Bitcoin scaling network Mezo’s yield-bearing stBTC token is now live

Mezo, the yield-bearing Bitcoin BTC -4.98% Layer 2 being developed by venture studio Thesis, is launching a liquid-staked bitcoin token in what could be a first for the network. Like other staked tokens, the new cryptocurrency, dubbed stBTC, will enable users to earn returns while maintaining exposure to their bitcoin. 

Users mint stBTC by depositing either BitGo's wrapped bitcoin (WBTC) or the bitcoin-backed Ethereum token tBTC on Mezo, paying a fee and locking their tokens. These stBTC tokens can then be ported over to the tBTC/stBTC pool on DeFi platform Curve to receive Curve LP tokens. 

stBTC is just the latest experiment with the nascent world of “BitcoinFi,” or the attempt to bring the world’s first and largest cryptocurrency further into decentralized finance. 

Mezo’s Joey Campbell and Vaish Puri wrote that users can “superstack” their yield by staking Curve LP tokens on Mezo, which will earn rewards called “magic satoshis.”

“As early HODLers, many of us have watched our Bitcoin grow in value over the years. But we've also watched DeFi unfold, often feeling like we had to choose between holding our Bitcoin and participating in these new financial opportunities,” Campbell and Puri wrote in a blog .

“As more Bitcoin flows into this system, the ecosystem grows stronger, more liquid, and more attractive to users and developers. It's a virtuous cycle — more participants lead to more innovation, which attracts more participants, and so on,” they added. 

stBTC, an ERC4626 token, is built on the Bitcoin staking protocol Acre developed by Thesis. Unlike some rebasing tokens with elastic supply models that adjust the number of tokens in circulation, stBTC will increase in value as staking rewards accumulate.

The token will also introduce an annual minting fee starting at 2% for tBTC and 3% for WBTC as a measure against “economically trapped deposits,” where the value of stBTC outpaces the underlying deposits, Campbell and Puri argued. 

In July, Mezo raised a $7.5 million strategic funding round three months after emerging from stealth. CEO Matt Luongo claims the platform has 12,000 users who have so far deposited over 2,300 BTC.