bitcoin
Two Prime CEO says Bitcoin L2 yields are drying up as risks pile on
Two Prime CEO Alexander Blume thinks much of that yield was never real to begin with.
In an interview on October 22, 2026, Blume described the rewards offered by Bitcoin layer-2 protocols such as Babylon and Stacks as "basically just VC-funded subsidies." His argument comes down to arithmetic.
More capital is chasing the same pot of incentives, so each depositor gets a smaller share. Blume warned that leaning on venture capital forever is not a sustainable model.
Investors eventually want their money working toward something other than paying depositors to show up. The scale of capital involved is not small.
As of November 4, 2026, Babylon had about 40,800 BTC staked, worth around $3.28 billion. Its BABY token was running at 5.5% inflation at the time.
Token inflation is one of the ways these rewards get paid. New tokens are minted and handed out to stakers.
That works as long as the market keeps valuing those tokens, which is a large assumption to build a yield strategy on. Not every model works the same way. Stacks sets its Bitcoin staking rewards at the consensus level, meaning the payouts are baked into the protocol's own rules.
