stSTX: Unlocking $700M+ and Supercharging Stacks DeFi

STX Stacking represents a massive market worth over $700M at current prices.

Yet, this capital has largely remained inactive within the ecosystem, given Stacked STX remains locked.

The launch of the Stacking DAO liquid staking protocol has made 13% of the total stacked STX ($90M+) liquid and available for deployment within Stacks DeFi through stSTX (Stacking DAO liquid staking token).

The rapid adoption of stSTX has been underscored by several key on-chain metrics since the protocol’s launch in December 2023.

• According to DeFiLlama, Stacks’ TVL surged from $40M to $170M
• Data from Signal 21 shows that Stacks' monthly active users grew from just a few hundred to several thousand
• Stacking DAO now drives 2 STX of volume for every 50 STX traded on the Stacks network

But the ultimate proof is the stSTX usage within the various Stacks DeFi protocols, with 48% of available stSTX deployed by over 21k users across Hermetica, Zest, Velar, Arkadiko, and Bitflow.

In percentage terms, stSTX has a higher adoption rate in DeFi than other chains liquid staking tokens, given only 30% of minted stETH is utilized in Ethereum's DeFi ecosystem and 35% of JitoSOL in Solana's.

Now, how is stSTX actually distributed across Stacks DeFi, and what are the benefits of using each protocol?

1)Zest Protocol

Zest is a Bitcoin lending and borrowing dApp that enables users to lend their Stacks assets, including stSTX, to earn yield while also using this capital as collateral to borrow stablecoins and other tokens.

17.52M+ stSTX, worth over $27M+, are deposited on the protocol, representing around 88% of their TVL.

Zest's popularity as the DeFi protocol with the most stSTX likely comes from letting users keep their STX positions and continue earning Stacking rewards while borrowing assets to pursue more advanced DeFi strategies, like generating yield and earning points on other platforms.

Another strategy involves using leverage to borrow additional stSTX, further boosting the yield and points earned through Stacking DAO and Zest.

2)Bitflow DEX

Bitflow is the top DEX aggregator on Stacks, helping users secure the best swap rates across various decentralized exchanges and liquidity pools.

Over 3 million stSTX (valued at $4.5M+) have been deposited, representing 30% of the platform's TVL.

By depositing in the stSTX-STX pool and by escrowing the LP position, users accumulate Bitflow points and get a boost on Stacking DAO points.

Additionally, stSTX is the second most traded token on Bitflow, and liquidity providers are actively earning swap fees from these trades.

3)Arkadiko Protocol

Arkadiko lets users deposit stSTX and STX liquidity into vaults to borrow USDA stablecoins.

Currently, around 4.6 million stSTX ($7.2M) are locked as vault reserves to mint USDA, representing 75% of the protocol's TVL.

By borrowing USDA through stSTX, users can either deposit the stablecoin into the Arkadiko liquidation pool to earn 33% APR in DIKO rewards or leverage it as a stablecoin asset within the Stacks ecosystem for further opportunities.

4)Velar

Velar is developing multiple protocols on Stacks and Bitcoin L2s, including a DEX, PerpDEX, and a token launchpad. Velar is also the Stacks DeFi protocol with the most active users in the last 30 days.

Users can deposit stSTX into the stSTX-USDC pool to earn yield from swap fees.

While the pool's TVL isn’t high yet, the upcoming stSTX-STX pool is expected to attract much more liquidity.

5)Hermetica

Hermetica launched the stSTXearn vault, using an automated options strategy to generate returns on deposited stSTX.

Currently in Beta and accessible only to WL addresses, the vault has already attracted over 750k stSTX ($1.3M+).

Why is there so much liquidity in closed beta? The vault averaged a 16.2% annualized return on STX in a 4.5-year backtest.

Conclusions

Stacking DAO has been instrumental in unlocking the potential of the Stacks DeFi ecosystem, giving users a solid incentive to stay active within the network.

With multiple protocols integrating stSTX, they’ve tapped into its liquidity to bootstrap their communities, while Stacking DAO continues to hit new growth milestones both on-chain and across social platforms.

Stacking DAO Details:

Mint stSTX today and earn up to 10% yield on your STX: https://app.stackingdao.com/

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