by Caitlin Eckvahl on October 29, 2021

This week, we’re excited to share that BitGo has added support for Stacks, creating the opportunity for larger token holders such as institutions to engage in Bitcoin DeFi via Stacking. BitGo clients, both small and large, will now be able to earn bitcoin yield simply by holding their STX and turning on the Stacking function, joining a growing Bitcoin DeFi user base that already has nearly $1B locked in Stacking.

For those who are new to Stacking, Stacking shares some properties with staking but has some key differences. In staking schemes, the yield is generally paid in the same asset that was staked-- this is then often traded out of. In Stacking, the yield is paid to the ‘Stacker’ directly in BTC.

Further, compared to other yield-earning solutions in the market, the bitcoin yield from Stacking does not require lending action, meaning that token holders do not need to lend their funds out in order to earn a reward. Instead, the yield is derived directly from the Stacks' consensus mechanism that ties the Stacks blockchain to the Bitcoin blockchain. Even better, Stacks tokens stay with the owner, which eliminates the risk or borrower defaults, typically associated with lending-based yields.

Yield of this nature may be very attractive to institutions in an uncertain environment for lend-based yield products as banks and other financial institutions wait for a roadmap to engage with crypto assets. As the first qualified custodian purpose-built for digital assets, Stacks will be made available to more than 500 institutional custody customers as well as a mass amount of everyday users looking to generate a yield in BTC and hold tokens in the Stacks network.

In a statement about the integration, BitGo’s co-founder CEO, Mike Belshe, said, “Financial institutions have been wanting a safe and secure way to enter the DeFi space. By onboarding support for Stacks and STX, we are giving our clients what they want - bitcoin and paradigm-shifting cryptoassets like STX, without the need for expensive infrastructure investments.”

BitGo clients will have the option to securely store Stacks tokens in custody, digital wallets, multi-sig wallets, or earn yield in BTC via Stacking. Users will also have access to BitGo’s insurance, asset protection, portfolio management, and tax reporting tools. To learn more visit https://www.bitgo.com/.

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