypto on crypto. How is this possible?

You earn bitcoin interest by lending your bitcoin out. Depositing BTC into a secure platform, such as Celsius Network or Voyager, gives them access to lend out your bitcoin in the form of loans to their customers. They then charge those customers an interest rate, and share the returns with you. This is where the yield comes from.

The customers might be institutional or retail. The loans might be large or might be small. They might be used to purchase a large item, like a person loan. There’s a million reasons why people or businesses take loans. All that matters is that you are rewarded for lending out your assets in interest, and platforms need your Bitcoin to be able to lend it out.

Lockup periods

Something to watch out for when using a lending platform to earn BTC interest, is the lockup or cool-down periods. In order to make profit from your deposited funds, the platform or service needs to give it to other customers under a loan term. Some platforms allow you to remove funds at any time, while others give you an improved interest rate for keeping funds in a wallet for longer periods of time (such as 1 or 2 months). This is a key difference between Celsius Network and Blockfi, for example.

BTC Interest Accounts act like Staking, but aren’t

Earning interest is a lot like Staking. Staking is another method of generating yield, and is native to certain tokens. However, Bitcoin does not offer staking as part of it’s protocol. ETH 2.0 will use staking to reward it’s holders, without having to lend their ETH out.

Interest accounts bring staking like rewards to coins that otherwise do not support it natively.