Stacks, the Bitcoin Layer 2 network, is proposing a significant upgrade to its consensus mechanism that would let Bitcoin holders earn yield on their BTC without ever moving it off the main chain. The kicker: 15% of all excess revenue gets funneled into a reserve fund designed to keep the whole system solvent even during lean times.
The upgrade, dubbed PoX-5 (Proof-of-Transfer version 5), introduces a waterfall distribution model. Protocol bond holders sit at the top of the payment queue, with an initial target yield of roughly 3% APY. These bonds require a six-month lockup period. Only after those obligations are met does the remaining revenue flow downhill.
Whatever is left after paying bond holders, the excess miner revenue, gets split two ways. STX-only stakers receive 85% of the surplus. The protocol reserve fund absorbs the remaining 15%.
To participate, Bitcoin holders lock their BTC on the Bitcoin Layer 1 network using a timelock mechanism and pair it with STX, the native token of the Stacks network. No bridging required. No custodial transfers.
Building a 1.2-year safety buffer
