sBTC on Stacks Launches for Bitcoin Yield Opportunities
Bitcoin maxis should note that sBTC on Stacks is now available, designed to enhance the utility of bitcoin, according to Andre Serrano, head of product at Stacks.
Serrano stated that users earn yield by both holding and deploying sBTC in DeFi.
Key Insights:
- Mint and hold sBTC: Bridging bitcoin into sBTC (a 1:1 bitcoin-backed asset secured via Stacks) allows users to earn rewards in bitcoin. Rewards are distributed biweekly as BTC, with no inflationary tokens involved.
- Deploy in DeFi: Additional incentives can be earned through Stacks-native DeFi protocols like Zest, which offers 6-7% APY on top of the base 5% by supplying sBTC.
sBTC maintains liquidity, allowing users to earn rewards without staking or locking it up. However, withdrawals back to the Bitcoin network will not be available until March 2025. Alternative bridging options to chains like Solana and Aptos via Axelar are expected in January, pending liquidity constraints.
sBTC utilizes a threshold signature 15-key multisig setup managed by community signers. A minimum of 11 out of 15 signers must act honestly for security. Reputable firms like Blockdaemon and Kiln have been onboarded as signers, securing billions in assets while earning bitcoin rewards to align incentives.
The long-term plan includes integrating sBTC into the Stacks consensus mechanism to decentralize further and enhance security, aligning trust assumptions with those of Stacks.
Updated Dec. 17, 2024: Clarified that the honest majority assumption requires a 70% majority — meaning 11 out of 15 signers must act honestly.