How does Bitlayer capitalize on BTC ETF dividends? - Strategic layout and ecological opportunities for institutional entry

As the scale of Bitcoin spot ETFs surpasses $49 billion (Q2 2025 data), institutional funds are accelerating their influx into the Bitcoin ecosystem. Bitlayer, as the first Bitcoin Layer2 based on BitVM, leverages technological advantages and institutional cooperation to become the core infrastructure for capturing ETF dividends. The following are its key strategies and implementation paths:

1. Technical adaptation: Providing compliant entry points for institutional funds

1. Native BTC cross-chain solution: Bitlayer's BitVM bridge supports institutions to directly custody BTC (without needing to wrap it as wBTC), locking through Taproot addresses and ZK verification to achieve asset transparency that meets SEC requirements. Currently, over 40% of Bitcoin hash power (e.g., AntPool) supports this verification network, reducing institutional concerns about security. Case: The Bitlayer cross-chain bridge invested by Franklin Templeton has allowed institutional clients to seamlessly transfer ETF-held BTC into Layer2 for yield generation, with annual returns improving by 3-5 times compared to off-chain custody.

2. Institutional-level compliance framework

- MPC custody integration: Bitlayer collaborates with Hong Kong's New Fire Technology to provide multi-party computation (MPC) custody solutions for ETF issuers, meeting 'qualified custodian' regulatory requirements.

- On-chain audit interface: Supports real-time verification of fund flows by institutions like PwC, in compliance with U.S. regulations (GENIUS Act) on on-chain transparency.

2. Revenue scenarios: Activating the on-chain financial value of BTC

1. YBTC yield protocol: Bitlayer's YBTC (third-generation wrapped BTC) combines trading fee dividends and protocol incentives, achieving annual returns of 8-12%, significantly higher than ETF management fees (1.5-2%). Currently, the on-chain locked volume of YBTC has exceeded $350 million, integrated with ecosystems like Sui and Arbitrum. Institutional case: Goldman Sachs increased its holdings of ETHA (Ethereum ETF) in Q2 while reallocating part of its BTC to YBTC through Bitlayer to optimize its yield structure.

2. RWA asset bridging: Bitlayer collaborates with Franklin Templeton to develop the 'ETF-RWA Bridge', allowing institutions to tokenize ETF shares and enter DeFi protocols, for example:

- Staking IBIT ETF shares to lend stablecoins;

- Achieving cross-chain arbitrage through Bitlayer's OP-DLC bridge.

3. Ecological synergy: Deep binding with ETF issuers

1. Capital-level cooperation

- Bitlayer's Series A financing was led by Franklin Templeton, which manages $16 trillion in assets providing financial backing.

- ETF issuers such as BlackRock develop dedicated Layer2 chains through Bitlayer for on-chain settlement of ETF shares (the testnet TVL has reached $850 million).

2. Liquidity guidance

- Bitlayer establishes a $50 million 'ETF Ecosystem Fund' to subsidize institutional market makers (such as Flow Traders) providing liquidity on Layer2, reducing trading slippage.

- Linkage with Grayscale's mini BTC/ETH ETF to achieve two-way exchange of off-chain and on-chain assets.

4. Risk hedging: Responding to market volatility

1. Options tools integrate Bitlayer with quantitative institutions like Jane Street to deploy European options protocols on Layer2, allowing ETF investors to hedge against BTC price volatility. For example:

- Buying put options to hedge against ETF net value decline;

- Compressing option settlement costs through ZK proof (reducing by 90% compared to off-chain).

2. The gold-BTC cross-asset pool targets institutions like Harvard University that simultaneously allocate to gold ETFs and Bitcoin ETFs, with Bitlayer developing a BTC/XAU synthetic asset trading pair that supports dynamic rebalancing strategies.

Future challenges and breakthroughs

- Regulatory adaptation: The SEC's determination of the securities attributes of cross-chain bridges may affect the compliance of the BitVM bridge.

- Technical load: If ETF funds flood in on a large scale, the efficiency of ZK proof generation needs to be optimized (current TPS 2000+).

Conclusion: Bitlayer is becoming the preferred on-chain infrastructure for institutions allocating BTC ETFs through a three-pronged strategy of 'compliant entry - revenue enhancement - ecological synergy'. If it successfully captures 10% of ETF fund inflows (about $4.9 billion), its ecosystem TVL is expected to reach the billion-dollar level.