Core network launches liquid staking token for Bitcoin holders

The Core Foundation announced the launch of LstBTC, a liquid staking token backed by Bitcoin (CRYPTO:BTC) on its Bitcoin-backed Layer 2 "Core" (CRYPTO:CORE) network. 

The new ERC-20 token will be pegged 1:1 with BTC and offer daily rewards to its holders, marking a significant development in Bitcoin's decentralised finance (DeFi) ecosystem. 

Liquid staking allows BTC holders to earn yield on their assets while maintaining the flexibility to trade them. 

According to Core DAO, staking rewards will be paid out in CORE tokens, the native utility and governance token of the Core network. 

Rich Rines, an initial contributor to Core DAO, stated, “LSTs are the missing ingredient in Bitcoin DeFi, and the introduction of LstBTC will help kickstart Core’s ecosystem.” 

Core is an Ethereum Virtual Machine (EVM)-compatible Bitcoin sidechain using a consensus mechanism called "Satoshi Plus," combining merge mining and delegated proof of stake. 

This setup enables the network to leverage Bitcoin's security while offering enhanced functionality compared to Bitcoin Layer 1. 

The concept of liquid staking eliminates the need to lock up assets to earn yield, allowing users to stake BTC in a self-custody setup and earn rewards from multiple Layer 2 blockchains. 

This flexibility could attract more developers and projects to build on the Core network, creating new decentralised applications and protocols. 

LstBTC, while issued on the Core network, is backed by BTC held in a multi-signature wallet on Bitcoin Layer 1. 

Core DAO emphasised that "Multisig wallets undergo rigorous security audits, ensuring that users’ assets are well-protected," but noted that this introduces new trust considerations over standard BTC holdings. 

On the same day, the Zest protocol on the Stacks Bitcoin Layer 2 also launched its own liquid staking token, BTCz. 

Unlike LstBTC, BTCz is designed to appreciate in value as the amount of BTC backing it increases over time. 

The Stacks blockchain, which integrates with Bitcoin Layer 1 for security, recently completed its Nakamoto upgrade, significantly improving transaction speeds. 

These developments mark a growing trend in expanding Bitcoin’s DeFi capabilities, providing BTC holders with more opportunities to participate in yield-generating activities without compromising liquidity.

At the time of writing, the Core (CORE) price was $0.8686, while the Bitcoin (BTC) price was $56,642.06.