After the institutional market trends, BTCFi's new proposition and Core's practice provide a typical sample.
Written by: ChandlerZ, Foresight News
In 2025, the main narrative of Bitcoin reached a significant turning point. The acceptance of Bitcoin by traditional financial channels continued to rise, and after the processes of custody, disclosure, risk control, and compliance were systematized, Bitcoin resembled a type of configurable asset. Throughout 2025, net inflows into Bitcoin spot ETFs in the U.S. exceeded $21 billion. Additionally, the U.S. crypto market formed a crypto ETF options market in 2025, allowing 401(k) pension plans to invest in alternative assets, including cryptocurrencies. The Financial Accounting Standards Board approved fair value accounting rules for Bitcoin.
The nature of funds has matured, bringing more realistic operational issues. After institutions buy BTC, the market is no longer solely concerned with the paper profits from price increases but is more focused on where the profits come from, whether cash flow can be explained, whether risk boundaries can be quantified, and whether audits and disclosures can be completed.
Changes in on-chain funds are also amplifying this contradiction. Data from DeFiLlama shows that the total value locked (TVL) in DeFi approached $172 billion in early October 2025, essentially recovering from the lows since 2022. In the phase of re-evaluating on-chain yields and capital efficiency, Bitcoin's long-standing shortcomings are more easily magnified. Its store of value attribute is strong enough, but sustainable yields and explainable cash flows remain relatively weak.
The emergence of BTCFi transforms shortcomings into opportunities. It aims to integrate BTC into collateral financing, asset management portfolios, and payment distribution systems, evolving Bitcoin from a static holding logic to a productive asset logic. As long as Bitcoin continues to be an important component of institutional balance sheets, there will be a long-term real demand for how to enhance BTC's capital efficiency under controllable risks.
In the early stages, BTCFi relied more on subsidy and incentive-driven annualized narratives. Periodic interest rate spreads and arbitrage opportunities can quickly attract liquidity but are difficult to stabilize in the long term. As we enter 2026, the focus of competition is also changing. After institutionalization, the market's preference for cash flow is closer to a revenue structure driven by fees and services. Yield can attract attention, while revenue determines sustainability and valuation anchors.
On-chain sources of yield are more commonly derived from incentive subsidies, inflation releases, interest rate spreads, and short-cycle opportunities, which are more volatile and depend more on market and incentive policies for sustainability. Revenue is closer to fee and service income, coming from management fees of asset management protocols, enterprise-level service charges, payment distributions, trading, and clearing, which are sustainable cash flows that are easier to disclose and audit, and are more aligned with institutional valuation frameworks.
From this perspective, the decisive factor in 2026 is unlikely to be determined solely by higher annualized returns; the core variable is closer to the ability to transition from Yield to Revenue, that is, from earnings to income.
"Lightbulb Moment" vs "Grid Moment"
The history of DeFi is filled with many "lightbulb moments." Certain technologies or protocols illuminate the market with astonishing annualized returns, attracting massive amounts of capital. However, such high yields often rely on token incentives, protocol subsidies, or brief interest rate windows, akin to dazzling incandescent light bulbs that, while proving the feasibility of technology, struggle to form lasting commercial value due to their high energy consumption and short lifespan. Yield was precisely the early lightbulb of BTCFi, whose high volatility and uncertainty kept risk-averse institutional investors cautious.
Many BTCFi products completed their lightbulb moments over the past two years, proving that BTC can generate on-chain yields, participate in lending and trading, and build on-chain financial activities around BTC. However, the illumination of the lightbulb does not equate to industrial scale. Rich Rines, a contributor to the Core Foundation focused on the development of the BTCFi ecosystem, emphasized in his December 2025 analysis that early innovations proved value but still lacked a distribution system capable of bringing widespread adoption and sustained economic impact.
Revenue represents the "grid" form of BTCFi. It signifies a mature, stable, and scalable infrastructure system, with its value derived from sustainable fees generated by real economic activities, such as asset management fees, transaction fees, enterprise-level service fees, and payment network distributions. Before the grid moment arrives, high-yield narratives often fluctuate with cycles; after the grid moment arrives, fees, transactions, asset management, and payment activities form a stable load, creating a closed loop of income and security.
The trend of BTCFi moving towards the "grid moment" in 2026 is rooted in the fundamental needs of institutional capital. When financial giants managing trillions of assets integrate Bitcoin into their products, they primarily focus on several core elements. These include risk control explainability, as institutions require systems with transparent mechanisms and clear risk boundaries to clarify profit sources and risk exposures to clients and regulators; secondly, compliance vehicles, as BTCFi's product forms must be purchasable, custodial, and reportable within the traditional financial system, such as ETPs listed on mainstream exchanges; finally, sufficient on-chain performance and stability, as industrial-grade financial activities require the underlying network to have efficient transaction finality, low transaction costs, and continuous online operational capabilities.
Thus, competition in the grid moment resembles a battle for infrastructure, and a single-point breakthrough model is no longer sufficient to support the next phase of BTCFi. Future industry leaders will inevitably be infrastructure projects capable of building the "grid," providing strong security, yield engines, a thriving application ecosystem, and compliant pathways to traditional finance. The "Bitcoin Grid" model constructed by Core DAO is a practical step in this direction.
Core's "Bitcoin Grid" Model: What Does It Aim to Solve?
From its inception, Core's L1 public chain ecosystem has positioned itself as the grid for BTCFi. Its core logic is to transmit, amplify, and distribute the security and value of Bitcoin to a wide range of financial scenarios through a multi-layered infrastructure, and then return economic value to the network itself through mechanisms such as gas consumption, yield demand, and value buybacks, forming a positive cycle.
A powerful grid requires reliable power plants and extensive transmission networks. Core demonstrates unique industry advantages in this regard. The network's security is closely linked to Bitcoin itself through the innovative Satoshi Plus consensus mechanism. At its peak, over 90% of Bitcoin miners' hash power participated in maintaining the security of the Core network, providing a high level of security for on-chain financial activities. This deep binding brings strong network effects; after launching non-custodial Bitcoin staking in 2024, it attracted over 9,000 Bitcoins at one point.
As of 2025, the TVL of the BTC DeFi ecosystem based on Core exceeded $900 million, which not only reflects the ecosystem's attractiveness but also represents a sustainable economy that has formed scale, with real users and trading activities.
The most intuitive landing vehicle for institutionalization comes from yield-based ETPs. Valour announced the launch of a Bitcoin staking ETP on September 18, 2025, listed on the London Stock Exchange. The product emphasizes 1:1 physical Bitcoin support and cold storage custody, providing an estimated annualized staking yield of about 1.4%; in January 2026, it even opened trading to retail investors in the UK. The yield of this product is generated from the staking mechanism based on the Core blockchain, and the yield is distributed by enhancing net asset value. This marks a significant event for BTCFi's transition to a configurable asset form in traditional finance, proving that Core's infrastructure meets the standards of mainstream financial markets in terms of technology and compliance structure, opening the door for BTCFi to enter asset management and wealth channels.
According to the roadmap released by the Core Foundation for 2026, it clearly defines the core goal of income-driven CORE buybacks. Its strategy is shifting from a model that requires all activities to occur on the Core chain to a model that attracts value flow to Core through sophisticated mechanisms from the entire Bitcoin ecosystem. This model will create value in existing active user scenarios, greatly expanding the reachable BTC scale, and ultimately pulling back the value generated by external activities into the Core ecosystem.
Three Major Modules Push Yield Towards Revenue
To push yields towards sustainable income, Core has built a composable system consisting of multiple core modules. These modules work in synergy to transform one-time, unstable yields into sustainable, predictable income.
The first module is the yield product matrix. It serves as the "generator" of the Core grid, responsible for converting Bitcoin's static value into dynamic, composable yield streams, focusing on combinations of Asset Management Protocols (AMP), Liquid Staking Tokens (LST), and Dual Staking.
AMP is a simplified path for encapsulating CORE and Bitcoin yield products. Users deposit CORE, BTC, or both, and the protocol allocates funds to transparent strategies, aiming to generate returns while creating fee income, which is further converted into CORE buybacks.
Above AMP, LST is responsible for capitalizing yield-generating assets and enhancing capital efficiency. Core views liquid BTC with yield attributes as an important direction for BTCFi and proposes an LST model based on Core. When LST enters lending markets, DEXs, and other application scenarios, activity and trading volume will bring more gas and fee returns, further strengthening the income closed loop. Core also connects LST with the possibilities of yield-based BTC ETFs, structured products, and savings accounts, attempting to position LST as the underlying asset form for larger-scale capital entering BTCFi.
The dual staking market aims to resolve the friction long faced by BTC-only participants. Many BTC holders are willing to stake BTC but lack the willingness to hold CORE, making it difficult to expand participation in dual staking. Core's proposed market pairing logic involves BTC stakers paying fees to CORE holders, who then acquire and stake CORE on their behalf, allowing BTC-only participants to achieve higher overall yields while CORE holders receive fees and higher yield rates.
For example, when held separately, $100,000 in BTC yields $50 at a 0.05% rate, while $20,000 in CORE yields $1,300 at a 6.5% rate. When combined, the total scale of $120,000 can yield up to $6,000 at a 5% rate, with a distribution plan of 3% for BTC holders and 15% for CORE holders. Yield enhancement is decoupled from inflation, with CORE's annual issuance rate being about 2.5% of the circulating supply, and additional yields coming from market mechanism optimization and the collaborative scale of BTC and CORE.
The second module is new banking services. Its representative product, SatPay, connects BTCFi to real-world consumption and payment scenarios. If yield products are "power generation," SatPay is the "distribution network" that delivers "electricity" to thousands of households.
Core positions SatPay as the new bank for Bitcoin, aiming to transform the use of CORE's gas and Bitcoin yields into a consumer-level financial experience, further converting it into sustained demand and revenue for CORE. SatPay is expected to launch in the first quarter of 2026, with Core disclosing its collaboration with banking infrastructure provider Mobilum, emphasizing that Mobilum has an annual revenue scale of tens of millions of dollars.
The core experience of SatPay revolves around yield-based BTC collateralized lending: users can borrow stablecoins by collateralizing yield-generating BTC or LST, recharge their debit cards, and spend, while BTC continues to generate yields to gradually repay the loan, forming a self-repaying BTC loan. The value of payment scenarios lies in the sustained activity brought by high-frequency usage; deposits, LST minting, loans, repayments, transactions, and strategy executions will all generate gas consumption and protocol fees, thereby continuously increasing the usage and buyback pressure of CORE.
The third module is enterprise-level solutions. It serves as the "high-voltage transmission network" of the Core grid, directly catering to large institutions and corporate clients. The enterprise and institutional side will determine whether the grid can support a larger long-term load. The next phase of institutional holding often needs to answer the same question: after custodial BTC, how to obtain auditable yields without increasing additional custodial risks. Core likens itself to a pluggable Bitcoin capital efficiency stack, attempting to provide standardized yield pathways for institutions through a combination of validation nodes, yield strategies, AMP, LST, and enterprise tools.
In the direction of digital asset vaults, Core mentions that one of Europe's largest digital asset vaults, BTCS S.A., has integrated Core and is running validation nodes to generate yields on corporate balance sheets, serving as an early example. If such models continue to spread, the revenue sources of BTCFi will be closer to traditional asset management and corporate financial services, and the scale limit will also increase as institutional capital pools expand.
Summary
Returning to the question itself, the institutional market in 2025 pushed BTC into the era of configurable assets. The more critical task for the BTCFi ecosystem in 2026 is to scale yield capabilities and solidify them into sustained income. The "lightbulb" story repeats itself in every crypto cycle, attracting attention with brief brilliance but often extinguishing due to an inability to sustain. The "grid" story, however, concerns the underlying structure of the industry and long-term value. It focuses on building a system that allows thousands of applications, institutions, and users to safely, efficiently, and cost-effectively utilize "electricity" (the value of Bitcoin).
The practice of Core DAO provides a typical example: establishing a secure foundation through non-custodial staking, assetizing and charging for yields with AMP and LST, bringing yield capabilities into the payment distribution end with SatPay, and finally establishing institutional channels in enterprise solutions and digital asset vaults.
When more products and users rely on the same set of composable infrastructure, the cycles of fees, revenue, buybacks, and security will have the opportunity to operate continuously. The next phase of BTCFi will be determined by who can connect the ability to light up the lightbulb to the grid and ensure the long-term stable operation of the grid.
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