Zest Protocol has launched its first automated Stacks Vault product, zvstBTC, on the Stacks network. The vault utilizes a leveraged staking loop to increase the yield on Bitcoin assets, aiming for an annual percentage yield of 6–8%. This strategy is designed to triple the base yield of approximately 2.6% currently offered by stBTC, the liquid staking token from Stacking DAO.
The mechanism involves users depositing BTC or stBTC into the vault to receive zvstBTC shares. The protocol then uses stBTC as collateral in its lending market to borrow sBTC, which is subsequently reinvested into staking positions. Gains are not distributed as separate tokens but are reflected in the increasing net asset value of the zvstBTC shares.
To manage risk during the initial phase, Zest Protocol has capped deposits at 10 BTC. The lending market on Stacks has previously reached a total value locked exceeding $100 million and has recorded no bad debt since its inception in March 2024. Additionally, the protocol has implemented STX token incentives to drive participation in the ecosystem.
