- Stacks published a whitepaper proposing a self-custodial Bitcoin staking mechanism that generates native $BTC yield without bridges or wrappers.
- The protocol extends the Proof-of-Transfer mechanism in place since 2021, which has already distributed over 4,200 $BTC in rewards to participants.
- The initial PoX-5 phase targets around 3,000 $BTC in capacity with a 3% APY in $BTC and a minimum $STX ratio of 5%.
Stacks Labs published a technical whitepaper detailing a proposal for a self-custodial Bitcoin staking mechanism. The proposal extends the existing Proof-of-Transfer (PoX) protocol to allow $BTC holders to generate Bitcoin-denominated yield without needing to move their funds to another chain, wrap them into a synthetic token, or surrender custody to a third party.
Until now, the market offered no solution combining native $BTC yields with the asset remaining on layer 1 under the user’s own keys. Existing restaking protocols require moving $BTC off Bitcoin or rely on intermediary trust assumptions, introducing the same risk vectors that Bitcoin’s design seeks to eliminate. The new mechanism proposed by Stacks aims to remove those threats.
Hold $BTC. Earn $BTC. That’s what Bitcoiners want.
Today we’re publishing the Bitcoin Staking whitepaper.
Self-custodial. $BTC-denominated yield.
Here’s what it is and why it matters 🧵 pic.twitter.com/sS5uan4AQ2
— stacks.btc (@Stacks) May 13, 2026
Stacks Keeps $BTC Where It Belongs
The mechanism is based on what the whitepaper calls “protocol bonds“: the user locks $BTC on Bitcoin’s layer 1 via a timelock and simultaneously locks $STX on the Stacks network for a period of six months. The $BTC remains on the Bitcoin blockchain, secured by its consensus and under the user’s own keys throughout that time.
Yields are generated in the same way PoX operates today: Stacks miners bid with $BTC to compete for block rewards and transaction fees, and that $BTC is distributed among eligible participants. Bitcoin Staking modifies who is eligible and how rewards are prioritized, not their origin.
Distribution follows a cascading tranche structure. Positions combining $BTC and $STX form the primary tranche and receive the target yield rate. Once those obligations are met, the surplus from mining revenues is split between stakers who contribute only $STX and a reserve fund that acts as a buffer when revenues fall below the required threshold.
Two Phases Toward Full Decentralization
The launch will take place in two stages. The first, called PoX-5, is a managed bootstrap period of approximately twelve months during which Stacks Endowment sets the capacity and yield parameters. Initial conditions target 3,000 $BTC in capacity with a 3% APY in $BTC and a minimum $STX pairing ratio of 5%. The second phase, PoX-6, removes permissioning and shifts the determination of capacity, rates, and ratios to on-chain consensus through a blind auction. Both phases require community approval through the SIP governance process.
Muneeb Ali, founder of Stacks, stated that the mechanism “changes the calculus” for $BTC holders by allowing them to earn yield on Bitcoin in a trustless manner while the token remains in its native place.
