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Bitcoin Maxis, it's time to take notice – sBTC on Stacks is here, and it's designed to allow your bitcoin to run overtime, according to Andre Serrano, head of product at Stacks.
“The nice thing about this is that you are eligible to earn that return by holding it as well as deploying it in DeFi,” Serrano told Blockworks.
Here is the alpha:
- Mint and Hold sBTC – By merging Bitcoin into sBTC (a 1:1 Bitcoin-backed asset secured via Stacks), users become eligible for rewards (bitcoinismore.org) paid in Bitcoin, not in inflationary points or tokens. Rewards are distributed every two weeks – Bitcoin in and Bitcoin out – in a simple and clean way
- Deployment in DeFi – The rewards don't have to stop there. Native DeFi protocols like Stacks Enthusiasm Offer additional incentives in addition to the basic 5% rule. For example, by saving sBTC in Zest, a liquidity protocol for Bitcoin, users can stack another 6-7% APY in additional incentives.
Kicker? Unlike other Bitcoin-related solutions, sBTC remains liquid, and you do not need to stake or lock it to earn rewards. However, there is one caveat: withdrawals will not be enabled back into the Bitcoin network until March 2025. So, for the least trustworthy way to return, you will need to wait.
But sBTC is expected to soon be deliverable to chains like Solana and Aptos via Axelar, expected in January. Therefore, there could be an indirect route back to Bitcoin via these protocols, subject to liquidity constraints.
On Stacks, sBTC currently relies on a 15-key multi-sig setup, where 15 community signatories manage deposits and withdrawals. This works under the honest majority assumption, meaning that at least 11 out of 15 sites must act honestly for the system to remain secure.
To enhance trust, Stacks has onboarded professional and reputable signers such as Blockdaemon and Kiln, companies known for securing billions in assets across multiple chains. These signatories also post collateral and earn Bitcoin rewards for maintaining the protocol, aligning incentives to ensure security.
Looking ahead, the plan is to gradually decentralize the system by integrating sBTC into the Stacks consensus mechanism, where all Stacks signatories will eventually participate. This will further strengthen security, bringing trust assumptions closer to those of Stacks themselves.
Updated December 17, 2024 at 3 PM ET: It has been clarified that the honest majority assumption has a majority threshold of 70% - meaning that 11 out of 15 signatories must act honestly, instead of 8 as previously mentioned.
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