Making sBTC ready for DeFi prime time

Hi stxnomnom,

I think this is an intriguing area of research, and we should experiment with different mechanisms, like the one you described.

I created an issue to track and develop the idea your described.
What is your GitHub username so I tag you and keep you involved?
Also, I would love it if you would join our sBTC Eng meeting to discuss more of these ideas!


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Hi @stxnomnom!

The Stacks Foundation is preparing to fund research on the initiative you proposed. I encourage you to apply for the grant!

cc @HeroGamer


I think it’s too early to start researching one possible solution here, when we haven’t yet a) settled on the priority of the problem (should we revisit this when there’s more clarity on who the signers are?) as well as b) all the possible solutions

Funding grants now for specific solution spaces feels premature imo. I commented that on the Github post


While it may seem like an overly simplistic approach, could incentivizing decentralized stacking be a viable strategy as well? For instance, by offering enhanced rewards to a greater number of addresses below a certain threshold.

Since the beginning of this discussion, do we have a bit more clarity on who are some of the potential signers? Do we have any kind of coordination between community players holding institutional conversations?

I think we need to discuss and prepare this proposal accurately with sBTC peg so that we can have various discussions on defi or future usability, is there anyone who can talk with me?

Another good reason for removing a cap on minted sBTC from the blockworks piece.

“ The supply cap is determined via the consensus protocol mechanism that prices the BTC/STX exchange rate using the 90 day moving average. If the value of sBTC ever surpassed 60% of the stacked STX value, minting would be disabled until further withdrawal requests were processed. This is a great method for removing the reliance on centralized oracle providers and improving decentralization, but it comes with tradeoffs. A stacker with 70% of the total value stacked is able to single-handedly sign BTC peg-outs, manipulate the BTC/STX exchange rate, or choose a malicious fork choice on the Stacks chain. If sBTC had been live during the bug experienced in April, the damage could have been much worse.”

Reducing complexity of sBTC by removing a cap on minted sBTC feels like the way to go. The free market can decide what a sufficient sBTC collateralisation ratio should be instead of an engineering system with potential vulnerabilities

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Won’t the advent of sBTC demote the usefulness of STX? I mean, why hold STX if most items get traded in sBTC? Yes, I know there is the reward, but that doesn’t seem that compelling. And if so, won’t this further drive consolidation of STX to whales, further raising concerns over the 70% threshold. Maybe all this will be considered in the tokenomics study.

It’s unlikely that STX will get less useful. With sBTC, STX will remain the gas asset on the Stacks network (even if sBTC->STX swaps are used to pay for gas under the hood). With increased activity on the network (driven by sBTC), more STX will be paid to Stacks miners, which results in higher rewards for locking up STX

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agree. played out in a similar way on ethereum network, ie. there’s lots of wBTC in circulation and still plenty of reason to use and hold ETH

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Cool. The balance of additional fees from increased adoption translating to higher rewards to stackers makes sense.

But if holding STX would be primarily for those rewards, and you seem to confirm this decreased utility for STX by relegating it to just paying gas. And I apologize if I’m getting this wrong!

If true, would that lead to more STX consolidation to whales (in the long run)? I guess that’s what I’m getting at since the discussion was about removing the cap.

Also, IMHO, I don’t think STX is, or ever was in the same position as ETH (re:wBTC). Plus, all this is still playing out.