BitGo integrates Stacks, bringing Bitcoin DeFi to institutions

Published at: Oct. 25, 2021

Digital asset custodian BitGo has integrated with Stacks to bring Bitcoin (BTC) rewards to institutional investors, a move that could strengthen the already-heightened institutional demand for crypto during the next leg of the bull market.

Beginning Monday, BitGo will offer institutional token holders the ability to earn Bitcoin rewards through the Stacks token, which is also known as STX. Through a process known as Stacking, STX token holders can earn BTC rewards directly in their wallets.

Unlike other yield-earning services, BTC rewards generated through Stacking are not based on a lending auction, which means STX token holders do not need to lend their funds. Rather, Stacks claims that the yield is derived directly from its staking mechanism, which is connected to the Bitcoin blockchain.

As part of the integration, STX token holders will also have access to BitGo’s insurance, asset protection and portfolio management solutions. BitGo recently expanded its crypto-insurance program by $600 million, bringing the total value of assets covered to over $700 million.

Stacks is an open-source network for building smart-contract and DeFi bridges to Bitcoin. The platform launched its mainnet in January of this year and has secured several high-profile partnerships, including Foundry Digital and Blockdaemon, among others.

BitGo co-founder and CEO Mike Belshe said his company integrated Stacks because financial institutions have been looking for a secure access point to the DeFi market. “By onboarding support for Stacks and STX, we are giving our clients what they want [...] without the need for expensive infrastructure investments,” he said.

Institutional capital has flooded the cryptocurrency market this year, a trend that is expected to continue as Bitcoin and Ether (ETH) vie for new all-time highs. As Cointelegraph reported recently, institutional managers held a record $72.3 billion worth of crypto as of Oct. 17, marking the first all-time high since May.

The recently approved ProShares Bitcoin Strategy exchange-traded fund (ETF) debuted last week with the highest-ever “natural” volume, signaling a readiness on the part of institutional investors to dabble in digital assets. A second futures-based ETF from Valkyrie was also approved by the United States Securities and Exchange Commission last week.