March 24, 2022 · 6 min read
Stacks Ecosystem Snapshot - The Platforms Pushing Bitcoin-Enabled DeFi
(Disclaimer: Please be aware that the Stacks Accelerator is currently an investor in Novum Insights at the time of this article’s publication. Novum Insights is also a member of ‘Stacks Accelerator’ cohort-1.)
(Disclaimer: Some members of Novum Insights are holders of tokens in NFT collections discussed in this article)
The Stacks ecosystem is continuing to thrive. With Stacks DeFi TVL (total value locked) now sitting at around $650M, developers are starting to take advantage of Bitcoin infrastructure.
The ecosystem now hosts decentralised exchanges, NFT marketplaces, play-to-earn games, yield farming protocols and more. Earlier this month, Stacks exchange OkCoin along with the Stacks Foundation announced a $165M fund for protocols accelerating DeFi adoption of Bitcoin, and protocols helping to realise Bitcoin-based smart contract functionality. Dubbed the “Bitcoin Odyssey Collective”, the participating investors include White Star Capital and the Digital Currency Group.
Since the chain’s launch, the network’s token $STX has risen to be 58th highest-ranked cryptocurrency by its $1.7B market cap. Let’s dive into the applications and tools that are contributing to Stacks' success.
High TVL Stacks Protocols
Top 3 Stacks Applications by TVL
(Info from DeFiLlama. Updated 21/03/22)
The top 3 Stacks protocols by TVL showcase the scope of DeFi development on Bitcoin infrastructure.
The highest ranked Stacks dApp by TVL is StacksSwap with almost $100M locked. The protocol allows fungible and non-fungible token trading as well as stable cryptocurrency lending using the protocol’s native token $STSW. Similarly to Uniswap, StacksSwap offers liquidity provision opportunities which allow users to earn fees for supplying liquidity to swapping pairs.
ALEX is another popular DEX (decentralised exchange) built on Stacks which offers dynamic yield farming and lending with its native $ALEX token. ALEX uses dynamic collateral rebalancing pools to eliminate the risk of forced liquidation.
Early this month, ALEX hosted the first Stacks NFT project to hold an IDO (Initial DEX Offering). Bitcoin Monkeys launched $BANANA token on the exchange, which can be generated by Bitcoin Monkey NFTs and burned to modify NFTs in the collection or purchased to acquire accessories.
Arkadiko is a lending protocol which allows users to collateralise $STX to receive a stablecoin called $USDA. Arkadiko loan repayments take place automatically using a yield generated by the stacking collateralized STX. With its DAO based governance structure, the platform uses a native governance token in the form of $DIKO which can be used for voting on proposals.
Protocols Powering Web 3
Trust Machines is a decentralised programmable layer for Bitcoin. The Stacks blockchain already allows applications to be developed which utilise Bitcoin infrastructure, but Trust Machine further expands Bitcoin’s smart contract functionality. Last month, the protocol raised $150M of funding with investors including Breyer Capital, Digital Currency Group and GoldenTree. The project’s CEO Muneeb Ali (also cofounder of Stacks) stated that the project will make “Bitcoin the settlement layer of Web 3”.
Part of the Trust Machines group, Zest is a yield earning protocol which allows users to lend Bitcoin using pools which generate Bitcoin rewards. At the time of writing, typical APY (annual percentage yield) for unsecured BTC loans on the platform is around 3-5%. The platform’s native token $ZEST can be used for governance voting. Later in the platform’s development roadmap, Zest aims to implement NFT-based loan receipts which will allow users to purchase Bitcoin bonds to help collateralise Stacks-based DeFi.
Ryder is an identity hardware wallet which uses private keys to authenticate users for accessing dApps and protocols. The decentralised ID removes the need to memorise passwords and keys, or have them on non secure devices such as laptops and mobile phones. Users can use the hardware to access crypto wallets or authentication-locked platforms. Prototypes for the wrist-worn wallet have been developed, with user-definable settings and functionality.
MoonRay is a play-to-earn metaverse action game with a tradable NFT economy. The project raised $3.5M in a seed round backed by VC firm Animoca Brands. Through the Stacks network, the game uses Bitcoin for transaction settlement and also offers DeFi yield farming opportunities to players. The next stage of development for the platform is to allow NFT-based land purchasing, similarly to more established Ethereum-based metaverse games such as Decentraland and The Sandbox.
Unlocking Bitcoin’s NFT Potential
Stacks now also hosts a thriving NFT ecosystem with creator communities and impressive daily trading volumes. Stacks-based NFTs can be bought and sold on marketplaces such as StacksArt, Byzantium and STXNFT. These marketplaces also provide collection data tracking - similarly to the tracking provided by OpenSea for Ethereum-based projects. Novum Insights’ own Stacks Dataverse allows the Stacks ecosystem and STX-based NFT projects to be explored.
STX NFTs by Weekly Sales Volume
(Info from STXNFT. Updated 22/03/22)
Megapont’s pixel art project Megapont Apes and subsidiary Robots and Wasteland Apes collections remain by far the highest valued STX NFT project, followed by Bitcoin Monkeys and Tiger Force. Some Ethereum-based NFT collections such as Satoshibles have bridged to the Stacks ecosystem, with token holders taking advantage of the comparatively low costs of listing and trading.
OKCoin’s recently announced Bitcoin Odyssey Collective seems poised to accelerate growth in the sector even further, and birth protocols that utilise Bitcoin settlement. With investment and development in the Stacks ecosystem continuing to expand, the chain seems to be ahead in the race to unlock Bitcoin’s DeFi potential.
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