Only 0.52% of Bitcoin Is Working Onchain—Here’s Why

The gap is striking because bitcoin has already been widely tokenized. Wrapped assets including WBTC, cbBTC, and tBTC together represent more than 218,000 $BTC-equivalent units. Yet only around 35% of that wrapped bitcoin is currently deployed productively, per the report.

Lending Dominates BTCFi, but Yields Remain Thin

The current BTCFi market is heavily concentrated in lending.

According to the report, lending accounts for 81% of productive $BTC, while staking and restaking make up another 12%. Liquidity strategies remain much smaller.

Conventional liquidity provision represents about 5.5% of productive $BTC, while impermanent-loss-protected models account for just 1.3%.

That reflects a central problem for bitcoin holders: lending yields are extremely low, averaging around 0.01%, because demand to borrow $BTC itself remains limited.

DEX liquidity can pay more through trading fees, but impermanent loss has held adoption back. Only about 7,000 $BTC is currently deployed across decentralized exchanges.

Yield Basis Bets on Liquidity Without Impermanent Loss

Yield Basis is positioning itself around that constraint. The protocol uses leveraged Curve Cryptoswap positions and automated rebalancing to generate yield from trading and arbitrage activity while attempting to neutralize impermanent loss.