BitGo, a provider of institutional liquidity, custody and security for digital assets, today announced support for Stacks, a network that has developed the technology necessary to integrate applications and smart contracts into the Bitcoin network.
To meet the demand from institutions looking to hold Bitcoin, BitGo is now offering institutional token holders the opportunity to earn BTC rewards for holding the native token (STX) of stacks in a process known as stacking. This, in turn, makes Bitcoin DeFi instantly accessible to large financial institutions and BitGo’s vast customer network.
Compared to other popular return solutions on the market, the Bitcoin return from stacking is not generated via a credit promotion, so token holders do not have to lend their funds to receive a reward. Instead, the revenue is derived directly from the stacks’ consensus mechanism that connects the stacks blockchain to the bitcoin blockchain.
In a regulatory environment where Coinbase has just closed its lending function, generating such a return can be very attractive to both institutions and everyday users who want to avoid potential regulatory uncertainties or penalties. It also eliminates an aspect of risk typically associated with credit-based returns as there cannot be borrower defaults.
“BitGo’s support for Stacking and the Stacks is another example of how the Stacks ecosystem and its supporters are leading the Bitcoin DeFi movement. Institutions can now partake of what thousands of stackers have enjoyed since the introduction of Stacks 2.0, a return paid in Bitcoin at industry-leading APYs, without the typical risks of staking options. “
– Mitchell Cuevas, Head of Growth at the Stacks Foundation
Stacking shares some characteristics with staking, with some major differences. First, with staking systems, the return is generally paid out in the same asset that has been staked and then often negotiated. With stacking, the income is paid directly to the ‘stacker’ in BTC.
Stacking vs. stacking
When Stacks (STX) is added to BitGo, customers will have access to BitGo’s insurance, asset protection, portfolio management and tax reporting tools. The integration of BitGo with Stacks also offers users the opportunity to keep Stacks tokens, digital wallets, multi-sig wallets in safe custody or to generate income in BTC through stacking.
“Financial institutions wanted a safe way to get into the DeFi space. With onboarding support for stacks and STX, we give our customers what they want – Bitcoin and paradigm-shifting crypto assets like STX, without the need for expensive infrastructure investments. “
– BitGo’s Co-Founder, CEO, Mike Belshe