KOL Pager on sBTC

Stacks is the leading Bitcoin L2 that unlocks BTC capital with new use cases, leveraging 100% Bitcoin finality and security, and benefiting from fast transactions. Activate the Bitcoin economy with Stacks.

What is sBTC?

sBTC is a 1:1 Bitcoin-backed asset on the Stacks Bitcoin L2 that will allow developers to create efficient use cases for BTC, opening the door to Bitcoin DeFi, NFTs, and more.

Unlocking BTC liquidity is a key factor, especially considering that Ethereum's DeFi ecosystem has a significantly higher TVL despite only accounting for 25% of Bitcoin's market cap.

The goal of sBTC is to unlock over $2 trillion in BTC liquidity for DeFi and dApps through Stacks, paving the way for a thriving Bitcoin economy.

sBTC is operated by a large number of signers, including institutional giants like BitGo, Asymmetry, Ankr, making it one of the most decentralized BTC versions on L2. More importantly, transactions on L2 are protected by a 100% Bitcoin security budget, making BTC transactions on L2 as irreversible as those on L1.

How does sBTC work?

The user journey begins with a transaction on the Bitcoin mainnet, where BTC is deposited into a multi-signature protocol monitored by a decentralized group of Stacks signers.

Once BTC is deposited, sBTC is minted on Stacks, allowing users to interact with DeFi dApps.

Due to this design, users can even access Bitcoin DeFi without knowing it is on Stacks. For example, Zest Protocol will support mainnet BTC deposits, automatically converting them to sBTC. As sBTC has the potential to become a Gas token charged on Stacks in the future, the user experience will be further enhanced.

KOL Pager on sBTC

Is there a cap on sBTC?

At this stage, a deposit cap of 1,000 BTC will be implemented for controlled testing, while ongoing security work continuously strengthens the protocol as it scales.

Initially, only deposits will be supported, and withdrawals will not be possible temporarily.

Will sBTC have yield?

Imagine earning Bitcoin rewards just by holding BTC. No staking, no points, no complexity—just Bitcoin rewards in your wallet. Early users of sBTC will receive an annualized 5% when they connect their wallets to https://bitcoinismore.org/ (going live at 11 AM EST on December 17).

This can now be achieved through the sBTC rewards program. Early users will earn BTC rewards (distributed in sBTC) simply by holding sBTC.

The sBTC rewards program is supported by a group of stackers "Stacking" STX.

When stacking STX, stackers receive BTC through Stacks' consensus mechanism. To enable the sBTC rewards program, these stackers will transfer corresponding proof of BTC reward contributions to the sBTC rewards pool.

BTC in the rewards pool is directly deposited into a smart contract, which deposits BTC into sBTC and proportionally distributes rewards to sBTC holders. The protocol takes a snapshot of users' sBTC holdings daily and distributes rewards every two weeks (the length of the PoX cycle).

Currently, the expected annual Bitcoin reward is 5%, distributed bi-weekly.

KOL Pager on sBTC

What are the main features of sBTC?

KOL Pager on sBTC

DeFi Use Cases: Additional Yield

Where can sBTC be used?

Multiple DeFi protocols will support sBTC, allowing users to earn additional yields beyond the target 5% just by holding sBTC:

1) Bitflow Decentralized Exchange:

https://x.com/Bitflow_Finance

Liquidity Pool: Users can deposit sBTC into Bitflow's liquidity pool, facilitating trades and earning a portion of the trading fees.
Liquidity Mining: Liquidity providers can stake their LP (liquidity provider) tokens in liquidity mining programs to earn additional rewards, typically from trading activity or platform incentives.
Early predictions suggest that annual yields for sBTC deployed will increase by 10-30%.
Bitflow Runes AMM
Bitflow introduces Stacks L2 Runes AMM, allowing you to bring Runes to L2 for a better user experience.

2) Zest - Lending Market

https://x.com/ZestProtocol

sBTC will be listed on the Zest Protocol lending market from day one.
Zest Protocol will launch yield-boosting activities on the Zest Protocol lending market from day one, with a BTC yield rate of up to 10% of the sBTC supply.

Zest will also unlock more DeFi strategies involving sBTC, such as:

Deposit sBTC to earn up to 10% annualized yield on BTC.
Borrow USDh stablecoin (or other stablecoins and exchange them for USDh) using BTC as collateral.
Stake USDh on Hermetica to earn up to 25% APY on stablecoins.

https://x.com/HermeticaFi (The annual yield for the USDh stablecoin on Stacks is 25%).

Note: Hermetica's DeFi protocol offers USDh, the first yield-bearing stablecoin backed by Bitcoin. The yield is sustainably generated through perpetual funding rates on centralized exchanges and paid out daily.

stSTXbtc is a new liquid staking token that users can deploy on Stacks DeFi. By holding this token, users will receive stacked rewards of up to 10% API, paid directly in sBTC to your wallet.

3) Velar Decentralized Exchange

https://x.com/VelarBTC

Liquidity Provision: Users can provide sBTC to Velar's liquidity pool, facilitating trades and earning a portion of the trading fees generated by the platform.
Liquidity Mining: By participating in liquidity mining programs, users can stake LP tokens earned by providing sBTC liquidity to earn additional rewards in Velar's native token or other incentives.
Staking: If Velar introduces sBTC staking options, users can lock their sBTC in a staking contract to earn rewards, such as additional tokens or percentage yields, to support network operations.
Velar will have its own incentive program, allowing you to earn Velar's native token VELAR by deploying sBTC in one of its DEX pools.

4) Arkadiko - USDA Stablecoin

https://x.com/ArkadikoFinance

Arkadiko will allow sBTC to be used as collateral within its protocol through governance voting, enabling users to borrow USDA or other assets against their held Bitcoin.

5) ALEX DEX

https://x.com/ALEXLabBTC

Users can deposit sBTC into liquidity pools on ALEX and pair it with another asset (like STX or stablecoins). By doing so, they facilitate trades on the platform and earn a portion of the trading fees generated by the mining pool.

ALEX will receive bonus yields in the form of its native token ALEX through the Surge event. This means that in addition to the 5% APY from the sBTC rewards program, you can earn yields by pooling sBTC and receive additional ALEX token rewards.

6) Granite (not yet launched) - Lending Protocol

https://x.com/GraniteBTC

Borrowers can obtain stablecoin loans by collateralizing Bitcoin, while liquidity providers earn yields by supplying stablecoins to the protocol.

Lending: Users can deposit sBTC as collateral to borrow stablecoins, which can then be deployed in various DeFi strategies for yield.
Participate in Liquidation: Users can act as liquidators, repaying under-collateralized loans in exchange for collateral and rewards, thus earning through the liquidation process.

Granite currently has a waitlist, allowing early registrants to gain early access. Ultimately, a points system will bring additional benefits, giving early access registrants a significant advantage.

https://www.granite.world/waitlist

How does sBTC differ from other Bitcoin assets like wBTC, cbBTC, ecc, etc.?

These BTC assets typically require sending BTC to intermediaries or rely on trusted signer alliances/small multi-signers.

sBTC will initially rely on a team of 15 signers, including enterprise-level institutions such as BlockDaemon, Figment, Luganodes, and Kiln, to handle the pegging and unpegging. Over time, this responsibility will shift to all Stacks signers, allowing anyone to participate in the security and decentralization of the network. BitGo, the Aptos Foundation, and other institutions are also expected to join this effort.

Additionally, thanks to the design of Stacks, sBTC will benefit from 100% Bitcoin finality, meaning that transactions on the Stacks layer will be as irreversible as Bitcoin.

Note: Signers are responsible for verifying and approving each generated block; anyone can become a signer, provided they have enough STX stacked to become an individual signer—similar to the concept of validators.

Additional

1) sBTC Additional Materials

- sBTC Website: https://www.stacks.co/sbtc

- sBTC Documentation: https://docs.stacks.co/concepts/sbtc

- sBTC Deck: https://www.stacks.co/sbtc-deck

2) Nakamoto Upgrade Information

- Nakamoto Website: https://www.nakamoto.run/

- Documentation: https://docs.stacks.co/nakamoto-upgrade/nakamoto-upgrade-start-here

The Nakamoto upgrade is crucial as it provides:

Fast block times (reduced from the current 10 minutes to under 1 minute, with optimizations ongoing)
100% Bitcoin determinism

Fast Blocks: Fast blocks bring a Solana-like experience to transactions and Bitcoin DeFi interactions, greatly improving the overall user experience when interacting with Stacks L2.

The Stacks DeFi ecosystem has grown significantly this year, allowing DeFi strategies to be applied in just a few seconds, facilitating onboarding and retention.

Before the Nakamoto hard fork, Stacks blocks were synchronized with Bitcoin blocks at a stable average of 10 minutes, making the chain slow and insufficient to meet the demands of DeFi activities. This limitation is no longer in place. Instead, Stacks blocks now settle in just a few seconds, with performance regularly improving. Once Bitcoin blocks are settled, the security of Bitcoin can still be leveraged.

100% Bitcoin Finality: With the Nakamoto upgrade, transactions occurring on Stacks L2 will utilize 100% of the Bitcoin security budget, meaning that once consecutive Bitcoin blocks are settled, Stacks transactions become as irreversible as Bitcoin.

Bitcoin blocks are no longer tied to individual Bitcoin blocks but are instead tied to miner terms during which they mine several Stacks blocks that settle in seconds.

There are already 50 signers, including enterprise-level institutions like BitGo, Aptos, Luganodes, and Kiln, responsible for verifying and approving each block generated during the miner term.

The fast block times with Bitcoin finality make Stacks the most secure and scalable Bitcoin L2, operating alongside a decentralized network of signers, which will allow BTC to move to L2 in a decentralized manner through the upcoming sBTC upgrade.