Bitcoin's layer-1 staking landscape is set to witness a significant development with the launch of BTCz, a new liquid staking token built on the Zest Protocol on Stacks. BTCz will allow users to earn yield on their Bitcoin holdings through the Babylon staking system, which offers the ability to stake Bitcoin to secure multiple external blockchains, including Bitcoin layer-2 networks.

Zest Protocol's partnership with Babylon Labs is similar to the relationship between EtherFi and EigenLayer on Ethereum. Users can deposit BTC to receive BTCz in return, which appreciates in value over time as the underlying BTC accrues. The security guarantees of BTCz are enhanced by Stacks, which can independently verify staking balances on Bitcoin layer-1 through Babylon without relying on oracle messaging services or third parties.

The introduction of sBTC, a decentralized, bridged version of BTC secured by Stacks network users, will further decentralize BTCz. sBTC is expected to become the yield-bearing cousin of BTCz on Stacks, marking the beginning of a series of BTC yield products offered by Zest Protocol Earn.

With a total value locked of $25.46 million, Zest's lending protocol is already gaining traction in the DeFi space. The launch of BTCz represents a significant step forward in the evolution of Bitcoin's DeFi ecosystem and offers new opportunities for users to earn yield on their Bitcoin holdings.