Stacks’ sBTC Sees Rapid Adoption as Second Cap Hits 3,000 BTC Limit

Stacks, the leading Layer 2 network for scaling Bitcoin, has hit a major milestone with sBTC, its non-custodial implementation of tokenized Bitcoin. It’s hit the second deposit cap of 3,000 BTC, a target that was fully subscribed shortly after opening on February 25.

This follows the initial 1,000 BTC cap, met within 48 hours of sBTC’s mainnet launch in December, and signals a surge in interest from both individual and institutional players. The rapid uptake points to growing confidence in Bitcoin’s potential for decentralized finance on Stacks, where DeFi protocols are actively developing all kinds of use cases for sBTC.

The People Want sBTC

sBTC is designed to serve as a 1:1 Bitcoin-backed token that requires no custody in minting or bridging unlike incumbent tokenized Bitcoin solutions. It allows users to move BTC onto Stacks’ Layer 2 network for use on DeFi protocols, such as lending via Zest Protocol or trading on DEXs like Bitflow and ALEX. 

As opposed to wrapped Bitcoin (WBTC) or Coinbase’s cbBTC, which rely on centralized custodians, sBTC employs a trust-minimized two-way peg system secured by a decentralized network of signers, requiring 70% consensus for transactions. Participants holding sBTC earn up to 5% APY in Bitcoin rewards, with additional yield available through DeFi integrations. Total tokenized BTC now accounts for 1.67% of Bitcoin’s circulating supply, the highest since October 2022, driven by demand for programmable assets.

The cap raise from 1,000 to 3,000 BTC, tripling capacity, attests to Bitcoin’s shifting role beyond a static store of value. Early sBTC adopters include major firms like UTXO Management, Jump Crypto, and SNZ, alongside CMS Holdings, RootstockLabs, Sypher Capital, and Asymmetric Research. Zest Protocol alone holds nearly 40% of sBTC in circulation, highlighting its traction in lending applications.

According to Hiro CEO Alex Miller, “We’ve already seen builders using our developer tools adopt sBTC to deliver solutions like native bitcoin yield generation…I predict that next we’ll see more innovation of these use cases, as well as new ideas through AI agents and more.”

Stacks Co-Founder Muneeb Ali added: “I’m excited to see people with their savings in bitcoin, their yield earned in bitcoin, and everything denominated in bitcoin. sBTC unlocks that full potential, and this second wave of sBTC depositors reflects the demand for Bitcoin to scale. The future of Bitcoin will be abstracting the L1 and L2s, like Stacks, to make bitcoin productivity seamless.”

Bitcoin Layers Stack Up

Bitcoin’s Layer 2 landscape is now thriving, with Stacks the leading L2 intent on unlocking Bitcoin’s idle capital and anchoring DeFi to its unrivaled security model. Despite the strong demand for sBTC since launching late last year, the real demand will come once the training wheels are taken off and Stacks begins accepting uncapped deposits.

sBTC withdrawals from Stacks are slated for March, pending further decentralization of its signer network, which has been initially set at 15 community-elected entities. For bitcoiners, the appeal of being able to bridge their BTC to Stacks and begin earning 5% APY is obvious – particularly given the prospect of further amplifying yield through other DeFi services such as liquidity provision or staking.

It’s taken time for a fully decentralized BTC to be developed that can work on Layer 2 just like native Bitcoin. Now that it’s here, the possibilities for creating yield-generating products are endless.