Leading Bitcoin DeFi machine Zest Protocol announces the public release of BTCz, allowing users to deploy their BTC to earn a native BTC yield in a seamless and secure manner. BTCz holders earn staking yield through the Babylon Protocol, enhanced by the unique security properties of the pioneering Bitcoin L2 Stacks.

Zest Protocol introduces BTCz staking instrument to Bitcoin DeFi segment

Backed by Tim Draper and Muneeb Ali, Bitcoin (BTC) on-chain lending app Zest Protocol announces integration with Stacks-based Babylon. Thanks to the collaboration, a new joint product, BTCz, is allowing stakers to obtain yield in Bitcoin (BTC).

As the leading Bitcoin L2, Stacks provides unique security features to Zest Protocol. Stacks smart contracts have the unique ability to read Bitcoin's state, allowing the contracts to independently verify changes to Bitcoin balances. 

This allows Zest Protocol’s BTC staking contract on the Stacks L2 to independently verify BTC stake on Bitcoin L1 through the Babylon staking protocol, without relying on a third party oracle or messaging system. 

Combined with Babylon’s trustless design, this opportunity lays the foundation for BTCz to be the most secure staked BTC derivative. 

Tycho Onnasch, founder of Zest Protocol, is excited by the upgrade the new collaboration brings to Bitcoin DeFi and on-chain staking in particular:

With the upcoming sBTC launch in Q4 of 2024, Zest Protocol’s BTCz is set to become sBTC’s yield-bearing cousin on Stacks. A yielding BTC asset like BTCz paired with sBTC will be critical for secure Bitcoin DeFi adoption, built by the engineers behind Stacks’ sBTC. This is just the start of the roll-out of our BTC yield products on Zest Protocol Earn.

Also, the new collaboration is expected to accelerate the growth of DeFi on Bitcoin (BTC), an important sphere in 2024.

Stacks' sBTC also accepted by new solution

Fisher Yu, cofounder of Babylon, welcomes the Zest Protocol solution and highlights its paramount importance for streamlined BTC staking:

We are excited to see Zest Protocol leverage our technology to enhance Bitcoin yield generation on Stacks. We look forward to observing how this innovation contributes to the broader Bitcoin ecosystem.

In addition to leveraging the Stacks L2’s read access to Bitcoin state for security, Zest Protocol’s BTCz will progressively decentralize toward the Stacks sBTC design to create a decentralized and permissionless peg. Users will also be able to deposit sBTC to earn yield through BTCz.

The Zest Protocol team has a long history of building Bitcoin applications and infrastructure. The Zest Protocol cofounders were among the first hires at Trust Machines, the leading Bitcoin infrastructure company led by Stacks co-creator Muneeb Ali. While at Trust Machines, the Zest Protocol cofounders played a key role in the design and development of sBTC.