# Lombard moves LBTC yield to a Bitwise-managed covered-call strategy

> Up to 60% of LBTC backing may enter an actively managed derivatives mandate held through qualified custodians, adding custodian, counterparty, options, and manager dependencies while targeting 2.5% net APY in bitcoin terms.

- URL: https://riadefi.com/on-chain/2026-08-17-lombard-lbtc-bitwise-covered-call-transition/
- Type: Economic change
- Stage: Executed
- Evidence: mixed
- Materiality: material
- Event date: 2026-08-17
- Version: 1, published 2026-09-23 (first published 2026-09-23)
- Follow-up: 2026-10-01
- Advisor-relevant: no
- Affects: Lombard BTC.b (asset)

Developing. Some claims here are not yet confirmed; they are listed apart from the confirmed facts. A new version replaces this one when the primary evidence changes.

## What happened

Lombard changed LBTC's yield source from Bitcoin staking to an off-chain covered-call strategy managed by Bitwise, with a staged deployment beginning in the week of August 17.

## What changed

Up to 60% of LBTC backing may enter an actively managed derivatives mandate held through qualified custodians, adding custodian, counterparty, options, and manager dependencies while targeting 2.5% net APY in bitcoin terms.

## What did not change

Lombard says the LBTC token contract, mint and redeem logic, RedStone price feed, Chainlink CCIP bridge, proof-of-reserve attestations, and existing integrations were unchanged. The source does not establish a change to BTC.b's own mechanics.

## Confirmed

- The announced active-allocation cap is 60% of LBTC backing.
- Lombard identified Anchorage Digital Bank and Kraken Institutional as custodians for the active allocation.
- Bitwise has trading authority but, according to Lombard, cannot withdraw, transfer, or rehypothecate the assets.
- The transition began with a planned $10 million pilot and gradual scaling.
- The 2.5% net APY is a target, not a guarantee.

## Still open

- The actual active allocation and realized yield on each date after launch.
- Independent verification of the stated tri-party, bankruptcy-remoteness, and no-rehypothecation protections.
- Loss-allocation mechanics across strategy losses, any insurance fund, and LBTC holders.
- Whether and how the Lombard BTC.b product shares the changed LBTC strategy or custody structure.

## What it means for an advisor

- Review the Lombard memo's custody, counterparty, derivatives, liquidity-buffer, and loss-allocation analysis.
- Do not apply LBTC's targeted yield or new structure to BTC.b without product-specific evidence.
- Treat the strategy's historical performance as non-guaranteed and not equivalent to LBTC performance.

## Previous interpretation

The existing Lombard assessment predates the move from staking-derived yield to an institutionally managed covered-call strategy.

## Sources

1. [LBTC Moves to Institutional Yield: Targeting 2.5% Net APY, Strategy Managed by Bitwise](https://www.lombard.finance/blog/LBTC-Moves-to-Institutional-Yield-Managed-by-Bitwise/) · Lombard Finance · 2026-08-13


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Published by Ketju Research on RIADeFi (https://riadefi.com). Educational research for financial professionals; not investment, legal, tax, or compliance advice.