Zest Protocol Introduces BTCz Token to Increase Attention on Decentralized Finance (DeFi) in the Bitcoin Ecosystem

Bitcoin holders can now earn staking rewards with the BTCz token through the Babylon Protocol.

Zest Protocol, a Web3 infrastructure company backed by Binance Labs and Tim Draper, has introduced a new yield-bearing BTCz token to increase attention on decentralized finance (DeFi) in the Bitcoin ecosystem. The move will allow Bitcoin holders to earn staking rewards with the BTCz token through the Babylon Protocol.

According to Tycho Onnasch, co-founder of Zest Protocol, the BTCz token will allow for passive yield generation while maintaining liquidity. He highlighted that while there are more than 10 Bitcoin-derived assets available, promising high yields, BTCz differs in its use of Stacks’ security features.

BTCz Offers Unique Benefits Compared to Other Bitcoin Assets

Onnasch explained that BTCz is designed with enhanced security through Stacks’ infrastructure, setting it apart from other Bitcoin-based tokens that offer similar yield opportunities. The token is paired with sBTC, another Stacks-based token, to promote secure Bitcoin DeFi adoption.

The new BTCz token is part of Zest Protocol’s broader plan to introduce more Bitcoin yield products. Onnasch mentioned that pairing BTCz with sBTC is crucial for increasing Bitcoin DeFi usage.

While the full potential of BTCz is promising, the specific yield percentage for holders remains unknown.

Babylon Protocol’s Yield Percentage Still Unrevealed

The Babylon Protocol will eventually generate staking rewards, but the yield percentage for BTCz is not yet determined. Currently, Bitcoin on the Babylon Protocol does not generate staking rewards. However, Onnasch stated that Babylon will begin validating proof-of-stake (PoS) networks in the coming months, allowing yield generation through BTCz.

Onnasch added that the Babylon Protocol’s validation of PoS networks will determine the BTCz token’s yield, offering Bitcoin holders opportunities to benefit once the system is fully operational.

Growing Interest in Bitcoin DeFi After Bitcoin Halving

Zest Protocol’s launch of BTCz comes at a time of growing interest in Bitcoin DeFi, especially following the 2024 Bitcoin halving. The introduction of the Runes protocol earlier this year has sparked new developments aimed at bringing DeFi features to Bitcoin.

In May, Hermetica introduced USDh, a Bitcoin-backed synthetic United States dollar with a yield of up to 25%. Additionally, Coinbase announced plans for Wrapped Bitcoin (cbBTC) in August, which generated excitement among Bitcoin DeFi participants.

Rena Shah, COO of Trust Machines, highlighted that cbBTC could expand Bitcoin DeFi adoption, especially by attracting Coinbase’s existing user base to the ecosystem.

Zest Protocol Adds to Expanding Bitcoin DeFi Ecosystem

Trust Machines, the company behind Trust Wallet, is also set to launch a decentralized exchange (DEX) for Bitcoin. The DEX will reportedly feature cbBTC and other Bitcoin-based assets.

Together, these initiatives aim to enhance the DeFi capabilities of the Bitcoin network, catering to the growing demand for decentralized financial instruments.