The Rise of Zest Protocol: From Stacks DeFi Backbone to the Next Chapter of BTCFi

It’s been just over a year since Zest Protocol launched on mainnet.

In that time, the Nakamoto upgrade and sBTC have gone live, bringing a faster chain and around 5,000 sBTC minted, cementing Stacks as the leading Bitcoin L2 by BTC supply.

Together, these upgrades and the rapid rise of DeFi protocols have driven remarkable growth across the Stacks ecosystem, and Zest Protocol has played a central role in it.

Here’s a look back at Zest Protocol's key milestones over the past year and how they’ve helped power the ecosystem’s expansion.

The Most Battle Tested Protocol

Zest Protocol has proven itself as the most battle tested DeFi protocol on Stacks, showing the capacity to lead the BTCFi sector as it scales.

First, Zest Protocol is backed by some of the most respected Bitcoiners and tier one investors, including Tim Draper, Muneeb, YZi Labs (formerly Binance Labs), and Flow Traders.

Second, our team is made up of OG Stacks builders and Bitcoiners who understand every detail of building on Bitcoin, making it one of the most knowledgeable teams in the space. Zest Protocol’s founders were the very first hires at Trust Machines and played a key role in major Stacks milestones like Nakamoto upgrade and sBTC.

Third, Zest Protocol has processed more than 1,500 liquidations with zero bad debt, even during periods of extreme volatility, thanks to its built in risk limits designed to protect users from losses.

It is no coincidence that Zest Protocol has surpassed $100M in TVL and over $10M in total borrows. These milestones reflect the strong trust the Stacks ecosystem has placed in the team and the protocol over the past year.

Bitcoin backed lending is inevitably set to become a trillion dollar opportunity. Coinbase’s recent Bitcoin backed loans are only a glimpse of the growing interest in this product.

Zest Protocol's background and achievements so far are proof of the team’s ability to deliver, with much more to come to make BTC backed loans easily accessible to anyone holding Bitcoin.

Attracting and Activating BTC capital

Since the launch of sBTC in December 2024, around 5k BTC have been bridged to Stacks. That capital came for one reason in particular: to find new ways to earn yield on Bitcoin.

Zest Protocol's lending and borrowing platform, with its simple UI, has attracted over 10% of the available sBTC supply on Stacks, leading by a wide margin among all DeFi protocols in BTC liquidity.

Today, more than 560 sBTC are deposited on Zest Protocol, earning yield and powering roughly $5.000.000 in borrowing activity. With the sBTC cap now lifted, BTC deposits and usage on Zest Protocol are only expected to continue growing.

Zest Protocol has always aimed to set the standard for Bitcoin backed lending, and this past year marks just the beginning of plans to make BTC the pristine collateral of the digital era.

Unlocking Stablecoins Liquidity

For any ecosystem to thrive, healthy stablecoin liquidity and activity are essential, and Zest Protocol has been leading the charge in making that happen on Stacks.

Starting with Hermetica, Zest Protocol helped bring over 1M USDh on Stacks and introduced more efficient liquidations, unlocking new CeFi grade liquidity within Stacks DeFi.

This collaboration enabled one of the most efficient yield strategies on Stacks as users can borrow low cost USDh on Zest Protocol against BTC and stake the stablecoin on Hermetica to earn yield from funding fees.

To scale this strategy even further, Zest Protocol has attracted around 9M aeUSDC, making the approach even more efficient as users can now borrow cheap aeUSDC and swap it for USDh.

This is only the beginning of what BTC backed stablecoin lending can achieve, and Zest Protocol is actively expanding this frontier, tapping into what could become a trillion dollar opportunity.

Scaling STX as Productive Asset

While stablecoins represent one side of a thriving ecosystem, the other is its native token, in this case STX.

Zest Protocol has once again played a pivotal role in driving STX based activity, with around 20M STX supplied and 3.6M STX borrowed. The protocol has also helped establish STX as a prime collateral asset across Stacks, with over $2M in liquidity borrowed against it.

Meanwhile, Stacking DAO has made more than 85M stacked STX liquid through its stSTX and stSTXbtc LSTs. But as Lido has shown on Ethereum, lending protocols are where LSTs become truly useful, and Zest Protocol is clear proof of that.

About 30% of Stacking DAO’s LST supply is deposited on Zest Protocol, making these assets a core part of the Stacks DeFi collateral base powering over $2.1M in active loans, especially as the stacking yield earned on them helps offset borrowing costs.

Zest Protocol has even become the foundation for the stacking yield amplification strategy, where users borrow STX against their STX or STX derived collateral and restack them on Stacking DAO to capture the arbitrage between stacking yields and STX borrowing rates.

With new vaults, Dual Stacking, and additional products on the horizon, Zest Protocol is set to become an even more central hub for unlocking and scaling DeFi strategies across the Stacks ecosystem.

What's Coming Next

Zest Protocol’s goal is to become the go-to platform for lending and borrowing on Stacks, and ultimately across Bitcoin DeFi. Achieving this will initially require an increasing flow of liquidity into the protocol, and several upcoming opportunities can help drive that growth.

First, Dual Stacking is launching on Stacks, allowing sBTC holders to earn BTC yield with additional reward boosters when deploying sBTC in DeFi.

As already the leading venue for sBTC activity, Zest Protocol stands to benefit directly from this feature, as Dual Stacking will incentivize users to bridge BTC to Stacks and further expand the protocol’s sBTC supply.

In addition, the upcoming Satoshi Upgrades will introduce self-custody features that make sBTC even more appealing to institutions and large holders. As trust and on-chain usability increase, Zest Protocol is well positioned to attract a larger share of this incoming institutional BTC liquidity.

Second, the Stacks Endowment, which consists of 500M STX to accelerate adoption of Stacks, will also be deployed to accelerate the growth of Stacks DeFi.

As Zest Protocol already serves as the go-to place for on-chain liquidity, it is reasonable to expect that a significant share of this capital will flow through Zest Protocol. In the end, greater liquidity on Zest Protocol translates into lower borrowing costs, which in turn fuels more activity across the broader DeFi ecosystem.

In particular, additional Endowment liquidity on Zest Protocol will make looping strategies more efficient and accessible, expand stablecoin liquidity available for borrowing against collateral, and support new borrow-lend markets as more governance tokens launch on Stacks.

Third, lending protocols often serve as the foundation for many other DeFi products. With new vaults coming to Stacks, Zest Protocol is well positioned to benefit from projects building on top of it, unlocking even more liquidity and activity.

In addition, with Bitflow introducing concentrated liquidity to Stacks, those LP positions could potentially be used as collateral on Zest Protocol, Much like how close to 8% of Kamino’s market side and debt are backed by Jupiter LP positions, Looking ahead, Zest Protocol could also expand to accept Runes as collateral, as Stacks continues to evolve into a trading hub for BTC-based assets.

In conclusion, Zest Protocol is positioning itself to become the leading BTCFi protocol to access Bitcoin liquidity.

The demand to lend and borrow against Bitcoin and BTC assets will only grow from here and Zest Protocol's' team is committed to find the best way to make it accessible.

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