Stacks DeFi is Firing On All Cylinders
A Highlight of the Blossoming Bitcoin DeFi Ecosystem powered by the leading Bitcoin L2
by Grant Nissly on May 6th, 2024
The Stacks Community approved the Nakamoto Upgrade, and the mainnet rollout process will take place over the coming months.

The long-awaited upgrade will enable faster and more secure transactions, 100% Bitcoin finality, and the introduction of sBTC, a trustless, two-way Bitcoin peg.

The Nakamoto Upgrade is a game changer for DeFi on Stacks. In anticipation of the release, talented teams are building DeFi applications on Stacks.

Let's explore some of these applications.
ALEX is building the finance layer on Bitcoin. Some call it the Super App for Bitcoin, and they recently raised $10M to propel their mission.

ALEX aims to merge the capabilities of Bitcoin Layer 1 (L1) and Layer 2 (L2) technologies to foster a unified Bitcoin DeFi ecosystem — they’ve built a decentralized exchange (DEX), swaps, liquidity pools, staking, yield farming, a launchpad for Bitcoin economy projects, a Bitcoin Oracle, and more.

ALEX has been live on mainnet since January 2022, and the ecosystem is clearly interested in what they’re building — in early April, they passed $1.5B in cumulative volume.
Stacking DAO
Stacking DAO is a liquid stacking protocol on Stacks.

Liquid Stacking solves an important problem of providing liquidity to Stackers while they earn yield for securing the Stacks network through stacking.

Stacking DAO is proving to be very popular in the Stacks DeFi ecosystem. In a few short months, they gained over $100M in TVL.

Philip and Niel, core contributors at Stacking DAO, wrote a guest post on Hiro about why Stacking DAO is so important.

Ortege, a blockchain analytics company, shows the growth of liquid stacking via the number of unique liquid stackers and Stacking DAO’s TVL.
BitFlow is a decentralized exchange (DEX) for Bitcoiners.

BitFlow is centered on stable swaps, a critical building block for a DeFi ecosystem that focuses on liquidity around similar assets. This enables users to trade between crypto and stablecoins with reliably small slippage and low trading fees.

BitFlow continues to roll out seamless, low-cost, and efficient trades among various stablecoins in the Bitcoin ecosystem. For example, stSTX, STX, USDA, sUSDT, xUSD, xBTC, aBTC, UWU, USDC, and wBTC.

For DEXs like Bitflow to operate, market participants must provide liquidity to trading pairs. Ortege shows how Bitflow partnered with Stacking DAO to gain liquidity for their STX-stSTX trading pair.
Velar is building a liquidity DeFi protocol for Bitcoin.

Recently, they shipped their Dharma AMM and are adding trading pairs across the Stacks ecosystem. For example, users can now swap their stSTX into aeUSD.

Velar is preparing to launch its decentralized perpetual exchange, which will allow users to trade crypto with 20x leverage.
Arkadiko, one of the original applications in the ecosystem, brings Bitcoin-backed stablecoins to market. Its current market capitalization is $20M.

Arkadiko recently launched Arkadiko 2.0. Arkadiko 2.0 introduces upgrades to Arkadiko, including “a redemption mechanism for USDA combined with new collateral types such as stSTX and sBTC.”
Zest, Hermetica, and more
The Stacks ecosystem has established players, but more and more builders are recognizing the potential of building DeFi on Bitcoin, the apex crypto asset.

Zest enables borrowing and lending on Bitcoin. It recently launched to the public, and the ecosystem is clearly excited about the potential to earn yield on Bitcoin.

Hermetica recently launched USDh, a Bitcoin-backed, yield-bearing synthetic dollar.

Hermetica’s vaults enable Bitcoiners to use derivates to hedge Bitcoin volatility.
Nakamoto Ahead
The Stacks DeFi ecosystem is gaining traction. With Nakamoto coming, the user and developer experience will improve even further.

Here’s how to get involved.

For DeFi Users:
  • Check out some of the applications building on Stacks. Explore the ecosystem and see what’s possible.

For Builders: