Staking has become a popular method for earning rewards from digital assets, thanks to proof-of-stake blockchains and DeFi protocols. However, Bitcoin holders have historically been excluded from these opportunities—until now. The Bitcoin liquidity layer, Acre, offers a Bitcoin staking service, allowing you to generate yield from your BTC.
This guide explains what Acre is and how you can use it to stake your Bitcoin.
Understanding Staking
Staking involves "locking up" crypto assets to support the operations of a cryptocurrency protocol. In return, users who stake—known as stakers—receive a percentage of rewards, with the exact amount depending on various factors.
Staking is a primary method for managing and securing proof-of-stake-based blockchains. It also ensures that everyone involved in the blockchain’s decision-making process has a vested interest in acting in the network’s best interests.
For many stakers, this process is a way to earn rewards on the blockchain. Others may choose to take a more active role in project governance.
Can You Natively Stake Bitcoin?
No, you cannot natively stake Bitcoin.
The original form of cryptocurrency staking comes from the proof-of-stake (PoS) consensus mechanism. In this system, validators stake a portion of their assets to participate in confirming transactions, securing the blockchain, and making governance-related decisions. In return, validators receive fees and newly minted tokens as rewards.
Bitcoin, however, uses a proof-of-work (PoW) consensus mechanism based on computational power rather than staking. In other words, Bitcoin’s entire governance model operates independently of staking.
This is why there is no native Bitcoin staking.
What Is Bitcoin Staking?
Although you cannot natively stake Bitcoin, the demand for BTC yield has motivated developers to create Bitcoin staking opportunities.
Most Bitcoin staking options involve wrapping BTC into new tokens and deploying them in DeFi protocols on other chains.
However, a new type of Bitcoin staking protocol, led by platforms like Acre, allows you to deposit native BTC to earn staking rewards paid in tokenized BTC (tBTC).
Acre is described as "Bitcoin’s new liquidity layer for scaling." You can deposit BTC in exchange for staking rewards paid in stBTC, a tokenized version of Bitcoin.
This new platform automatically allocates deposited Bitcoin across various protocols and pools, eliminating the need to explore different BTC staking platforms individually.
Acre’s integration with certain wallets means you can stake Bitcoin with just a few clicks, making Bitcoin staking accessible to everyone.
What Bitcoin Staking Rates Can You Expect with Acre?
The Bitcoin staking rates offered by Acre depend on several factors, including the current demand for tBTC on Layer 2 networks that use Acre’s system as a liquidity provider, their interest rates, and the amount you deposit.
Currently, Acre’s dApp does not display fixed rates because the protocol cannot guarantee returns to potential users. Actual potential rates depend on the Layer 2 solutions being used.
From the rewards generated, Acre deducts 10% as a protocol fee. The remainder is credited to your account. This fee supports the protocol’s operations, encourages the growth of new Layer 2 solutions needing liquidity, and expands reward options.
How Does Bitcoin Staking Work with Acre?
To stake Bitcoin on Acre, you deposit BTC to receive stBTC tokens, which represent your deposited native BTC. Acre converts your deposited BTC into tBTC, which is then deployed across various Bitcoin Layer 2 solutions to generate yield.
Your deposited BTC is held in a 51-of-100 multi-signature wallet operated by decentralized nodes.
stBTC is a non-rebasing token, meaning the number of tokens held by stakers remains constant, but their value increases over time. With rebasing tokens, the opposite occurs—the token quantity increases while the value remains stable.
Acre uses tBTC as a bridge between Bitcoin and other chains, interacting with protocols that require the liquidity Acre provides.
Finally, your deposit is allocated using the Acre Dispatcher. This component uses yield and risk optimization strategies to determine how BTC is distributed. This is where your earnings come from!
The allocation decisions of the Acre Dispatcher are determined by monthly votes from holders of the protocol’s governance token, veACRE.
How to Connect Your Wallet to Acre for BTC Staking
Getting started with Acre is straightforward.
- Connect your compatible wallet to the protocol. If you don’t have one yet, setting it up is quick and easy.
- Follow the on-screen prompts to connect your wallet to the protocol. Once connected, you can deposit funds with just a few clicks.
Enter the amount you wish to deposit, and that’s all there is to it!
- You may need to wait for a transaction confirmation message, which will appear on your dashboard.
- Afterward, the dashboard will also display the rewards you’ve accumulated since your deposit. This allows you to decide when to withdraw, whether to deposit more, or simply watch your rewards grow.
That’s it! Staking BTC with Acre is that simple.
If you’re ready to start staking Bitcoin, you can explore reliable wallet options to connect with Acre.
Disclaimer: This article is for informational purposes only and should not be considered financial, investment, or professional advice. While we aim to provide clear and accurate information about using Acre for Bitcoin staking, this content does not endorse or recommend engaging in any financial activities. Staking cryptocurrencies involves risks, so it is essential to conduct your own research and consult a financial advisor before making any decisions.
Frequently Asked Questions
What does staking Bitcoin mean?
Bitcoin itself does not support native staking.
However, specialized Bitcoin staking protocols, such as Acre, allow you to deposit BTC to earn staking rewards paid in tokenized Bitcoin. Alternatively, you can wrap Bitcoin and deposit the wrapped Bitcoin tokens into DeFi protocols within other blockchain ecosystems to earn staking rewards on wrapped Bitcoin.
How much can you earn by staking Bitcoin?
There is no fixed amount you can earn by staking Bitcoin. Different protocols offer varying incentives. This is why Acre aggregates a growing number of protocols. By doing so, users can access the best available rates without needing to select protocol options themselves.
Is staking Bitcoin safe?
Staking Bitcoin involves certain risks, including smart contract vulnerabilities, market volatility, and protocol-specific factors. It’s crucial to use reputable platforms and understand the mechanisms involved. Always conduct thorough research and consider consulting a financial advisor to assess your risk tolerance.
Can I unstake my Bitcoin at any time?
Most staking protocols, including Acre, allow you to unstake your Bitcoin, but there may be waiting periods or unbonding times depending on the platform. Check the specific terms and conditions of the protocol you are using to understand the process and any potential delays.
What is the difference between stBTC and tBTC?
stBTC represents your staked Bitcoin on Acre and is a non-rebasing token, meaning your token balance remains constant while its value appreciates. tBTC is a tokenized version of Bitcoin used as a bridge to other chains, facilitating liquidity provision and yield generation across Layer 2 networks.
How does Acre ensure the security of deposited BTC?
Acre stores deposited BTC in a 51-of-100 multi-signature wallet operated by decentralized nodes. This structure enhances security by requiring a majority of nodes to approve transactions, reducing the risk of unauthorized access or mismanagement.