Why Bitcoin's Next Big Opportunity Could Be Earning Yield Without Selling

With a more sophisticated and increasingly institutional holder base, Bitcoin yield opportunities have never been more popular.

A new wave of crypto startups are now betting that the next big thing may have less to do with Bitcoin's price and more to do with what investors can earn while holding it.

That's the idea behind HoneyB, a Bitcoin yield platform being developed by Nectar Group, which recently raised $5 million at a $30 million valuation. The funding round was led by Portal Ventures, with participation from Peer Venture Partners and Anchorage Digital Ventures, among others. But the bigger story may be the company's attempt to solve a problem that has plagued crypto for years: Generating a sustainable yield on Bitcoin without forcing investors to sell their Bitcoin or surrender it to risky lending platforms.

"Our goal was to have people not actually have to give up their Bitcoin in order to be able to access yield," HoneyB CEO Josh Gordon told Coinage in a new interview.

The timing is particularly interesting. As Bitcoin has evolved from a speculative investment into an increasingly common institutional reserve asset, the question of how to generate income from those holdings has become harder to ignore. Unlike stocks that pay dividends or bonds that generate interest, Bitcoin doesn't produce income on its own. And attempts to manufacture yield through crypto lending have left investors with painful memories of companies like Celsius and BlockFi, which collapsed during the industry's 2022 downturn.

Gordon argues that the answer may lie in connecting Bitcoin to income-generating strategies that already exist in traditional finance.

"Our goal is to provide a yield solution that doesn't need incentives," Gordon said, pointing to how many crypto-native yield products depend on token rewards that become less attractive as more capital enters their protocols.

"When you look at the private credit markets, you look at the trade finance markets, invoice financing markets, income ETF markets, there's a lot of opportunities for you to earn somewhere between 6 to 12% yield, depending on your risk threshold," he explained.

HoneyB's proposed approach works by allowing investors to borrow stablecoins against their Bitcoin holdings and deploy the borrowed funds into income-producing investments. Rather than selling Bitcoin to access those markets, investors use their existing holdings as collateral, with the aim of earning enough income to cover borrowing costs and generate additional returns.

HoneyB's underlying investment strategy is targeting approximately 10% annual returns, with the platform aiming to deliver a more modest 2% to 4% annualized net yield on Bitcoin holdings after financing costs and fees. Those returns are not guaranteed and depend on the performance of the underlying investments, borrowing rates and collateral requirements.

The distinction matters because borrowing against Bitcoin introduces risks of its own. A sharp decline in Bitcoin's price could force investors to post more collateral or face liquidation. Rising financing costs could also eliminate the economic benefit of the strategy, even if the underlying investments continue generating income.

Gordon acknowledges those challenges, arguing that HoneyB has been designed with the failures of earlier crypto lending models in mind.

"The problem with lending onchain is you have something like [October 10th] happen," Gordon said, referring to the market volatility around October 10 last year when borrowing costs and liquidation risks became especially problematic for leveraged crypto strategies.

"If you're at 80% [loan-to-value] you're automatically liquidated," he explained, describing a scenario in which Bitcoin falls sharply while borrowing rates spike.

Instead, HoneyB is working with custodial and lending arrangements intended to give investors more flexibility during periods of market stress. Gordon said Bitcoin can remain with institutional custodians such as BitGo or Anchorage Digital while investors borrow against it and direct the proceeds into income strategies.

The arrangement does not eliminate the risks associated with leverage or counterparties. But Gordon believes combining established custodians with more predictable financing arrangements could make Bitcoin yield more attractive to institutions that have been reluctant to participate in decentralized lending markets.

That institutional focus also shapes the investments HoneyB intends to offer. Rather than relying on unfamiliar crypto protocols to generate returns, Gordon said the company has prioritized strategies developed by established asset managers.

"Our goal was to work with, you know, tier-one asset managers," Gordon said. "I look at it like this. It's a perfect time for income because Bitcoin has been really flat... when Bitcoin is really flat, people are trying to figure out ways to optimize the reserve asset."

That shift could have implications beyond Bitcoin itself. Traditional asset managers, custodians and lenders all stand to play a role in a market where digital assets increasingly serve as collateral for investments in conventional financial products.

Gordon pointed to the popularity of income-focused exchange-traded funds as evidence that investors already have an appetite for strategies designed to produce returns without necessarily relying on appreciation in the underlying asset.

HoneyB plans to launch its first product in the fourth quarter of 2026, initially targeting institutional investors outside the United States. The company also plans to expand its institutional offerings into the U.S. and is working toward a retail product expected in the first quarter of 2027.

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