Yield

LBTC is Bitcoin that earns in Bitcoin. Its base yield comes from an institutional covered-call options strategy managed by Bitwise Investment Manager, LLC., which sells calls against a portion of the Bitcoin backing LBTC and collects the premiums in Bitcoin terms. The result is real market income denominated in BTC, not token emissions, so your Bitcoin stack grows.

LBTC targets 2.5% net APY in BTC terms at full strategy deployment. This is a target, not a guarantee: yield is variable, accrues in BTC, and runs below target during the deployment ramp. The strategy and direct mint and redeem are not available to US or UK persons or other restricted jurisdictions.

2.5%Net APY target, in BTC terms

50-60%Active allocation

40-50%Passive allocation

20% / 0%Protocol rewards fee / Protocol operating fee

Where Yield Comes From

LBTC yield originates from covered-call options strategy. A covered call means the holder sells another party the right to buy Bitcoin at a fixed price (the strike) by a fixed date, in exchange for an upfront premium. Bitwise writes these calls against LBTC’s backing. Buyers pay premiums for that optionality, and the premiums, denominated in Bitcoin, accrue to LBTC holders through a rising exchange rate.

This is real market income, not token emissions or liquidity-mining incentives. The premiums exist because counterparties pay for optionality on Bitcoin’s price. The strategy earns from Bitcoin’s volatility surface rather than its price direction, so it can generate income whether Bitcoin rises, falls, or trades flat. For strike selection, tenors, risk limits, and how the strategy behaves in different markets, see Yield Strategy.

No leverage, no puts

Covered calls only, fully collateralized. No leverage, no lending, no rehypothecation, and no forced liquidation of the backing.

Financially settled

Options settle in cash, not physical delivery. Bitcoin never leaves custody as a result of options activity.

How the Bitcoin Is Held

LBTC’s backing operates across two custody arrangements at all times. This split between an active allocation and a passive allocation is what lets LBTC pursue real yield while keeping redemptions reliable.

Active allocation

Target 50-60% of backing

The portion deployed into the covered-call mandate. It is held at two qualified custodians in segregated, Lombard-owned accounts under a tri-party agreement: Anchorage Digital Bank, a federally chartered crypto bank (OCC national trust charter), and Kraken Institutional, a Wyoming Special Purpose Depository Institution. Both are qualified custodians under applicable US banking regulation, and the accounts are bankruptcy-remote. Bitwise holds discretionary trading authority only, bounded to opening and closing options positions; it cannot withdraw, transfer, or rehypothecate the Bitcoin. Lombard retains title to the BTC at all times.

Passive allocation

40-50% of backing

Remains in Lombard’s decentralized Security Consortium custody, unchanged from the original design. It earns no option premium, bears no strategy risk, and exists to fund BTC redemptions first. Redemptions settle in native BTC at the current exchange rate, within a window of up to 10 days. There is no gate or pause mechanism, but redemption is not instant.

The passive allocation earns nothing by design: it is what funds redemptions on the 10-day window without the options book having to be unwound.

How Yield Reaches You

Exchange Rate

LBTC uses an exchange rate model to distribute yield. Rather than receiving additional tokens, the rate at which LBTC converts to BTC increases over time. If you mint when 1 LBTC = 1.00 BTC, and the rate later reaches 1.05, each LBTC you hold is now redeemable for 1.05 BTC.

Non-Rebasing

LBTC is non-rebasing, meaning your token balance never changes. Only the exchange rate moves. This design avoids complications with DeFi integrations (some protocols struggle with rebasing tokens) and makes it straightforward to calculate your position value at any time.

Yield Distribution

Option premiums earned by the strategy are reflected in the LBTC exchange rate. A 20% Protocol rewards fee applies to strategy gains, subject to a high-water mark; there is no Protocol operating fee.

Bitcoin Earn

Bitcoin Earn is Lombard’s flagship vault product, providing actively-managed yield strategies for Bitcoin holders.

Meta-Vault Structure

Bitcoin Earn operates as a meta-vault, a single entry point that allocates deposits across multiple underlying strategies. Rather than choosing individual protocols yourself, the vault’s allocation is managed to optimise risk-adjusted returns across its underlying strategies.

How It Works

Deposit LBTC, BTC.b, or other supported Bitcoin assets into Bitcoin Earn
Receive vault share tokens representing your position
The vault deploys your assets across its active strategies
Yield accrues to your share tokens as strategies generate returns
Redeem share tokens to withdraw your assets plus accumulated yield

Strategies

Bitcoin Earn distributes capital across structurally uncorrelated yield sources:

Bitcoin Money Market Strategy, Managed by Sentora, generating variable yield from DeFi lending markets, optimised continuously against onchain lending rates
Bitcoin Onchain Credit Strategy, Powered by Flow Traders and Cap Protocol, generating a fixed premium from institutional borrowing demand, independent of DeFi market conditions

Money market yield moves with DeFi lending activity; the credit premium does not. All strategies undergo security review before activation, and the vault maintains diversification to manage risk.

See Bitcoin Onchain Credit Strategy for a full breakdown of the credit allocation.

Transparency

Bitcoin Earn provides full visibility into vault allocations and performance. You can view current strategy allocations, historical returns, and underlying protocol exposures at any time. The vault’s share token exchange rate provides a clear measure of accumulated yield.

Other Vaults

Sentora/Veda Vaults

In addition to Bitcoin Earn, Lombard partners with Sentora to offer specialized Bitcoin yield vaults built on Veda infrastructure. These vaults are managed by experienced DeFi strategists and provide access to curated yield opportunities.

Structure

Partner vaults follow a similar share-token model to Bitcoin Earn. Depositors receive share tokens that appreciate as the vault generates yield. Each vault has defined strategy parameters, risk profiles, and fee structures disclosed before deposit. Performance data is publicly available through the Lombard application.

Yield Considerations

What Affects Yield

Several factors influence the yield you earn on LBTC:

Bitcoin implied volatility, Option premiums rise and fall with the market’s demand for Bitcoin optionality. Below roughly 30% implied volatility, premiums compress and the strategy runs below target, an income risk rather than a capital-loss risk.
Deployment level, During the allocation ramp, yield runs below the 2.5% target and builds as the active allocation scales toward full deployment
DeFi market conditions, Lending rates and trading volumes affect DeFi layer yield
Protocol incentives, Lux multipliers and partner incentives vary by season and protocol
Vault strategy performance, Individual strategy returns depend on market conditions

Yield vs Risk

Higher yield generally comes with additional risk exposure. The base covered-call layer carries strategy risk (mark-to-market pressure on the active allocation during sharp Bitcoin rallies), income compression in low-volatility environments, and counterparty risk on OTC options positions. These risks are bounded by the custody structure: options are financially settled, Bitcoin never leaves Lombard’s segregated accounts, and the liquidity buffer is isolated from the strategy entirely. DeFi deployments introduce smart contract risk from the protocols you interact with. Vault strategies may involve additional complexity and protocol dependencies. For the full risk breakdown, see Risks.

Verify, Don’t Trust

You do not have to take the yield on faith. Lombard publishes a transparency dashboard refreshed every 24 hours, and the strategy metrics on it are attested by Bitwise, a regulated US manager, and cross-checked against custodial records rather than self-reported.

Deployment progress and current yield

See how much of the backing is deployed into the active allocation and the yield being earned right now, side by side, as the strategy ramps toward full deployment.

Allocation split

Confirm the split between the active allocation and the passive allocation, so you can see the buffer is intact and available for redemptions.

Strategy metrics

Options book NAV, Bitcoin accumulated since inception, reported by the manager and cross-checked against custodial records.

Proof of Reserve

Lombard’s ongoing Proof-of-Reserve attestations verify the backing itself, independent of the manager.

Explore it on the transparency dashboard .

About the Manager

Bitwise Asset Management is a global crypto asset manager with more than $9 billion in client assets. Since 2017, Bitwise has established a track record of excellence helping investors understand and access the opportunities in crypto. Bitwise manages a suite of over 70 investment products in the U.S. and Europe, spanning ETPs, index funds, alpha and SMA strategies, and staking solutions.

The covered-call strategy has a 4.5-year operating history. From 2022 through 2026 YTD, gross historical returns have been positive in every calendar year, including the 2022 bear market, the recovery that followed, and the range of market regimes in between. Over that period, no short option position has expired in-the-money, and no Bitcoin has been called away. Past performance does not guarantee future results and covered-call strategies carry the risk of assignment in different market conditions.

LBTC runs a deliberately conservative implementation. The mandate disallows leverage, borrowing, and naked short positions and every position must be fully covered by Bitcoin held in custody. Only a portion of the total LBTC is deployed to the active strategy.

Next Steps

Yield Strategy, The covered-call mechanics, custody structure, and risk limits in depth
Understanding Yield, How yield reaches your balance through the exchange rate
Assets, Learn about LBTC and BTC.b in detail
Transparency Dashboard, Verify deployment, yield, allocation, and reserves on a 24-hour cycle
Lux Rewards, How to maximize your incentive yield
Access DeFi, Deploy LBTC and BTC.b into DeFi protocols
Risks, Understand the risk factors across yield layers