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Bitcoin & Passive Income: A Quick Overview

Inflation has reached levels that were not witnessed for decades. Quantitative easing (QE) at the peak of the coronavirus pandemic flooded the world with so much money supply, that the price of goods and services simply skyrocketed. Specifically, the Fed’s broadest measure of the money supply, dubbed M2, is over $21.6 trillion today compared to around $15.5 trillion just before the pandemic in February 2020, indicating a sudden spike in the supply to the tune of almost 40%.

As expected, Bitcoin stayed true to its ethos making a new all-time high of $69,000 in November 2021. However, people who never bought BTC suffered from high inflation as it diminished the purchasing power of their disposable income and savings. 

In this article, we will dive deep into the various strategies to be used to earn passive income with Bitcoin. 

Is Passive Income Possible with Bitcoin?

The first question that typically comes into a person’s mind when thinking of passive income with Bitcoin is whether any such thing is even possible. Crypto enthusiasts typically associate passive income plays with Ethereum-based decentralized finance (DeFi). However, more often than not these platforms have a high entry barrier due to Ethereum’s sky-high gas fees which are not feasible for someone with small savings in crypto. 

Fortunately, the same is not the case with Bitcoin passive income platforms. Users can put their BTC stack to use by paying almost negligible fees, courtesy of RSK.

RSK: The Home of Bitcoin Passive Income Instruments

RSK powers a wide range of Bitcoin-based DeFi platforms that allow users to earn healthy passive income on their BTC holdings. In addition, there are several other platforms such as Blindex, and BabelFish that can help users earn passive income on their stablecoin holdings. 

Being the first and most widely recognized Bitcoin-based smart contract platform, RSK is well-positioned to propel the Bitcoin passive income space. An increasing number of decentralized applications (dApps) are continually being built on RSK that offer users a lot of options to earn passive income on their BTC. 

Let us quickly sift through the different platforms on RSK that allow users to put their BTC to generate income before we explore them in detail.

What Are the Options Available on RSK for Passive Bitcoin Income?

To begin, there are numerous RSK-powered Bitcoin staking platforms such as Money on Chain, Blindex, Sovryn, BabelFish, Bundles, and others that can be used to earn yields on staked BTC. Furthermore, by using the RSK-powered Bitcoin platforms, users can lend, borrow, trade and earn interest on their BTC. 

RSK boasts of a thriving Bitcoin-centric DeFi ecosystem that continues to grow exponentially in terms of total value locked (TVL). In the next section, we will dig deeper into some of the leading Bitcoin-based platforms built atop RSK that can help users generate an extra source of reliable income.

Money on Chain – The Premier Bitcoin HODL + Earn Platform

With a TVL of more than $69 million, Money on Chain (MoC) is the leading RSK-based platform in the Bitcoin DeFi space. Money on Chain is a Bitcoin collateralized protocol that allows users to deposit BTC and benefit from the various advantages of DeFi. Simply put, Money on Chain is a decentralized leverage exchange that combines a BTC collateralized stablecoin with an interest-bearing token for BTC holders. 

Money on Chain champions the “HODL + EARN” mantra in that BTC holders can use the platform and earn passive income just by holding their BTC. Money on Chain offers a range of tokens with different utilities that investors can use based on what they are looking for. 

To begin, let us discuss the BPro token. BPro is a HODL + Earn token that improves the efficiency of your BTC while you remain in full custody of the digital asset. In essence, BPro is a leveraged position on Bitcoin thereby offering better returns than the premier cryptocurrency. 

Historically, the BPro token has outperformed BTC by as much as 23.6% regardless of the volatility of the wider crypto market. All that the user is required to do is to HODL BPro tokens. Money on Chain offers a better alternative to incentives offered by centralized exchanges that typically require investors to deposit BTC for a certain period with minuscule interest payments. 

With Money on Chain’s BPro token, investors are not required to adhere to any lock-up period. BPro token holders are free to redeem their BPro for BTC anytime they want, either by redeeming against the underlying RSK smart contract or by selling their tokens on the secondary market. Further, BPro token holders can tap the MoC liquidity mining program that rewards the holders with MoC tokens every day. 

The second token offered by Money on Chain is the BTCx token which is essentially a leveraged long position on Bitcoin with minimal interest and no counterparty risk. The BTCx token aims to maximize your earning potential with minimal downside risk. For instance, the token offers fixed leverage once the operation is set to ensure the holder doesn’t run the risk of being liquidated during times of extreme market volatility. At the time of writing, the BTCx token leverage sits at 1.92. Furthermore, BTCx holders are free to redeem the token anytime they want with no extra cost. In addition, the BTCx token is non-custodial meaning that users don’t have to provide their private keys while holding the token.

The third token in the Money on Chain ecosystem is a USD-pegged stablecoin called Dollar on Chain (DoC). Just like any other stablecoin, Dollar on Chain mirrors the price of the US dollar. However, the biggest advantage of Dollar on Chain over the rest of the stablecoins such as Tether and USDC is that it is decentralized. Dollar on Chain is collateralized with BTC and maintains a 1:1 peg to the USD. Dollar on Chain token is ideal for daily transactions as it does not incur any protocol fees, thanks to RSK’s highly-optimized smart contracts. Besides the option to purchase Dollar on Chain from secondary markets, users can choose to mint the token on their own and avoid any unnecessary extra costs such as the bid-ask spread.

A key point that separates Dollar on Chain from other competing stablecoins is that its collateral is stored in a smart contract inside the RSK blockchain. This mitigates the requirement to trust a third party that is typically in control of the collateral when it comes to centralized issuers. Dollar on Chain is firmly integrated with the wider RSK smart contract economy with integrations with Defiant, Sovryn, Tropykus, Bleumi, Liquality and many others.

The final piece of the puzzle in the Money On Chain ecosystem is the platform’s native governance token, MoC. The MoC token goes beyond the typical utilities of a governance token providing its holders with the ability to partake in protocol governance or vote and veto proposals. The MoC token is an innovative take on a typical governance token as it allows its holders to stake the token in the protocol to earn yield without giving up on custody. 

MoC token holders also benefit from compound interest as the MoC tokens received for staking are automatically staked back into the protocol for even higher yields. The MoC token has a maximum supply of 210 million of which a whopping 84% is already staked on the protocol. The token’s market cap currently sits at more than $24 million and continues to grow at an exponential rate as the Bitcoin DeFi ecosystem thrives. Users can purchase the MoC token directly on the TEX decentralized exchange, RSKSwap or Sovryn. You can also continue stacking MoC tokens as rewards by participating in the MoC Liquidity Mining program for BPro holders.

Blindex – A Currency-Blind DeFi Platform

Blindex is the ‘first DeFi platform that is currency-blind’ and after going through the platform, one can understand the rationale behind the tagline. The Blindex multi-currency stablecoin platform allows anyone on the planet to mint, redeem, trade and invest currency-specific stablecoins without exposure to foreign exchange risks or having the need to be over-collaterlized. 

Blindex promises to bring a new era for stablecoins and has, accordingly, launched a full-suite Bitcoin-based stablecoin platform powered by RSK. With Blindex, stablecoin holders can perform a wide range of tasks on Bitcoin DeFi and earn attractive returns to grow their crypto portfolio.

For instance, users can provide collateral in the form of BTC or ETH to mint new BD-stables or Blindex stablecoins. These stablecoins are typically tied to the price of a fiat currency such as USD, EUR, and others. To date, Blindex has launched two stablecoins, BDUS (USD pegged stablecoin) and BDEU (EURO pegged stablecoin). The project has plans to add more stablecoins to its list of offerings in the future. The Blindex team notes that after tokenizing all major foreign currencies, the project’s long-term vision is to tokenize everything, including stocks, bonds, price indexes, real estate and more.

Blindex also facilitates seamless swaps between two different tokens. Users can choose to swap between two different supported stablecoins in a decentralized manner without losing the 

custody of their assets and with no counterparty risk. Blindex users can also become liquidity providers (LP) on the platform by depositing their digital assets such as BTC or ETH into a liquidity pool and earning trading fees. LPs also receive an LP token as proof of ownership of a certain proportion of the liquidity pool on Blindex. Subsequently, users can stake these LP tokens to begin earning BDX tokens, Blindex’s utility token.

One of the key points to keep in mind regarding Blindex, is that the project promises its stablecoins are completely disconnected from centralized stablecoins such as USDT and USDC. This means that Blindex’s stablecoins can never be blacklisted, censored or otherwise adversely impacted by any centralized authority regardless of the situation. 

For a DeFi ecosystem to thrive, the importance of a truly decentralized stablecoin cannot be overstated. In the Ethereum DeFi ecosystem, we have Curve Finance which has been the de-facto leading DEX. In the same vein, the success of Blindex will be critical for the rapidly booming Bitcoin DeFi ecosystem in the long term.

Sovryn – Non-Custodial DeFi on Bitcoin

Launched in December 2020, Sovryn is one of the earliest and most widely used Bitcoin-based DeFi platforms. As the name might indicate, Sovryn aims to give its users complete ownership and sovereignty over their BTC holdings via a transparent, non-custodial DeFi platform. 

Backed by some of the most influential and reputed investors in the digital assets space such as AscendEX, Blockware Solutions, Gate.io, Pomp Investments among others, Sovryn is primed to lead the DeFi on Bitcoin narrative soon.

Sovryn offers decentralized trading and lending for Bitcoin which means the platform never takes custody of your BTC. Sovryn users enjoy a wide swathe of DeFi features such as the ability to go long or short on a token with as much as five times leverage. 

Sovryn also enables users to earn interest on their BTC, USDT and the Dollar on Chain (DOC) stablecoin by lending their digital assets. Sovryn users also benefit from the low-cost, low-slippage swaps between BTC, USDT and DOC. Traders with a big stack of digital currencies can look forward to making extra income through arbitrage and benefiting from the difference in the bid-ask spreads during times of market volatility.

Sovryn is fully powered by the RSK sidechain which means that its users get to enjoy quick transactions compared to settling transactions on the Bitcoin network. For comparison, the time of block settlement or adding a new transaction on the RSK blockchain is approximately 30 seconds compared to the Bitcoin network’s 10 minutes block settlement time. 

On Sovryn, users can lend their digital assets for flexible, high-yield returns with no minimum deposits, no lock-up periods and instant withdrawal. Users can also tap Sovryn to borrow xUSD or Sovryn’s native governance token SOV against their BTC. Subsequently, they can stake the borrowed SOV to earn rewards and voting rights to chart the course of the protocol. 

Additionally, Sovryn allows holders to provide liquidity to both a single-sided or double-sided liquidity pool to farm yields on their BTC. Sovryn users can also tap the platform’s FastBTC Replay feature that enables them to instantaneously send and receive BTC from any Bitcoin wallet. 

Some of the upcoming products and features coming on Sovryn are perpetual swaps that allow traders to trade with up to 20x leverage using BTC-backed perpetual swaps and a Bitcoin-backed stablecoin that will be pegged to the USD by overcollateralized Bitcoin.

Another factor to consider while deciding to use Sovryn to earn income on BTC is the platform’s security. Both retail and institutional investors tend to be reluctant when it comes to participating in DeFi protocols due to the constant rug-pulls or hacks. Sovryn, in contrast, offers industry-grade security so that users can rest assured about the safety of their digital assets.

As an added layer of security to safeguard its users, Sovryn supports all the leading cryptocurrency wallets such as Ledger, Trezor, Metamask, Math Wallet, MyCrypto, Liquality, Portis, and many others. 

BabelFish – Cross-Chain Stablecoin Protocol on RSK 

BabelFish is a cross-chain stablecoin protocol. The protocol aggregates liquidity from across different chains and issuers to provide the user with the best quote for a digital asset. In a relatively short period since its launch, BabelFish has cemented itself as the leading stablecoin issuer in the RSK ecosystem. BabelFish’s native US dollar-pegged stablecoin XUSD achieved a significant milestone when it reached $10 million in cumulative deposits merely 2 months after mainnet launch.

The quick traction in terms of adoption witnessed by BabelFish indicates the strong appetite for stablecoin-based DeFi protocols in the RSK-powered Bitcoin DeFi ecosystem. A major contributing factor to BabelFish’s rapid ascent is its integration with Sovryn. For the uninitiated, Sovryn was the first project to integrate XUSD into its bridge and website front-end to offer an intuitive user experience and deep stablecoin liquidity. 

BabelFish DAO’s long-term objective is to facilitate stablecoin flow across different blockchains such as Bitcoin, RSK, Ethereum, and others. At present, BabelFish users can deposit the major stablecoins from Ethereum, Binance Smart Chain, and RSK into the platform and earn strong yields. Also, BabelFish aims to collect stablecoin liquidity across the aforementioned blockchains and offers its users deep liquidity with a simple interface, and tackle the problem of fragmented liquidity across different smart contract ecosystems.

BabelFish also comprises a DAO with its multi-utility token called FISH. The FISH token enables its holders to participate in BabelFish’s governance and vote on a range of protocol-related proposals such as those regarding improvements, budget allocation, partnerships, etc. FISH token holders can also stake the token and be rewarded for the same.

What the Future Looks Like for Bitcoin Passive Income

The future has never looked as promising for Bitcoin passive income plays. It should be recalled that every four years, the issuance rate of BTC is sliced by half which exerts extreme BTC supply scarcity in the market. As a result, the significance of stacking satoshis over a long time frame has never been more real.

Fortunately, RSK offers a flourishing DeFi ecosystem powered by the Bitcoin network where users have no dearth of options to put their BTC to use and earn passive income. Platforms such as Money on Chain, Blindex, Sovryn and BabelFish get the job done.

As the Bitcoin DeFi ecosystem continues to grow, we will see an increasing number of promising projects looking to grab the lion’s share of BTC. In all, it can be stated that the Bitcoin-based passive income ecosystem is blooming.