The Lido of Stacks: Liquid Stacking with stSTX by Stacking DAO

Stacking DAO

Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.

This week, we cover the "Lido of Stacks," a new liquid staking protocol for STX called Stacking DAO, with most TVL of any DeFi app on a Bitcoin L2.

Launched in late December 2023, Stacking DAO just became the largest DeFi protocol on Stacks and across any Bitcoin L2 with $120M.

As the most prominent Bitcoin L2, Stacks hosts just over $188M TVL with over an FDV over $6B as of this writing. The new flagship LST by Stacking DAO called stSTX represents a key primitive to help bootstrap more growth in the Stacks DeFi ecosystem.

Stacking refers to locking STX to participate in the Stacks Consensus. This stacking is somewhat similar to ETH staking, where stacked STX is currently earning an average yield of 6.35% APY.

However, the real demand for stSTX is the result of an extremely frustrating legacy UX. Stacking STX is painful for a number of reasons.

  • Stacking cycles last 2 weeks, meaning long waits to unlock and compound positions.
  • The minimum requirement for locking is ~90,000 STX.
  • With the Stacks Nakamoto upgrade, stackers will have to run a node with liveness.
  • Stacking yield is taxable income in many jurisdictions.

Similar to Lido but for Stacks, Stacking DAO’s liquid stacking protocol gives users an auto-compounding token called stacked STX (stSTX) with the following benefits:

  • No more waiting 2 weeks to unstack. With stSTX-STX liquidity on a DEX, users can trade anytime from stSTX back to STX.
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