Mezo Launches Liquid-Staked Bitcoin Token stBTC

Mezo, the yield-bearing Bitcoin (BTC) Layer 2 developed by venture studio Thesis, is launching a liquid-staked bitcoin token, stBTC, potentially marking a first for the network. This new cryptocurrency allows users to earn returns while maintaining exposure to their Bitcoin.

How stBTC Works

Users can mint stBTC by depositing either BitGo’s wrapped bitcoin (WBTC) or the bitcoin-backed Ethereum token, tBTC, on the Mezo platform. This involves paying a fee and locking their tokens. The resulting stBTC tokens can be transferred to the tBTC/stBTC pool on the DeFi platform Curve in exchange for Curve LP tokens.

BitcoinFi and Superstacking

stBTC represents the latest experiment in the emerging realm of “BitcoinFi,” which aims to integrate Bitcoin further into decentralized finance. Joey Campbell and Vaish Puri from Mezo noted that users can “superstack” their yield by staking Curve LP tokens on the platform, earning rewards referred to as “magic satoshis.”

The Virtuous Cycle

Campbell and Puri highlighted the balance between holding Bitcoin and seizing new financial opportunities in DeFi. They emphasized that as more Bitcoin enters this ecosystem, it becomes stronger and more attractive, creating a cycle of participation and innovation.

Technical Details

stBTC is an ERC4626 token built on the Bitcoin staking protocol, Acre, developed by Thesis. Unlike some rebasing tokens that adjust their supply, the value of stBTC increases as staking rewards accrue.

Minting Fees and Economic Considerations

The token will have an annual minting fee starting at 2% for tBTC and 3% for WBTC to prevent “economically trapped deposits,” where stBTC values exceed underlying deposits.

Recent Developments

In July, Mezo completed a $7.5 million strategic funding round, emerging from stealth just three months prior. CEO Matt Luongo reported that the platform boasts 12,000 users who have deposited over 2,300 BTC.

Editor’s Note (Aug. 28, 2024): Updates headline to reflect stBTC was developed by Acre.