- Stacks users can now do more with their STX tokens thanks to a partnership between Velar and Stacking DAO.
- The collaboration has been tipped to “set a new benchmark for what is possible in Bitcoin DeFi.”
- The recent Velar and Stacking DAO collaboration is the latest in a growing line of positives for Stacks.
Out of a desire to unlock applications beyond payments on Bitcoin, Layer 2 chains built on the OG blockchain are quickly rising to prominence. Among those leading such solutions is Stacks.
The network’s push to become the dominant Bitcoin Layer 2 is set to receive a boost from Bitcoin-focused DeFi project Velar. The move promises to allow users to do more with STX, the network’s native token.
Velar and Stacking DAO Collaborate to Unlock STX Liquidity
Stacks users can now do more with their STX tokens thanks to a partnership between Velar and Stacking DAO, the leading Stacks liquid staking solution.
Sponsored
On Tuesday, November 26, Velar revealed its new partnership with Stacking DAO to launch an STX/stSTX trading pair. The partnership aims to enhance Stacking’s appeal and bolster liquidity across the network.
Stacking is the term used for staking STX to participate in Stacks consensus to bolster the network’s security. Participating in Stacking earns users Bitcoin rewards, making it a highly demanded activity. However, this comes at the cost of STX liquidity.
While Stacking DAO tries to tackle this by offering stSTX tokens to STX stakers, stSTX utility remains limited compared to STX for DeFi applications.
The Velar STX/stSTX trading pair unlocks better capital efficiency for users by allowing them to easily switch between their staking positions to leverage high-yield DeFi opportunities without going through the typically lengthy process of withdrawing their stake from Stacking DAO.
Velar Pushing Boundaries
Velar CMO Peter Watson asserted that the STX/stSTX trading pair showcased the team’s dedication to innovation.
"At Velar, we’re constantly driving innovation, and partnering with StackingDAO to build the first-of-its-kind stableswap pool with an upgradeable variable midpoint is a proud moment for us. This feature, designed to better protect liquidity providers, showcases the cutting-edge solutions we’re bringing to the Stacks ecosystem,” he stressed in a statement.
Watson’s highlight of the upgradeable midpoint variable feature has been tipped to help minimize users’ risk of impermanent losses compared to other available STX/stSTX pools. With this feature, Watson contends that Velar and Stacking DAO are raising the bar on what is possible in the Bitcoin DeFi space.
“Collaborating with the talented StackingDAO team has been an incredible experience, and together, we’re setting a new benchmark for what’s possible in Bitcoin DeFi," he noted.
Per the statement, liquidity providers in the STX/stSTX pool are incentivized through a dual rewards structure to earn 5,000 VELAR tokens daily and a 50% boost in Stacking DAO points. With the Stacking DAO points, users will gain future benefits, including airdrops.
The recent Velar and Stacking DAO collaboration is the latest in a growing line of positives for Stacks.
A New Era
On October 28, Stacks completed its much-ballyhooed Nakamoto upgrade, ushering in a new era of unprecedented speed and security for users tipped to catalyze a Cambrian explosion of DeFi activity on the network. According to developers, the upgrade also set the stage for sBTC, the network’s long-anticipated wrapped Bitcoin token designed to allow users to leverage their Bitcoin holdings for DeFi activity.
Following the Nakamoto upgrade, on November 7, Stacks unveiled Bitcoin L2 Labs, a new team committed to the network’s core development and streamlining the experience of builders on the network.
On the Flipside
- With a TVL of only $109 million, DeFi activity on Stacks still has a long way to go before competing with leading Layer 1 chains like Ethereum and Solana, which boast billions in TVL.
- Velar only has $3.3 million in TVL, per Defi Llama data at the time of writing.
Why This Matters
The Velar STX/stSTX trading pair support promises to unlock greater flexibility for users, allowing them to take advantage of more opportunities in the fast-rising Bitcoin DeFi ecosystem.
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