150 BTC of Initial Capacity: How stBTC Brings Bitcoin Staking Yield Onchain

Bitcoin Staking launches on Stacks on September 10 through the Genesis Bond, opening a new way to earn Bitcoin denominated yield.

Alongside the initial institutional participation, Stacking DAO is bringing Bitcoin Staking yield onchain through stBTC with an initial pooled capacity of 150 BTC.

stBTC is Stacking DAO’s liquid staking token for Bitcoin, giving holders a way to access Bitcoin Staking yield while keeping their position liquid and usable across Stacks.

This guide covers what stBTC is, why it matters for Bitcoin native finance, how the pooled Bitcoin Staking position works, and how to deposit once it goes live.

What Is stBTC?

stBTC is Stacking DAO’s liquid staking token for Bitcoin. It represents a Bitcoin Staking position while remaining liquid and usable across Stacks. Users enter with sBTC, or with native BTC, and receive stBTC in return.

From there, stBTC does two things at once. It earns Bitcoin Staking yield in the background while remaining transferable and usable across Stacks DeFi.

That liquidity gives stBTC uses beyond simply holding it. stBTC will be usable as collateral on Zest Protocol and will sit at the center of Zest Protocol’s first Stacks Vault, an automated strategy that uses stBTC as collateral to borrow sBTC and stake it into more stBTC.

As rewards accrue, the amount of sBTC represented by each stBTC increases automatically. There is no need to manually claim each reward distribution.

The idea is similar to liquid staking tokens on other networks: instead of choosing between earning staking yield and keeping an asset liquid, holders receive a token that represents the underlying staking position while remaining usable onchain.

How Does stBTC Work?

The process starts when a user enters with sBTC, or native BTC that is first converted through the sBTC peg path.

Once deposited, Stacking DAO manages the sBTC backing stBTC across two areas: a liquid reserve used to support withdrawals and PoX-5 sBTC bond positions that participate in Bitcoin Staking. stBTC therefore represents a liquid claim on an underlying pool that includes both reserve liquidity and deployed sBTC.

For stBTC, the underlying sBTC participates in Bitcoin Staking through the PoX-5 sBTC bond path, using smart contracts on Stacks. This is separate from the native BTC bonding path, where BTC remains on Bitcoin L1.

Bitcoin Staking also requires STX equal to roughly 5% of the paired Bitcoin value under the initial protocol parameters. stBTC users do not need to supply that STX separately. The required STX comes from backing associated with Stacking DAO’s stSTX and stSTXbtc products.

Bitcoin Staking rewards come from Stacks Proof of Transfer which has distributed 4,200+ BTC since January 2021. Bitcoin miners bid BTC for the right to produce Stacks blocks, and that BTC funds staking rewards.

stBTC targets approximately 2.6% net yield from Bitcoin Staking. Those rewards accrue in sBTC and, as they are claimed and reinvested, the stBTC to sBTC value ratio gradually increases over time.

When a holder wants to exit, stBTC is redeemed back into sBTC at the prevailing stBTC to sBTC ratio, including the rewards that have accrued.

Stacking DAO’s design includes two withdrawal paths: an instant withdrawal supported by the liquid reserve for a small fee, or a standard withdrawal with a cooldown of approximately one staking cycle.

How to Deposit Into stBTC

stBTC will initially support up to 150 BTC of capacity, so deposits will be subject to available room in the pool. Users can stake BTC directly on app.stackingdao.com ahead of the September 10 launch.

Users can access the product through the Stacking DAO app, connect a supported Stacks wallet, select Bitcoin as the staking option, and choose whether to enter with sBTC or native BTC.

After confirming the amount to deposit, users will receive stBTC at the current stBTC to sBTC ratio. From there, stBTC can be held or used across supported Stacks applications while Bitcoin Staking rewards accrue automatically.

When you want to exit, redeem stBTC back into sBTC using the available withdrawal option.

Frequently Asked Questions

What is the difference between stBTC and sBTC?

sBTC is a BTC asset on Stacks. stBTC is Stacking DAO’s liquid staking token, backed and rewarded in sBTC while its underlying positions participate in Bitcoin Staking.

Where does stBTC yield come from?

stBTC yield comes from Stacks Proof of Transfer. Bitcoin miners bid BTC to produce Stacks blocks, and that BTC funds Bitcoin Staking rewards. Proof of Transfer has distributed more than 4,200 BTC since January 2021.

Do I need to hold STX to use stBTC?

No. Bitcoin Staking requires STX to be paired with the underlying Bitcoin value, but Stacking DAO provides the required STX from backing associated with stSTX and stSTXbtc. stBTC holders do not need to supply STX separately.

Can I use stBTC while earning Bitcoin Staking yield?

Yes. stBTC remains liquid and transferable while the underlying position earns. It can be used across supported Stacks DeFi applications, including as collateral on Zest Protocol.

How do I withdraw from stBTC?

stBTC is redeemed back into sBTC at the current stBTC to sBTC ratio, including accrued rewards. Stacking DAO’s design includes an instant withdrawal through its liquidity reserve for a small fee and a standard withdrawal with a cooldown of approximately one staking cycle.