DeFi Guide: Earning yield and borrowing with stSTX on Zest

Zest has recently enabled stSTX borrowing, unlocking new strategies relying on stSTX within Stacks DeFi.

This means that it’s now possible for Stacks users to:

• Earn yield on their stSTX deposit on Zest
• Use stSTX as collateral to borrow even more of it on Zest

Thanks to this new feature, users can potentially maximize their Stacking DAO and Zest point generation.

Here is everything you need to know to get started on Zest with stSTX.

Earning Yield on stSTX

By simply depositing stSTX on Zest, users start earning fees from borrowers.

The process takes under 1 minute, as users just need to visit Zest Protocoland select stSTX as the asset to deposit from the “Assets to supply” box.

By providing liquidity, users are now earning:

• Stacking DAO and Zest points
• Stacking Rewards and yield on Zest

Moreover, as overall stSTX borrowing increases and pool caps become less stringent, the yield earned by depositors should increase further.

Borrowing stSTX

With stSTX deposited as collateral, users can also leverage it to borrow more of it.

This strategy could be used to accelerate and maximize Stacking DAO and Zest points accumulation.

For instance, depositing 100 stSTX on Zest Protocol generates 150 Stacking DAO points per day.

By also borrowing 50 stSTX against the deposited liquidity brings the total to 225 points per day.

By supplying the borrowed stSTX amount back on Zest, there are now 150 stSTX on the Zest Protocol, generating approximately 333 Zest points per day at current STX prices.

Otherwise, the borrowed stSTX could be used to trade memecoins, provide liquidity in other DeFi projects, and many other possibilities.

To start borrowing stSTX, users only need to click the Borrow button for the stSTX asset and specify the desired loan amount.

Because the loan-to-value ratio for stSTX is 50%, by depositing $1000 of collateral, it’s possible to borrow up to $500 in stSTX.

Stacking DAO Details:

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