Where Does the Yield Come From?

Every Bitcoin holder who's been pitched bitcoin yield has learned to ask, where does the yield come from? The failure of so-called ‘BTC-yield products’ taught the market that if you cannot verify the revenue stream, it is not real.

What is BTC Yield?

Let’s first define what we mean by ‘BTC yield.’ Bitcoin yield is income denominated in BTC or its equivalent, earned on a BTC position, that exists independent of BTC price movement. If your Bitcoin is worth more tomorrow because the market moved, that's appreciation. If your Bitcoin generated additional value while the price stayed flat, that's yield. That distinction is the entire problem institutions run into: BTC can be a large, strategic allocation, but it doesn’t naturally produce cash flow the way credit, equities, or even cash do.

In practice, that means one of three things:

1. Borrower-paid interest (credit yield)
   Someone pays to borrow against BTC or borrow BTC itself.
2. Protocol-paid incentives (subsidy yield)
   A system pays participants to bootstrap liquidity or behavior.
3. User-paid fees routed to you (venue yield)
   Users pay fees to borrow, trade, or transact, and the system routes a share of those fees to you by rule.

Every BTC yield product is some mix of these three. The compliance problem is that many products blur them. You’re told you’re earning ‘yield,’ but you’re not told who is paying, from what revenue line, and under what controls.

Where Bitcoin yield comes from

Mezo is a network with three sources of operating revenue:

1. Loan interest. Borrowers commit BTC as collateral and borrow MUSD (a Bitcoin-backed stablecoin) against it. That borrowing activity generates interest and loan-related fees, which accrue to the protocol.
2. Swap fees. BTC and MUSD trade on Mezo's liquidity pools. Every trade generates a fee and accrues to the protocol.
3. Chain and bridging fees. Transactions cost gas. This gas fee is denominated in BTC and is routed back to the protocol. Assets bridged into Mezo generate fees, which also accrue to the network.

None of this requires your BTC to be lent out and is all transparently seen on the Mezo Explorer.

Passive Earning vs Active Earning on Mezo

When you commit BTC to Mezo Earn, you receive a veBTC position.  veBTC is a time-weighted position representing your committed BTC, where voting power is proportional to both the size and remaining duration of the lock.

Your veBTC accrues yield passively or actively, depending on how you use Mezo Earn.

• Passive BTC yield is accrued to veBTC sourced via chain and bridging fees. Revenue is generated each time assets move into Mezo, a loan is originated, or a position is refinanced and flows directly to all veBTC holders in proportion to their committed weight, without requiring active management or additional action beyond the initial commitment. This passive distribution represents the baseline return on a veBTC position.
• Active BTC yield pays a higher rate. Mezo Earn doesn't distribute swap fees and MUSD lending revenue automatically. Instead, veBTC lets you direct those fees toward specific parts of the network, like liquidity pools and the MUSD savings rate gauge. For investors looking for a higher return on their BTC,  opting in to weekly veBTC voting earns a share of the fees generated in the parts of the system voted on.

Start earning on your BTC

Mezo Earn is live. Deposit BTC, receive a veBTC position, and start accruing yield from real protocol revenue. No lending required.

→ Want the mechanics first? Start here: How veBTC works
→ Ready to earn? Start here: How to get veBTC
→ Want to read the entire Mezo Earn whitepaper?  Start here: Mezo Earn Whitepaper

Disclosure:This material contains forward-looking statements regarding future events, milestones, development, and utility. Such statements are based on current expectations and assumptions and are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied. Digital assets are highly volatile assets with no guaranteed value, utility, or performance. Participation involves significant risk, including but not limited to price volatility, regulatory uncertainty, technological vulnerabilities, and liquidity risk. Participation may result in partial or total loss of funds. The materials do not constitute, and should not be construed as, financial, investment, or legal advice. Participants must conduct their own due diligence on all relevant matters, and seek advice from legal, tax, or financial advisors regarding the risks and consequences of participation. All actions taken are done so at your own risk.