to establish a Bitcoin-native decentralized finance ecosystem.
The Bitcoin Staking model will involve users temporarily locking both BTC and STX to earn rewards in the form of BTC. Users participate in Bitcoin Staking through protocol bonds. This involves users locking up their BTC into time-locked UTXOs (unspent transaction outputs) on the Bitcoin network for a period of roughly half a year, and locking up STX into a smart contract on the Stacks network.
When entering Bitcoin Staking, users have to provide BTC as well as an amount of STX equivalent to 5% of the BTC stake.
Importantly, users don’t give up custody of their BTC when using Bitcoin Staking, which could make it appealing to holders that don’t want to use existing products offering BTC yield. Currently, there is no Bitcoin-denominated yield product on the market that uses a fully self-custodial design.
The non-custodial design used by Bitcoin Staking via Stacks also means that stakers don’t assume any slashing risks. Users also have the option to unlock their BTC and exit staking at any time. However, exiting early also comes with forfeiting yield.
The rewards earned by stakers are sourced from Stacks miners, who commit their BTC in order to compete for the chance of adding new blocks to their Stacks blockchain. At launch, the Bitcoin Staking mechanism will be targeting a 3% APY for stakers.
If you want to learn more about how Bitcoin Staking on Stacks works in more detail, we recommend you take a look at the project’s official whitepaper.
How can Bitcoin Staking positively impact STX?
RR2 Capital recently published a thesis explaining how the introduction of Bitcoin Staking could have a very positive impact on the demand for STX.
In their thesis, RR2 Capital explains that Bitcoin Staking on Stacks could create a direct demand driver for STX because every BTC staking position requires STX to be locked alongside it.
The model uses a dual-asset “protocol bond”: BTC is locked on Bitcoin L1 and earns BTC-denominated yield, while STX is locked on Stacks as the access or capacity asset. STX does not earn yield inside the bond, but it is required to participate.
This creates a mechanical link between BTC staking demand and STX demand. If users want to stake BTC, they must also lock roughly 5% of the BTC position in STX. As more BTC enters the staking system, more STX must be acquired and locked. In other words, BTC staking adoption directly pulls STX demand with it.
The effect could be stronger because much of the STX supply is already locked in the existing “stacking” mechanism, reducing the amount available on the open market. New BTC-driven demand would therefore meet a relatively limited liquid supply.
The model may also create a flywheel. More BTC staking can increase activity on Stacks, which can support higher miner BTC bids and more attractive BTC yields. Higher yields can attract more BTC, which requires more STX, further reinforcing demand.
If STX appreciates during a bond cycle, participants may also unlock excess STX capital when they rebond. That capital can be redeployed into Stacks DeFi, increasing TVL, liquidity, fees, and broader ecosystem activity.
In short, Bitcoin earns the yield, but STX unlocks access to that yield. If Bitcoin Staking gains traction, STX could benefit from recurring lock demand, reduced circulating supply, and stronger ecosystem usage.
The current Bitcoin staking landscape
As we’ve already mentioned, a very large portion of the Bitcoin supply is currently not earning any yield. According to RR2 Capital, less than 1% of the Bitcoin supply is currently deployed in various Bitcoin staking platforms such as Babylon, Lombard and Core DAO.
This means that there is a lot of potential for growth. For example, over 32% of the ETH supply is currently staked, while the staking ratio for coins such as SOL and SUI is even higher at 68% and 72%, respectively.
We have to keep in mind that Ethereum, Solana and Sui are blockchains that use Proof-of-Stake, which means that coin holders don’t need to go to any “external” platforms to stake. Still, even if we consider a relatively conservative scenario of Bitcoin reaching a staking ratio of 5%, that would be an expansion of over $50 billion (based on the current BTC price of roughly $63,800).
Here, it’s worth highlighting again that Stacks is looking to bring a currently untapped segment of BTC holders into Bitcoin staking by introducing a self-custodial Bitcoin staking mechanism, which is currently missing from the market. With self-custody being a major part of Bitcoiner culture, the demand could be larger than expected.
What could go wrong with Stacks’ Bitcoin Staking plan?
The first year of Bitcoin Staking will be conducted through a managed bootstrap phase, not a fully open market. The Stacks Endowment will be setting the Bitcoin Staking capacity and target yield in this phase. The permissionless and open market PoX-6 consensus mechanism is expected to make its debut sometime in 2027.
It’s also worth keeping in mind that competition to Stacks’ Bitcoin Staking model is already live. Babylon, CoreDAO, Lombard, and others are all competing for adoption, so Stacks must earn meaningful market share.
STX supply pressure remains an important factor because SIP-031 adds 500 million STX over five years, meaning staking-driven demand must outpace new issuance. If the STX price falls, miner bids and BTC yields may fall too, reducing participation and weakening STX demand further.
Finally, participants take on STX volatility and BTC market-cycle risk. The staking bond effectively includes long-STX exposure, while a BTC bear market could delay or weaken the thesis.
The bottom line
Stacks’ Bitcoin Staking mechanism gives STX a clear potential demand driver at a time when the token badly needs one. By requiring users to lock STX alongside BTC, the model directly ties BTC staking adoption to STX demand, while also reducing liquid supply and potentially increasing activity across the broader Stacks DeFi ecosystem.
The opportunity is significant, since only a tiny share of the Bitcoin supply is currently being used in yield-generating products. If Stacks can capture even a small portion of dormant BTC demand, the impact on STX could be meaningful, especially given the self-custodial design of its staking mechanism.
However, the thesis is far from guaranteed. The initial rollout will be managed rather than fully permissionless, competitors are already active, and STX still faces supply inflation, price volatility, and broader crypto market risk. Bitcoin Staking could become a major catalyst for Stacks, but its success will depend on whether BTC holders actually adopt it at scale and whether the resulting STX demand is strong enough to offset the risks.
Source:: Stacks Price Prediction: Will the STX Investment Thesis on Bitcoin Staking Succeed?