Bitcoin is hard to wedge into DeFi, so the yields he was talking about were probably on centralized exchanges. He was likely even referring to Celsius, which has since popped. What has changed since then is DeFi tools like Thorchain single sided vault deposits that let people earn yield on Bitcoin without giving up custody. Unsurprisingly Erik has been one of the most vocal proponents of Thorchain itself.

For a really quick summary, Thorchain provides Uniswap style liquidity pools such as BTC/RUNE that allow people to do one shot trades that can be routed across major blockchains, and liquidity providers collect fees on every trade. Typically liquidity providers are also exposed to RUNE due to the nature of how XYK liquidity works. These new vaults are special because they lack RUNE exposure, but they are also only allowed to make up something like 10% of the liquidity pool, so deposits are limited.

I've been incredibly vocal about how anything promising >10% yields is a scam. It's the reason I built ponzi.finance (which never got popular, but was fun while it lasted). Yields greater than 10% are always either temporary, or straight up fraud. I'd still tend to agree with Erik though that your claim that you can't earn yield on BTC was incorrect, though the counter-party risk at the time was not ideal. Counter-party risk is, of course completely unavoidable in legacy finance systems, and the overhead costs to properly mitigate it are (IMO) unsustainable in a world with easily accessible DeFi tooling.

Counter-party risk is what makes lending useful. The lender gives up control of the resources so that the borrower can use them. This is where the risk arises from. Defi has invented a new form of lending, without counter-party risk. It's "interesting" indeed but not very useful.

>presumably via exactly that sort of opaque, centralized exchange

Obviously Erik did not mean via centralized exchanges. You can lend your Bitcoin on countless decentralized protocols for those yields- even risklessly with flash loans via a dApp like Aave. With non-risk-free lending you can assess and knowingly accept your desired level of risk via fully auditable open ledgers.

If I lend Bitcoin on a decentralized protocol, who has the private key to the wallet I transfer the Bitcoin to? At some point I'm still trusting a centralized bridge, right?

You still hold the keys and can withdraw at any time. That's the point if non-custodial DeFi.

If you withdraw more than your interest and in some other crypto than your collateral then your loan now has leverage. During that particular withdraw transaction you will have signed some logic which can automatically liquidate your lent crypto if the amount you withdrew (minus interest) becomes worth less than your collateral.

Until that pre-signed liquidation transaction executes you are fully in control of the balance and keys.