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Wrapped BTC Holders Can Now Secure 6% APY on Base via Umoja
Umoja achieves the yield through covered calls and arbitrage.
Updated Apr 10, 2025, 2:11 p.m. Published Apr 10, 2025, 1:00 p.m.
What to know:
- Investors can deposit cbBTC to Umoja and earn an annual yield of 6%.
- Umoja achieves the yield by deploying deposited capital on a range of trading strategies like covered calls and abritrage.
- Japanese firm recently started to earn a yield on its bitcoin holdings by purchasing put options and selling the premium as price drops.
Decentralized finance (DeFi) protocol Umoja has released a product that allows Coinbase wrapped BTC (cbBTC) token holders to earn a 6% yield on layer-2 network Base.
Umoja achieves its yield by tapping into a range of centralized and decentralized exchange strategies including covered calls and arbitrage, which involves buying an asset at on one venue and simultaneously selling it for a higher price on another venue.
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It's worthing noting that cbBTC is a wrapped token and not bitcoin itself, it is an erc20 token backed 1:1 by bitcoin held at Coinbase.
The Umoja protocol supports a number of Yield Vault Tokens (YVTs) collateralized by cryptocurrencies (including real world asset tokens).
One of those YVTs is yBTC, which is minted once users deposit cbBTC on the protocol.
Acquiring a yield on BTC using DeFi strategies has been a controversial topic for bitcoin maximalists, who are generally opposed to the DeFi sector and altcoins.
However, as BTC continues its plunge from above $100K to the April 7 low of $74.8K, investor demand for achieving a yield to mitigate against spot value losses looks set to increase.
Japanese firm Metaplanet has recently started to earn a yield on bitcoin by purchasing spot assets at the same time as put options, then selling premium on put options as price slumps.
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