Stacking DAO and the Future of Stacks DeFi: New Strategies for Yield and Growth with stSTX

Stacking DAO is the leading protocol on Stacks, having made over 54 million stacked STX liquid and usable in DeFi.

By doing so, Stacking DAO has supported DeFi protocols like Zest, Bitflow, and Hermetica in bootstrapping initial liquidity and growing their user base by providing the growing stSTX community with opportunities to earn additional yield and rewards.

Use cases like borrowing against stSTX on Zest, providing stSTX liquidity in pools on Bitflow and Velar, or borrowing stablecoins with stSTX on Arkadiko enable more advanced DeFi strategies on Stacks.

However, just like in other ecosystems, liquid staking tokens have the potential to further empower DeFi protocols.

Let’s explore DeFi applications that could leverage stSTX to offer additional yield sources, but are not yet available on Stacks.

1)Vaults Amplifying Stacking Rewards

DeFi vaults are well-spread across other chains as they enable autonomously executing complex DeFi strategies to offer greater rewards.

A straightforward yet powerful model is the InstaDapp Lite Vault, which deposits stETH (Lido's liquid staking token for ETH) into lending protocols and employs a leverage strategy to increase exposure to staking rewards by borrowing additional ETH and converting it back into stETH.

This product can be replicated on Stacks using stSTX and Zest, with users assured of the yield since staking rewards provide a consistent and reliable yield stream.

2)Stacks 2x Index

STX has been performing as a high beta play for Bitcoin and some might even like to maintain a specific STX leverage ratio to obtain an amplified exposure to STX price.

For example, IndexCoop on Ethereum has launched an index token that maintains 2x leverage on ETH by borrowing USDC against deposits in lending markets, which are then converted back into ETH. The position is automatically rebalanced to maintain the 2x leverage.

This strategy could be similarly replicated by depositing stSTX on Zest, borrowing aeUSDC, converting it back to stSTX, and implementing automatic rebalancing to maintain the target leverage multiple.

3)Yield Farming Aggregator

Many protocols allow users to deposit assets into vaults that employ sophisticated DeFi strategies to optimize and diversify yield sources.

For instance, USDC in the vault could be allocated across various DeFi protocols to manage risk and enhance yield with a single click. Clip Finance is a great example of this approach.

As the Stacks DeFi landscape evolves, a protocol that automatically deposits Stacks assets across platforms like Stacking DAO, Zest, Bitflow, Velar, Arkadiko, Hermetica, and others could provide users with comprehensive exposure to yield opportunities across the entire network.

Stacking DAO could serve as a cornerstone for yield aggregators due to its high Stacking rewards potential. Additionally, there could be dedicated vaults designed to maximize yield from stSTX across various DeFi protocols

Conclusions

In conclusion, while there are various DeFi protocols utilizing stSTX that are not yet available on Stacks, they have the potential to attract many Stacking DAO users by offering new yield sources and rewards.

As the Stacks ecosystem expands with new developers and users, it’s natural to anticipate the emergence of innovative use cases for stSTX.

If you're interested in being part of this exciting development, reach out to us on Discord or Twitter!

Stacking DAO Details:

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