Why Stacking DAO supercharges Stacks and its DeFi ecosystem growth

Liquid Staking is the largest DeFi vertical with a TVL of $59+ Billion

Lido alone has been crucial for Ethereum’s growth. It manages 30% of staked ETH, with about 45% of stETH liquidity in DeFi or Restaking apps.

Chains aiming to develop a strong DeFi ecosystem must have a good liquid staking protocol, and Stacking DAO is bringing exactly that to Stacks.

But why is Liquid Stacking a cornerstone infrastructure for Stacks?

• Users can earn Stacking yield without any complexity or friction
• It enables users to keep their STX liquid and deposit it in DeFi protocols

Before the Stacking DAO launch, users faced a choice between using their STX for Stacking or DeFi. Given Stacking was more profitable, there was less incentive to allocate STX liquidity to DeFi.

However, with the introduction of stSTX, users can now engage in both strategies simultaneously.

The impact of Stacking DAO on Stacks growth and liquidity

Although the protocol launched a few months ago, it became the second-largest Stacks DeFi protocol with $70M+ in TVL according to DefiLlama.

The first reason for Stacking DAO’s early success is how easily users can earn Stacking yield. Users can mint stSTX in one click, automatically accumulate STX rewards, and swap back to STX at any time.

With Stacking DAO, all the frictions involved with Stacking have been removed, from lock waiting times to minimum STX requirements, improving users' overall experience.

The protocol traction can be further highlighted by the growth of Stacks chain TVL in terms of STX since Stacking DAO’s launch in December 2023.
Over 25M+ STX have become liquid via stSTX, unlocking new capital that can be used across Stacks applications.

The comparison with STX liquidity within DeFi without accounting for Liquid Stacking emphasizes the role of Stacking DAO in accelerating the capital growth and availability in Stacks.

These metrics clearly indicate a strong interest in liquid stacking, whose growth lends further legitimacy and attention to Stacks as the leading Bitcoin Layer 2.

The impact of Stacking DAO on Stacks DeFi ecosystem

Liquid Stacking is much more than holding a liquid token accumulating accruing Stacking rewards. It’s about unlocking new capital and liquidity to DeFi apps to incentivize more chain activity and new yield opportunities.

Even in this context, Stacking DAO played a crucial role in bootstrapping liquidity for new Stacks protocols.

For instance, Bitflow DEX TVL currently sits at $36M+ and the stSTX-STX pool accounts for 98% of their deposits. Incorporating stSTX can fuel rapid growth for newly launched DeFi apps, tapping into a widely held asset among the Stacks community, eager to pursue additional yield.

Even Zest protocol, just a week old and still having a waiting list, has reached $4M+ TVL by enabling stSTX deposits to borrow against it.

Other protocols, such as Arkadiko, just launched stSTX vaults to mint USDA, while Hermetica is teasing new use cases related to stSTX.

In conclusion, Stacking DAO is supercharging the Stacks ecosystem growth by enabling new DeFi strategies and use cases, which can find product-market fit by tapping into stSTX liquidity.

Stacking DAO Details:

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

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