A Bitcoin L2 for Builders
Activate the Bitcoin Economy: sBTC is a 1:1 Bitcoin-backed asset on the Stacks Bitcoin L2 that will allow developers to leverage the security, network effects, and .5T in latent capital of the Bitcoin network.
Build DeFi, NFTs, and Apps for Bitcoiners with sBTC
Meet the Signers:
sBTC Whitepaper
Unlocking Bitcoin to be a fully programmable, productive asset would allow Bitcoin to be the backbone of DeFi and a more secure web3. This whitepaper offers more detail about the design of the system.
Upon submission, you'll start to receive weekly sBTC progress updates. Providing an email is optional; access the paper directly.
Features
sBTC Basics
With sBTC, builders unlock Bitcoin as a fully programmable asset — opening the door for Bitcoin-backed DeFi, NFTs, and more.
Bitcoin security
The Stacks layer and sBTC state automatically forks with Bitcoin L1. Further, all transactions settle to the Bitcoin L1 with 100% Bitcoin finality, giving strong security guarantees.
Open and decentralized
The network is operated by a dynamic set of economically incentivized open-membership signers, not a set of federated or centralized parties.
Censorship resistant
sBTC operations happen on the Bitcoin main chain, meaning that external actors in the layer cannot censor these operations.
Inexpensive
Threshold signers are incentivized with BTC rewards from the Stacks layer's consensus, giving them strong economic incentives to participate without introducing additional fees.
On-chain Bitcoin oracle
There is no dependency on an external Oracle for peg operations as it uses a unique price oracle implemented on-chain on the Bitcoin L1.
Native Bitcoin yield
Because of the unique properties of Stacks, builders can create applications with sBTC that leverage the built-in bitcoin yield of the protocol to reward users, bootstrap liquidity, & more.
Visibility into Bitcoin state
sBTC is built on Stacks, meaning it comes with native visibility into Bitcoin-state through its decidable, secure smart contract language.
Have ideas for key features or integrations? Get involved and help extend and improve the tooling and technical ecosystem around sBTC.
Use Cases
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Bitcoin DeFi
Bitcoin DeFi will enable decentralized ways to earn yield on BTC. Yield is generated by putting idle capital to work, for example through lending or securing a network or application.
Scaling Ordinals
As Ordinals continue to grow, moving certain functions to the L2 can enable faster and cheaper experiences for users while enabling richer experiences powered by smart contracts.
Scaling BRC-20
BRC-20's are in their infancy, but we've already seen they can congest the network. sBTC could allow BRC-20's to leverage smart contracts while alleviating pressure on the Bitcoin L1.
Trust-minimized asset swapping
sBTC can be used to swap assets. Users can swap their BTC for other assets in a decentralized way, without having to rely on centralized exchanges.
Managing BTC risk
Bitcoin price can fluctuate rapidly. sBTC allows users to manage BTC risk by swapping it for stable coins during periods of high volatility.
Lending & Borrowing Bitcoin
sBTC-powered applications can make it safer to use BTC as collateral to borrow against. Bitcoin's limited supply and fast transferability makes it a perfect asset to borrow against.
In addition, it will be easy to build experiences that allow users to lock up their Bitcoin in a smart contract and borrow from a network of lenders including institutions and individuals.
In addition, it will be easy to build experiences that allow users to lock up their Bitcoin in a smart contract and borrow from a network of lenders including institutions and individuals.
Bitcoin DeFi
Bitcoin DeFi will enable decentralized ways to earn yield on BTC. Yield is generated by putting idle capital to work, for example through lending or securing a network or application.
Scaling Ordinals
As Ordinals continue to grow, moving certain functions to the L2 can enable faster and cheaper experiences for users while enabling richer experiences powered by smart contracts.
Lending & Borrowing
sBTC-powered applications can make it safer to use BTC as collateral to borrow against. Bitcoin's limited supply and fast transferability makes it a perfect asset to borrow against.
Trust-minimized swaps
sBTC can be used to swap assets in a trust-minimized way. Users can swap their BTC for other assets in a decentralized way, without having to rely on centralized exchanges.
Scaling BRC-20
BRC-20's are in their infancy, but we've already seen they can congest the network. sBTC could allow BRC-20's to leverage smart contracts while alleviating pressure on the Bitcoin L1.
Managing BTC risk
Bitcoin is a volatile asset, and its price can fluctuate rapidly. sBTC allows users to manage BTC risk by swapping it for stablecoins during periods of high volatility.
Calling Bitcoin builders
Help bring Bitcoin to billions by contributing code, supporting testing, and building applications for Bitcoiners with sBTC.
Build
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FAQs
Key design discussions and important questions
To dive deeper and understand the design:
Help out? Check out WGs: https://github.com/stacks-network/stacks/discussions
- sBTC Whitepaper
- sBTC Overview Deck
- sBTC Overview Site (you're on it!)
- Nakamoto Release of the Stacks layer
Help out? Check out WGs: https://github.com/stacks-network/stacks/discussions
There are quite a few interesting unlocks with sBTC, but to simplify, sBTC enables a kind of ‘write’ for Bitcoin. With sBTC you can effectively take your Bitcoin, move it to the L2, and do all kinds of interesting things with it. Critically, smart contracts can interact with sBTC, opening the door for DeFi and really any type of applications you see in other ecosystems, but with the added security benefits of Bitcoin backing it.
Read more: Blog post: 10 ways sBTC Unlocks the Power of Bitcoin
Read more: Blog post: 10 ways sBTC Unlocks the Power of Bitcoin
There are other Bitcoin deployed assets on different blockchains with different tradeoffs but most often, these solutions require sending BTC to an intermediary or are reliant on a trusted federation of signers. Open membership and decentralization are key aspects of Bitcoin and will not be compromised on in the final design of sBTC. In addition, sBTC will be the only asset that is secured by 100% of the hash power of Bitcoin itself.
Other key features and differentiators:
Other key features and differentiators:
- sBTC contributes to the security budget of Bitcoin without altering the base chain
- No mint/redeem fees
- Liveness incentives to ensure the system is always on
- Has an on-chain Bitcoin oracle
- Proximity to Bitcoin: 1) operations occur directly on the Bitcoin main chain, providing censorship resistance and 2) security with automatic settlement and 100% Bitcoin finality
Note: Some aspects of sBTC are still being designed and subject to change. This page will be updated as various elements become finalized.
sBTC operates by utilizing a synthetic asset model on the Stacks blockchain. To acquire sBTC, users swap their Bitcoin for sBTC through a smart contract. The value of sBTC is pegged to the value of Bitcoin, allowing users to represent their Bitcoin holdings in the form of sBTC on the Stacks blockchain. This synthetic representation enables users to engage in various DeFi applications, such as lending, borrowing, or trading, while still retaining the benefits and ownership of their underlying Bitcoin. The Stacks blockchain ensures the security and integrity of the sBTC ecosystem, while the value of sBTC remains tied to the value of Bitcoin.
sBTC operates by utilizing a synthetic asset model on the Stacks blockchain. To acquire sBTC, users swap their Bitcoin for sBTC through a smart contract. The value of sBTC is pegged to the value of Bitcoin, allowing users to represent their Bitcoin holdings in the form of sBTC on the Stacks blockchain. This synthetic representation enables users to engage in various DeFi applications, such as lending, borrowing, or trading, while still retaining the benefits and ownership of their underlying Bitcoin. The Stacks blockchain ensures the security and integrity of the sBTC ecosystem, while the value of sBTC remains tied to the value of Bitcoin.
Layer 2 solutions can be good for Bitcoin in a few major ways:
- Reducing network congestion at the base layer; read more about this in the next FAQ.
- Enabling new ways for Bitcoiners to deploy their holdings; learn more here.
- Providing a possible long-term economic incentive for network participants: Without creating a flywheel economy for Bitcoin, value is limited to the market cap of BTC. After all Bitcoin is mined, the network will need incentives transactions from apps & products so that miners will continue to validate transactions and secure the chain. Creating apps and products with BTC capital on Layer 2’s can allow Bitcoin to attract and retain more users than if it were only able to act as a store of value.
Layer 2 scaling solutions are essential for Bitcoin because they address the inherent scalability limitations of the main blockchain. Bitcoin was intentionally designed with a limited script to reduce the blockchain’s attack surface and increase its security and durability. But, as Bitcoin gains popularity and usage increases, the capacity of the primary blockchain can become constrained by high demand for block space, leading to slower confirmation times and higher transaction fees. This has been increasingly common with the rise of Ordinals and recent BRC-20 activity.
Layer 2 solutions provide an off-chain framework that enables faster and more efficient transactions, alleviating congestion on the base layer and improving the overall scalability of Bitcoin without needing to change Bitcoin itself. These layers can also enable DeFi and other applications by providing smart contract capabilities. Thriving Bitcoin layers are vital for enhancing the usability and long-term viability of the network.
Layer 2 solutions provide an off-chain framework that enables faster and more efficient transactions, alleviating congestion on the base layer and improving the overall scalability of Bitcoin without needing to change Bitcoin itself. These layers can also enable DeFi and other applications by providing smart contract capabilities. Thriving Bitcoin layers are vital for enhancing the usability and long-term viability of the network.
Bitcoin is the largest, most valuable, and most durable decentralized asset. Bitcoin layers like Stacks/sBTC and others can unlock the $500B in BTC capital using the Bitcoin L1 as settlement for decentralized applications. This is a tremendous opportunity; Bitcoin has a roughly 45% market share as of today, whereas Ethereum, has only 18% of the crypto market yet to date has seen most of the development and user activity. Ethereum has seen an explosion of DeFi, NFTs, and applications and as these mature, it follows that developers will look to access the green field of liquid Bitcoin capital by serving Bitcoiners.
Yes. sBTC is being designed from the ground up with the perspectives of Bitcoiners in mind (yes, even maxis!). The goal is for sBTC to be the most decentralized, most secure option for moving Bitcoin into a Layer 2 where smart contracts and complex (as well as cheaper and faster) applications come into play.
As a synthetic asset, sBTC allows Bitcoiners to maintain ownership of their Bitcoin holdings while gaining access to the expanding decentralized finance (DeFi) ecosystem. None of this changes Bitcoin itself and also does not require moving of value to Proof-of-Stake or other consensus models Bitcoiners have typically been wary of. Further, a healthy L2 ecosystem actually stands to benefit the Bitcoin network in the long-term by reducing congestion and offering an interesting economic incentive once all Bitcoin is mined.
Further, sBTC is unique in that via the Stacks layer, it is secured by the Bitcoin thanks to Proof-of-Transfer consensus. In other words, your sBTC will be backed by the might and security of the Bitcoin network itself.
As a synthetic asset, sBTC allows Bitcoiners to maintain ownership of their Bitcoin holdings while gaining access to the expanding decentralized finance (DeFi) ecosystem. None of this changes Bitcoin itself and also does not require moving of value to Proof-of-Stake or other consensus models Bitcoiners have typically been wary of. Further, a healthy L2 ecosystem actually stands to benefit the Bitcoin network in the long-term by reducing congestion and offering an interesting economic incentive once all Bitcoin is mined.
Further, sBTC is unique in that via the Stacks layer, it is secured by the Bitcoin thanks to Proof-of-Transfer consensus. In other words, your sBTC will be backed by the might and security of the Bitcoin network itself.
sBTC is being built by a decentralized group of organizations and individual contributors within the Bitcoin ecosystem. A Stacks Resident manages an open Working Group that facilitates coordination among contributors.
Key design discussions & decisions
In the original Nakamoto and sBTC whitepapers, there was a proposed design imposing a Bitcoin-block delay of 150 for sBTC deposit and withdrawal transactions. However, this design has been replaced with a much better alternative.
There is an open discussion on enabling sBTC as a gas asset at the protocol level. This community post highlights some of the advantages and invites other community members to weight in with their perspectives.
Unlike other BTC bridges, sBTC is not supported by a central custodian or a federation: instead, sBTC is secured by an open network of signers, making sBTC the most decentralized, Bitcoin-backed asset. This article covers the fundamentals of the sBTC security model.
Bitcoin Finality: Enhanced Security and Integration with Bitcoin
In the original Nakamoto and sBTC whitepapers, there was a proposed design imposing a Bitcoin-block delay of 150 for sBTC deposit and withdrawal transactions. However, with the latest Nakamoto rules, this delay has been removed instead securing these transactions via new miner requirements.
Solution Overview:
The latest design guarantees that once a Stacks transaction is confirmed, reversing it is as challenging as reversing a Bitcoin transaction. This means the Stacks blockchain is now more secure and stable, with no independent forks.
To accomplish this, sBTC will introduce a new requirement for Stacks miners. Now, they must include both a hash of all recognized Bitcoin transactions that Stacks recognizes, as well as a hash of the block itself. This change is a step up from the current system, where only the Stacks block hash is included.
Benefits:
- Stronger Link to Bitcoin: This update tightly anchors Stacks’ history to Bitcoin, starting from each miner's activity, and includes all relevant Bitcoin transactions processed by Stacks.
- Guaranteed Bitcoin Finality: It ensures the finality and irreversibility of transactions on both the Bitcoin and Stacks networks.
- Network Resilience: Nodes with the latest Stacks data can quickly identify and address any disruptions caused by changes in the Bitcoin network, safeguarding transactions and maintaining smooth operations.
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