The Bitcoin Staking Whitepaper

Core Blockchain
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Today we shared the Bitcoin Staking white paper for community review and feedback. It’s a significant proposed upgrade that has the potential to attract institutional Bitcoin capital seeking to Stacks by offering what no other Bitcoin layer can: self-custodial Bitcoin-denominated yield.

This white paper is the cornerstone of phase 1 of our roadmap. It covers a new Bitcoin Staking mechanism built on top of Proof-of-Transfer.

What’s being proposed?

Bitcoin Staking (PoX-5): a proposed upgrade to Proof-of-Transfer (PoX) that enables participants to lock BTC and STX together in order to receive a target yield rate over a given bonding period. Pair BTC:STX commitments are called “protocol bonds,” they enable people to earn BTC-denominated yield without giving up custody of their coins.

Protocol Bonds: Participants pair a BTC timelock with an STX commitment on L2 to receive a target yield rate over a ~6-month bonding period. Yield comes from BTC paid by Stacks miners competing for block rewards. In this design, BTC becomes the yield-bearing asset, while STX functions as a capacity asset: the native token used for governance, and as the variable that determines each participant’s share of the reward pool. This creates a direct economic link between STX demand and BTC yield.

PoX Rewards Eligibility: Bitcoin Staking proposes making paired BTC:STX commitments (aka protocol bonds) eligible for PoX rewards, expanding participation beyond solely STX-only lockups.

Yield Distribution Priority: The yield distribution mechanism determines how the BTC reward pool is allocated. Bitcoin Staking proposes a waterfall structure with defined tranche distribution priority where tranche 1 includes active protocol bonds, tranche 2 is a reserve fund and tranche 3 is STX-only stakers.

Stacking to Staking: Under PoX in its current form, the BTC spent by miners is distributed to eligible participants in a process known as “stacking.” We propose ‘staking’ to replace this term and reflect the expanded dual-asset protocol bonds introduced in Bitcoin Staking.

Key things to know about the proposed changes:

  • The system would launch in a bootstrap phase under Stacks Endowment stewardship, with whitelisted partners and a reserved ~10% community allocation, before transitioning to a fully permissionless auction model in a future PoX-6 upgrade.

  • BTC would remain under your own keys at all times. There is no slashing, bridging or wrapping. You get your BTC and STX back in full when the timelock expires, regardless of what happens to the network.

  • An early exit option would allow user to unlock BTC before the bonding period ends, at the cost of forfeiting remaining yield.

Why Now?

Stacks will drive Bitcoin growth by building Bitcoin-native finance where both individuals and institutions come to grow and manage their Bitcoin. Self-custodial, BTC-denominated yield is the first piece of that puzzle. Bitcoin Staking on Stacks offers a path for Bitcoin-native finance, turning the largest pool of dormant capital in crypto into yield-bearing capital.

  • Bitcoin needs a better staking solution - Stacks is uniquely positioned to succeed. ETH and SOL both demonstrated how staking drives thriving DeFi ecosystems by attracting capital into the protocol.

  • The competitive window is open but closing. Babylon, CoreDAO, Lombard, and Botanix are pursuing the same demand pool with custodial, bridged, or wrapped mechanisms. Stacks has structural advantages no competitor matches, but time to market is critical.

  • Concentrated TVL is the prerequisite for Bitcoin-native DeFi. Without meaningful BTC liquidity on Stacks, lending markets stay shallow, structured products don’t price, and builders don’t ship. Bitcoin Staking concentrates BTC at the protocol layer where the rest of the ecosystem can build on top of.

Take a look at the whitepaper and leave your question, comments, and feedback below!

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How likely is this to launch in July 2026 given previous delays including a full time CMO?

If July is likely, will it coincide with the new CMO as well?

Do you intend for the Tranche 1 and 2 STX demand to overcompensate for the STX-only staking having the least priority (Tranche 3) and possibly zero yield?

Based off current talks, how likely with the initial 3000 BTC be filled and in what time frame?

Thank you.

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Please make Proof of Burn something more meaningful, e.g. send miner commits to the reserve!

Also, it might be good to have a mix of fiat currency in the reserve than only USD. Did you exchange the proposals with institutions around the Bitcoin world?

How is the minimum of entry for staking determined? Aka stacks required per slot. Reward distribution via contracts could in theory remove the limit of 4000 slots for example by reward claiming or by batched distribution. If we keep the 4000 slots how is the stacks required per slot determined?

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I love what Stacks is doing with Bitcoin yield. Rootstock is a tiny eco but still many Bitcoin miners are doing merged mining as it’s essentially free money for them. Stacks is that same value prop only with staking mechanisms for holders built on top of it. It’s an easy thing to sell to someone and it’s why I’m hopeful Stacks will be able to onboard a lot more users in the near future.

What I am consistently seeing from Stacks is that this Bitcoin staking is somehow unique in the industry.

But it’s not. There’s plenty of self solutions doing the same value prop as Stacks: Lock/unlock your BTC directly on the Bitcoin L1, earn yield from the wrapped BTC token.

What I would love to see is Stacks pivot away from the purity contest (i.e., “only [insert decentralised BTC protocol] gives you true control of your Bitcoin!”) and instead focus more on why Stacks BTC yield is going to be higher and more consistent than other similar solutions. I’ve not seen much (if any) discussion around how Stacks intends to deliver the consistent yield that will attract large deposits.

If we take the recent-ish restaking mania on Ethereum as an example.

  • It was a similar high level mechanism (dual stake for boosted yield)
  • It saw large inflows of capital and interest

The focus, from the restaking protocols, was mainly on the use cases for that restaked ETH; not the mechanism itself. We’ve seen a significant drop in capital and interest since things like EigenLayer and Karak launched but there remains a large ecosystem of people now building out restaking products over there. EigenLayer alone is many multiples larger than the entire Stacks ecosystem.

I would like to see BTC staking use cases explored in more detail (in the whitepaper if possible as well). The vast majority of attention should be on exploring BTC staking use cases as opposed to the staking mechanic (which has been, so far, the only topic of conversation coming out of Stacks). I think this is the only way to (finally) get the adoption Stacks so sorely needs.