Bitcoin joins the DeFi ecosystem

Bitcoin L2 Labs, the core development team behind Stacks, a programmable 1:1 Bitcoin-backed asset, has announced the successful mainnet launch of sBTC. The on-chain Bitcoin economy marks a major step forward and follows October's Nakamoto upgrade, which brought faster transactions and 100% Bitcoin settlement to the Stacks network.

For the wider Bitcoin community, this is more than a milestone – it marks 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 Stakes launched the Nakamoto upgrade in late August. It allows BTC holders to access DeFi capabilities while maintaining Bitcoin's unmatched security principles.

In particular, users can participate in DeFi applications such as lending and borrowing on protocols such as Zest, decentralized exchanges (DEXs) such as Bitflow and ALEX, or AI-based tools such as aiBTC.

“Unlike locking BTC in a proof system, sBTC is fully transparent and enables an on-chain Bitcoin economy. Inheriting the security of 100% of Bitcoin's hash power, it can power decentralized lending, DEXs, AI bots, and more,” Stack founder Munib Ali said in a press release to BeInCrypto. He said in a statement.

Among the key features of sBTC is 1:1 Bitcoin support, where the crypto pioneer fully validates every sBTC token. Secondly, there is an institutionalized signatory network, which reduces dependence on individual entities, thereby increasing trust.

In addition, sBTC has 100% Bitcoin finality, which means it is protected by Bitcoin hash power, ensuring strong security. In addition, the product has transparent, open source code, which provides transparency and assurance to developers and users.

However, the current mainnet tier introduces a deposit-only functionality, capped at 1,000 BTC. Despite this limitation, this cap provides initial liquidity to developers and enables further integration with institutional custodians and ecosystem partners.

According to the press release, downloads will only be available in Q1 2025 when the system transitions to a fully open and license-free signer suite. Depositors will receive annual rewards of up to 5% in sBTC for holding the asset, providing a unique opportunity for Bitcoin owners.

Unlocking the full potential of Bitcoin

Meanwhile, the launch of sBTC is set to bring Bitcoin closer to Ethereum's dominance in the DeFi space. While Ethereum has reached $80 billion in Total Value Locked (TVL), according to Defillama, Bitcoin is fast approaching after the Binance Smart Chain (BSC) flip.

The successful launch of sBTC lays the foundation for a strong Bitcoin Layer-2 ecosystem. A gradual lifting of the BTC cap, the introduction of cash withdrawals, and the transition to a license-free signer network could drive further 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 scalable beyond a store of value, unlocking BTC's full potential in decentralized applications,” said Andre Serrano, Head of Product at Bitcoin L2 Labs.

This development increases opportunities for DeFi developers. For example, the Zest protocol allows users to earn additional rewards when they hold sBTC.

“Earn more Zest Points. It gives users a 5% yield for holding only sBTC, a reward program for Stacks. With Zest, users can charge their products with sBTC, the platform said.

As Bitcoin capital flows into DeFi protocols, builders, developers and users will benefit from improved liquidity and innovative financial tools.