Content
- Why Bitcoin Can Generate Returns
- How BTC Earn Works
- Why Use CoolWallet to Earn BTC Returns
- How to Use
- FAQs
Why Bitcoin Can Generate Returns
Bitcoin itself does not generate returns. Most people buy BTC and hold it for the long term, waiting for the price to rise — during this time, the asset is actually sitting idle.
But idle Bitcoin can actually be put to work. Through an institutional-grade options strategy, the Bitcoin you hold can generate returns, without you having to sell your BTC.
It's worth noting that returns here are denominated in Bitcoin, not US dollars. In other words, what you earn is more Bitcoin — rather than converting your BTC into fiat to invest.
How BTC Earn Works
Returns come from a Bitcoin covered call options strategy managed by Bitwise Investment Manager. In simple terms: a portion of the reserve Bitcoin is used to sell 'the right to buy Bitcoin at a higher price in the future.' Buyers pay option premiums, which are added to the reserve in Bitcoin form, becoming your returns.
Currently, approximately 50–60% of the reserve is deployed in this strategy; the remainder acts as a liquidity buffer for withdrawals and does not generate yield. All options are cash-settled, meaning Bitcoin never leaves the custodial account and is never lent out.
Custody and Self-Custody
Deposited BTC is held by qualified custodians in segregated accounts under Lombard's name. The strategy manager only has options-trading authority and cannot withdraw, transfer, or lend out this Bitcoin.
The LBTC you hold remains under the control of your CoolWallet private key at all times, and can be transferred or used in DeFi whenever you like — independent of the custodian or Lombard.
Why Use CoolWallet to Earn BTC Returns
Supported Products
Benefits of Earning BTC Returns with CoolWallet
Earning BTC returns with CoolWallet combines security and convenience.
Self-Custody Security Your LBTC stays under the control of your CoolWallet private key at all times. There's no need to hand your assets over to a centralized platform, and you can transfer or use them yourself whenever you like.
Strong Security With the CoolWallet Pro or CoolWallet Go cold wallet, your private key is stored inside the card's chip, eliminating the risk of leaks and keeping your assets secure.
Convenient Mobile Operation With the CoolWallet App, you can quickly and easily deposit, withdraw, and check your holdings — anytime, anywhere, in an intuitive and simple way.
Full Visibility The earning process is clear at a glance, and you can track your LBTC holdings at any time.
Flexible Asset Management You can add deposits or make partial withdrawals at any time, flexibly adjusting your asset allocation and the pace of your returns.
How to Use
How to Add a Deposit
Step 1. Open the CoolWallet App, go to the "Wallet" tab → "Earn" → "BTC", and enter the BTC Earn page.
Step 2. Tap "Deposit", read through the related information, then tap "Deposit Now".
Step 3. When you deposit BTC through Lombard, you will receive LBTC of equal value as proof of holding. Choose the BTC address to send BTC from, and the Ethereum address to receive the minted LBTC.
After confirming that the amount and addresses are correct, you'll need to complete an authorization transaction. Completing this authorization means you agree to let Lombard mint LBTC using the selected address and charge the corresponding minting fee. This authorization does not transfer your assets; it simply enables the subsequent deposit process.
Step 4. Confirm that the transaction details are correct, then sign the authorization (CoolWallet Pro or CoolWallet Go users should have their cold wallet ready to complete the signing). Once the authorization is done, tap "Deposit" to continue.
Since the amount of BTC each LBTC can be redeemed for increases over time, you'll receive slightly less LBTC than the BTC you deposit — but the BTC value represented is the same.
Step 5. After the deposit is complete, you'll need to wait for the transaction to be confirmed on-chain and for LBTC to be minted. Minting usually takes about 60 minutes.
When the status changes from "Processing" to "Earning", your LBTC has been successfully minted.
Manually Minting LBTC and Re-authorizing
Depending on blockchain network conditions, in rare cases the minting fee may exceed the amount you agreed to at deposit, or the mint may still be in the automatic minting queue, leaving your LBTC not yet minted.
At this point, you can either wait for the minting fee to drop, or mint immediately instead. To mint immediately, tap "Mint LBTC". The minting fee will then be paid in ETH, rather than deducted from the LBTC you receive after minting.
In addition, when the blockchain network is congested, the minting-fee authorization you approved earlier during the deposit process may have expired, requiring you to sign a new authorization before LBTC can continue to be minted. Tap "Re-authorize" to continue; this step incurs no additional fees.
How to Increase Your Deposit
If you want to increase your deposit, simply complete the "How to Add a Deposit" steps again.
How to Claim Returns
During the earning period, accumulated returns are reflected directly in the appreciation of your LBTC. When you withdraw, you exchange your appreciated LBTC back to BTC, and the accumulated returns are directly reflected in the amount of BTC you receive.
How to Withdraw
Step 1. On the BTC Earn page, tap "Withdraw", and choose the address to receive the BTC after withdrawal.
Step 2. Enter the amount to withdraw and complete the transaction signing (CoolWallet Pro or CoolWallet Go users should have their cold wallet ready to complete the signing). You can withdraw part or all of your holdings as needed.
Step 3. After the transaction succeeds, processing typically takes 7–10 days; actual timing may vary slightly depending on network and liquidity conditions.
Step 4. Once the BTC is returned, the record will disappear from the BTC Earn page.
FAQs
Q1: How are returns calculated and claimed?
After depositing BTC, you will receive LBTC of equal value. Returns automatically accumulate and are reflected in the growth of LBTC's value — no manual claiming required. When you withdraw, LBTC is exchanged back to BTC at the current rate, and the accumulated returns are directly reflected in the amount of BTC you receive.
Q2: Can I withdraw at any time?
You can submit a withdrawal request at any time to exchange your current LBTC holdings back to the corresponding BTC value. Processing typically takes 7–10 days, with actual timing varying by network and liquidity conditions.
Each withdrawal incurs a fixed network security fee of 0.0001 LBTC, and the minimum withdrawal amount is 0.000133 LBTC (inclusive of fees).
Q3: Which address formats does BTC Earn support?
BTC Earn currently only supports Taproot (bc1p) addresses.
Q4: What is LBTC?
LBTC is a liquid token issued by Lombard, fully backed by Bitcoin, representing your BTC deposited with Lombard. Since the amount of BTC each LBTC can be redeemed for increases over time, you will receive slightly less LBTC than the BTC you deposit — but the BTC value represented is the same.
The quantity of LBTC you hold does not change as returns accumulate; yields are entirely reflected through a rising LBTC/BTC exchange rate, meaning returns automatically compound. During the holding period, you can use LBTC for DeFi lending, liquidity provision, or trading.
Q5: If I acquire LBTC from another platform, or transfer LBTC obtained from CoolWallet to another platform, will it affect my returns?
Your returns will not be affected. All LBTC is fungible — whether obtained by depositing BTC on CoolWallet or acquired from another platform, it all earns yield through the same LBTC/BTC exchange rate.
Your returns depend on how much LBTC you hold and for how long, so transfers in will increase and transfers out will reduce the returns you accumulate going forward. The BTC Earn page reflects your current LBTC holdings in real time.
Q6: Where do the returns come from?
Returns come from a Bitcoin covered call options strategy managed by Bitwise Investment Manager. In simple terms: a portion of the reserve Bitcoin is used to sell 'the right to buy Bitcoin at a higher price in the future.' Buyers pay option premiums, which are added to the reserve in Bitcoin form, becoming your returns.
Currently, approximately 50–60% of the reserve is deployed in this strategy; the remainder acts as a liquidity buffer for withdrawals and does not generate yield. All options are cash-settled, meaning Bitcoin never leaves the custodial account and is never lent out.
※ Prior to 2026, returns came from the Babylon Bitcoin staking protocol. This change only affects the future source of yield — all previously accumulated returns are fully retained, and no action is required on your part.
Q7: What are the risks of BTC Earn?
Technical Risk: As with all DeFi applications, smart contract and protocol operation risks exist.
Strategy Risk: Returns come from an actively managed options strategy — not a fixed rate — and losses are possible. Low-volatility environments compress returns; when Bitcoin rises sharply, the strategy may experience temporary paper drawdowns during roll periods (though Bitcoin's own price appreciation is fully retained by the holder).
Counterparty and Custodial Risk: The Bitcoin deployed in the strategy is held in segregated accounts at qualified custodians; the manager has trading authority only, with no withdrawal, transfer, or lending rights. Custodian, manager, and options counterparty risks still exist.
Market Risk: LBTC can be freely traded on secondary markets, and market prices may diverge from the official redemption price. You can always redeem Bitcoin at the current exchange rate through the official redemption process.
Geographic Restrictions: Lombard's services are currently not available to US or UK residents or users in other restricted jurisdictions.
Q8: What are Lombard Lux Points?
By participating in BTC Earn through CoolWallet, you also accumulate Lombard Lux Points. These points track your level of engagement in the Lombard ecosystem and may serve as a reference for future rewards and opportunities. Click here to learn more about Lombard Lux Points.
Q9: How to Check Your Lux Points
You can view your accumulated Lux Points after connecting your wallet on Lombard Finance's official Rewards Page. Note: The Lux Points mechanism follows Lombard's official documentation.
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