Bitcoin L2 Labs, the core development team behind Stacks, has announced the successful mainnet launch of a 1:1 Bitcoin-backed programmable asset, sBTC. This marks a major step toward building an on-chain Bitcoin economy and follows October’s Nakamoto Upgrade, which brought faster transactions and 100% Bitcoin finality to the Stacks network.
For the broader Bitcoin community, this is more than just a milestone; it signals a new era of programmable Bitcoin. The world’s most secure blockchain can now actively participate in decentralized finance (DeFi).
sBTC debuts on Stacks mainnet
sBTC is designed to unlock Bitcoin (BTC) liquidity and comes after Stacks initiated the Nakamoto Upgrade in late August. It will allow BTC holders to access DeFi opportunities while maintaining Bitcoin’s unparalleled security principles.
Specifically, users can engage in DeFi applications such as lending and borrowing on protocols like Zest, decentralized exchanges (DEXs) like Bitflow and ALEX, or even AI-powered tools like aiBTC.
“Unlike locking BTC in proof-of-stake systems, sBTC is fully expressive and enables an on-chain Bitcoin economy. It can power decentralized lending, DEXs, AI bots and more, while inheriting 100% of the security of Bitcoin's hashing power,” said Muneeb Ali, founder of Stacks, in a press release shared with BeInCrypto.
Among the main features of sBTC is its 1:1 Bitcoin backing, where the crypto pioneer fully collateralizes each sBTC token. Secondly, there is the institutional signatory network, which reduces the reliance on single entities, thus increasing trust.
Furthermore, sBTC has 100% Bitcoin finality, meaning it is secured by Bitcoin’s hash power, ensuring strong security. Furthermore, the product is open-source and transparent, offering transparency and verifiability to developers and users.
However, the current mainnet phase introduces deposit-only functionality, capped at 1,000 BTC. Despite this limitation, this cap will provide initial liquidity for developers and enable further integrations with institutional custodians and ecosystem partners.
According to the press release, withdrawals will only be available in Q1 2025 as the system transitions to a fully open and permissionless set of signers. Depositors will also earn annual rewards of up to 5% in sBTC for holding the asset, presenting a unique yield opportunity for Bitcoin holders.
Unlocking the full potential of Bitcoin
Meanwhile, the launch of sBTC is poised to bring Bitcoin closer to Ethereum’s dominance in the DeFi space. While Ethereum boasts a total value locked (TVL) approaching $80 billion, according to data from DefiLlama, Bitcoin is fast approaching it after overtaking Binance Smart Chain (BSC).
Bitcoin TVL. Source: DefiLlama
The successful launch of sBTC lays the foundation for a stronger Bitcoin Layer-2 ecosystem. The gradual increase in the BTC cap, the introduction of withdrawals, and the transition to a permissionless signatory network could further boost adoption. With sBTC, Bitcoin is no longer just a store of value, but a versatile asset for decentralized applications (dApps).
“With sBTC, Bitcoin becomes highly capable beyond a store of value, unlocking the full potential of BTC in decentralized applications,” emphasized Andre Serrano, Head of Product at Bitcoin L2 Labs.
This development also expands opportunities for DeFi builders. Zest Protocol, for example, allows users to earn additional rewards while holding sBTC.
“Earn more Zest points. Simply holding sBTC earns users a 5% yield, thanks to Stacks’ rewards program. With Zest, users can boost their sBTC yield,” the platform noted.
As Bitcoin capital flows into DeFi protocols, builders, developers, and users will benefit from increased liquidity and innovative financial tools.
The post sBTC Launches on Stacks, Bringing Bitcoin DeFi to Life appeared first on BeInCrypto.
