Stacks’ sBTC Gains Traction in Bitcoin DeFi

Stacks, a notable layer-2 solution aimed at unlocking Bitcoin’s potential for decentralized finance (DeFi), is gaining significant momentum.

The platform announced that several major institutions are adopting sBTC, a 1:1 Bitcoin-backed decentralized programmable asset, as a core element of their Bitcoin strategies.

Since its mainnet launch in December 2024, sBTC has garnered considerable interest from industry leaders, with early depositors like UTXO, SNZ, and Jump Crypto participating in the initial cap, showing strong confidence in the project’s vision.

The initial demand for sBTC was so overwhelming that a second cap raise was initiated, tripling the deposit capacity. This expanded cap was filled in less than 24 hours after its launch on February 25, welcoming a new wave of builders, institutions, wealth managers, and retail investors eager to access sBTC.

Unlocking Bitcoin’s Potential: $1T in Passive Capital

A rapidly growing use case for sBTC, Zest, has already secured nearly 40% of all sBTC in the protocol, illustrating the asset’s usability and functionality for Bitcoin holders. The distinctive design of sBTC enables fully active capital for BTC holders instead of merely staking or locking BTC on the L1. sBTC allows flexible smart contracts and transactions that utilize Bitcoin’s security and irreversibility.

The next key milestone for sBTC will be the launch of its withdrawal functionality, anticipated in March 2025.

Tokenized Bitcoin on the Rise: Meeting Growing Demand

As of February 2025, the demand for tokenized Bitcoin assets has been steadily on the rise. According to BBA data, the tokenized BTC supply has reached 1.67% of BTC’s circulating supply, a level not recorded since October 2022. This demand surge is driven by Bitcoin holders increasingly realizing that Bitcoin layers, such as Stacks, can provide solutions aligned with Bitcoin’s core security promise.

> “The growing adoption of sBTC provides essential liquidity for developers building and scaling applications,” stated Alex Miller, CEO of Hiro.
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> “We’ve observed builders utilizing our developer tools to adopt sBTC for solutions such as native Bitcoin yield generation, lending, borrowing, DEXs, and scaling of L1 activities like Runes and Ordinals. I predict we will see more innovation in these use cases, alongside new ideas from AI agents.”

Strategic Investments: Supporting the sBTC Vision

“We seek technologies that unlock latent capital and expand potential Bitcoin use cases,” remarked Saurabh Sharma from Jump Trading.
> “sBTC promotes a more dynamic and interconnected financial landscape, and we are excited to be part of this ecosystem.”

As a category, Bitcoin Layers have shown dramatic growth in the past year. Data from DeFiLlama indicates that the Total Value Locked (TVL) on Bitcoin Layers has surged over 460%, increasing from about $500M in 2024 to approximately $2.8B in February 2025.

Given sBTC’s relationship with Bitcoin and the backing of major industry players, including top staking providers, custodians, and ecosystems like Solana and Aptos, the project is set to bridge the demand for Bitcoin with a globally interconnected future across the crypto landscape.

Stacks and the community developing this DeFi ecosystem believe that “all roads lead back to Bitcoin,” highlighting Bitcoin’s fundamental role as a foundational layer.

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