Bitcoin L2 Core Launches Liquid Staking for BTC

The Core Foundation announced Thursday a BTC-backed liquid staking token on the Bitcoin-backed Layer 2 “Core” network.

The token named LstBTC will be an ERC-20 token 1:1 with BTC, adding daily rewards to holders.

Liquidity on Bitcoin

According to Core DAO, share rewards will be paid in CORE tokens – the core network's native utility and governance token.

“LSTs are the missing ingredient in Bitcoin DeFi, and the introduction of LstBTC will help jump-start the Core ecosystem,” said Rich Rines, the original promoter of Core DAO. “With LstBTC, the Core ecosystem will attract new developers, who are expected to launch their own LSTs on Core.”

Core is an EVM-compatible Bitcoin sidechain that uses mining and proxy proofing – a consensus mechanism called “Satoshi Plus”. This allows Bitcoin to inherit Bitcoin's security creatively by incorporating more functionality than L1 can offer.

Native Bitcoin staking is now a reality thanks to the builders in Babylon, who found a way to secure the security of many other blockchains to allow average Bitcoin users to stake their BTC in their own custody, such as Core. Once transparent proof-of-stake networks like Ethereum and Solana are granted rights, BTC holders will soon be able to access the serial production from multiple L2 blockchains simultaneously.

Traditionally, stock has been associated with the desire to lock in an asset in order to gain access to production. However, storing liquidity gives users complete freedom to move around and trade BTC, while still earning passive production, and possibly deploying it for additional production in other DeFi protocols.

When LsBTC comes up on Core, it is backed by BTC held in a multi-signature wallet on Bitcoin L1. This introduces a new level of confidence in regular BTC holdings, meaning that it is technically possible to generate investors.

“Multisig wallets undergo strict security audits, ensuring that users' assets are well protected, while still allowing them to benefit from the transactions and rewards provided by LstBTC,” Core DAO explained.

Bitcoin's expanding DeFi ecosystem

On Thursday, the Zest protocol on Stacks Bitcoin L2 also announced the launch of its liquid staking token BTCz. Unlike LstBTC, this token will appreciate in value over time as BTC support BTCz gradually grows.

The Stacks blockchain regularly checks their security for Bitcoin L1, and its smart contracts have the ability to read the state of Bitcoin. Stacks rolled out the final phase of the Nakamoto update late last month, enabling faster trading of orders on Stacks.