Stacks is currently the strongest option for eligible long-term Bitcoin holders seeking native BTC custody and Bitcoin-denominated rewards, although its model requires a separate STX commitment and direct participation remains restricted during PoX-5.
Stacks targets approximately 3% annualised BTC rewards through Proof of Transfer. Babylon and Core also allow holders to stake native BTC without wrapping or bridging it, but pay rewards in BABY and CORE respectively. Starknet and Stacking DAO instead use tokenised Bitcoin positions, offering access to decentralised finance applications while adding smart-contract, liquidity and custody risks.
Advertised yields are targets rather than guarantees. Actual returns depend on reward-token prices, protocol participation, withdrawal rules, lock-up periods and any additional staking requirements. APR and APY are not directly interchangeable.
How the platforms hold Bitcoin
Stacks, Babylon and Core allow BTC to remain on Bitcoin Layer 1 under the holder’s keys. Starknet and Stacking DAO use tokenised Bitcoin and additional infrastructure.
Stacks uses native timelocks, so users do not need a bridge, wrapped token or third-party custodian. Under its direct Bitcoin Staking model, participants lock BTC on Bitcoin and separately commit STX on Stacks. The two positions form a protocol bond while the BTC remains under the holder’s control.
Stacks lists direct, pooled and liquid routes through its Bitcoin Staking options. Direct staking currently requires approval during PoX-5. The planned PoX-6 upgrade is intended to remove that restriction and permit permissionless participation, although no activation date has been confirmed.
Babylon also locks native BTC through Bitcoin scripts without wrapping or bridging it. Its system delegates economic security to finality providers and connected networks. Users retain control of their Bitcoin, but part of the stake can be forfeited if a delegated finality provider breaches the relevant security rules.
Core uses native Bitcoin timelocks and allows holders to delegate BTC to Core validators. Users select a lock-up period and identify a validator and reward address in the staking transaction. The BTC becomes available after the timelock expires.
Starknet uses tokenised Bitcoin on its own network rather than locking native BTC directly on Bitcoin Layer 1. Supported assets include WBTC, LBTC, SolvBTC and tBTC. Users delegate those assets to validators for STRK rewards, either through supported wallets or liquid-staking positions that can remain usable in decentralised applications.
Stacking DAO uses sBTC, a Bitcoin-backed asset on Stacks. Depositors receive stBTC through its liquid Bitcoin staking product. The token represents an underlying Bitcoin Staking position, remains transferable and accumulates rewards. The underlying sBTC participates in Stacks Bitcoin Staking through protocol contracts, while Stacking DAO supplies the STX pairing needed for the bond.
What rewards are available?
Stacks targets approximately 3% annualised yield paid in BTC. The rewards come from Proof of Transfer, under which Stacks miners commit BTC to compete for block production and receive STX rewards. Those Bitcoin commitments fund distributions to eligible stakers.
Stacks says PoX has distributed more than 4,200 BTC since January 2021. Direct participants receive weekly BTC payouts, with protocol bonds prioritised in the distribution process. The rate remains a target and depends on the amount of BTC committed by miners.
Babylon pays rewards in BABY, issued by the protocol. Its official staking dashboard has shown base BTC staking APR of about 0.04%, rising to approximately 0.60% for users who stake BABY alongside their Bitcoin. The boost depends on the amount of BABY committed relative to BTC. Because rewards are paid in BABY, their value in Bitcoin changes with the token’s market price.
Core distributes CORE from network block rewards and part of transaction fees. BTC-only staking is available without holding CORE, although the base yield was below 0.1% in the comparison figures. Core Dual Staking requires users to commit CORE alongside BTC and places them in reward tiers according to their CORE-to-BTC ratio.
Dual Staking returns have commonly been described as ranging from 2% to 3%, but the outcome depends on the selected tier, validator performance and market conditions. Core does not provide one fixed APY for every BTC position, and changes in the CORE price can reduce the value of the reward.
Starknet pays STRK to users staking supported tokenised Bitcoin assets. Newly minted STRK funds the rewards, which depend on the amount staked and validator participation. Approximately 4% has been used as an indicative yield, although the realised return varies with STRK issuance, participation levels and the STRK-to-BTC exchange rate. Delegators do not need to stake STRK alongside Bitcoin, but may require it for network fees depending on their wallet.
Stacking DAO provides BTC-denominated yield through stBTC, sourced from the same PoX miner commitments that support Stacks Bitcoin Staking. Its initial documentation targeted approximately 2.6% net annualised yield, while its website displayed approximately 2.18% BTC APY during the October review. That difference means users need to check the live rate before staking.
Rewards are reflected through the exchange rate between stBTC and sBTC rather than paid as a direct BTC distribution. As rewards are collected and reinvested, each stBTC is designed to represent an increasing amount of sBTC. Stacking DAO supplies the underlying STX requirement, so users do not need to provide the roughly 5% STX pairing themselves.
Lock-ups and key risks
Direct Stacks Bitcoin Staking requires STX worth approximately 5% of the BTC position for the full six-month bonding period. A change in STX’s price can affect that commitment. BTC may be withdrawn before the bond expires, but future staking rewards are forfeited and the STX remains locked until the original term ends.
Direct bonds do not expose BTC to slashing, although the targeted yield depends on miner commitments. Participation is currently limited to approved holders during PoX-5, with the institutional onboarding programme aimed at users holding at least 50 BTC. PoX-6 is intended to open direct staking to all Bitcoin holders.
Babylon’s main additional risk is slashing. A finality provider that breaks the security conditions can cause part of the associated Bitcoin stake to be forfeited. Its current native staking term is 64,000 Bitcoin blocks, or roughly 15 months, although users can request early unbonding under the protocol’s withdrawal rules. Unbonding involves further waiting, and positions cannot be partially unbonded: the entire stake must be withdrawn through the applicable process.
Core lets holders choose their BTC lock-up period. Its official interface requires a minimum commitment of five days, although shorter periods are possible through direct Bitcoin scripting. Withdrawals are available when the selected period ends. The trade-off is that competitive returns generally require CORE exposure, while the amount needed for boosted tiers can change through protocol governance.
Starknet users must first obtain a supported tokenised Bitcoin asset. Its backing arrangements, bridging process and smart contracts create risks that do not apply when BTC is locked directly on Bitcoin Layer 1. STRK rewards add a further source of price exposure, while liquid-staking products introduce additional token and contract dependencies.
Stacking DAO allows stBTC to be transferred, traded or used in supported decentralised applications, and it can be redeemed into sBTC through the withdrawal mechanism. Instant redemption depends on reserve liquidity and carries a fee. Standard withdrawals have a cooldown of approximately 4,200 Bitcoin blocks, or four weeks. The position also remains dependent on sBTC infrastructure and staking smart contracts, while liquidity in stBTC markets may vary when users need to exit quickly.
Which platform suits which holder?
Stacks is the clearest fit for eligible long-term holders prioritising native BTC custody and BTC rewards, but users must accept the approximately 5% STX requirement, six-month bond and current PoX-5 restrictions.
Babylon suits holders seeking native BTC staking without buying BABY for basic participation. Its compromises are low base rewards paid in BABY and the possibility of Bitcoin slashing.
Core is more suitable for users who value flexible native Bitcoin lock-ups. Higher returns require CORE alongside BTC, and exposure to CORE can affect the overall result.
Starknet is aimed at holders who want tokenised Bitcoin to remain usable across decentralised applications. Its rewards are paid in STRK and come with tokenisation and smart-contract risks.
Stacking DAO is designed for liquid Bitcoin staking on Stacks without users supplying STX themselves. Its stBTC position can remain liquid and be used in supported applications, subject to sBTC, smart-contract and liquidity risks.
Overall, Stacks offers the strongest combination among the platforms compared for eligible long-term BTC holders seeking self-custody and BTC-denominated rewards. Its yield is funded by miner commitments through Proof of Transfer and does not involve BTC slashing, but the model still involves the STX requirement, six-month bonding period and restricted direct access during PoX-5.
Native BTC staking avoids some bridge and wrapper risks, but it does not remove the possibility of slashing, lock-ups or exposure to additional tokens. Tokenised alternatives add smart-contract, custody and liquidity considerations, and none of the advertised yields is guaranteed.
This article does not represent investment advice. The content and materials are for educational purposes only.
