BTC Holders Can Now Earn 6% APY on Base via Umoja

Wrapped BTC Holders Can Now Earn 6% APY on Base Platform via Umoja

Umoja achieves returns through covered call options and arbitrage strategies.

Oliver Knight | Edited by Stephen Alpher Updated April 10, 2025, 2:11 PM Published April 10, 2025, 1:00 PM

(Nasim Bouras/Unsplash)

Key points:

  • Investors can transfer cbBTC to Umoja account and earn 6% annual return.
  • Umoja achieves its profitability by using deposited capital in various trading tactics such as covered calls and arbitrage.
  • The Japanese company recently began profiting from its bitcoin holdings by buying put options and selling the premium as prices declined.

Decentralized finance (DeFi) protocol Umoja has introduced a product that allows Coinbase Wrapped BTC (cbBTC) token holders to earn 6% yield on the second-layer platform Base.

Umoja achieves its profitability by using a range of centralized and decentralized exchange strategies, including covered call options and arbitrage, which involves purchasing an asset on one platform and selling it at a higher price on another.

It should be noted that cbBTC is a wrapped token, not Bitcoin (BTC) itself. It is an erc20 token backed 1:1 by Bitcoin, which is stored on Coinbase.

The Umoja protocol supports multiple Yield Vault tokens (YVT) backed by cryptocurrencies (including real-world asset tokens).

One such YVT is yBTC, which is created after users deposit cbBTC into the protocol.

Generating income from BTC using DeFi strategies is controversial among Bitcoin maximalists who are generally negative about the DeFi sector and altcoins.

However, as BTC continues to fall from over $100,000 to an April 7 low of $74,800, investor interest in returns that can offset the loss in spot value is likely to increase.

Japanese company Metaplanet recently began profiting from bitcoin by simultaneously buying spot assets and put options, and then selling the premium on the put options as prices decline.

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