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SIP-045Recommended

PoX-5 Bitcoin Staking and Emission Schedule Alignment

By Adriano Di Luzio, Alexis Radcliff, Aaron Blankstein, Sam Lee, Tanguy Girault

  1. Idea
  2. Draft
  3. Accepted
  4. CAB vote
  5. Recommended
  6. Activation
  7. Ratified

Abstract

Stacks exists to activate the Bitcoin economy: to bring Bitcoin into productive use while preserving the security properties that define it. Bitcoin Staking is a proposed upgrade to Stacks Proof-of-Transfer (PoX) that enables participants to lock BTC on Bitcoin and STX on Stacks and earn BTC-denominated yield without giving up custody. This SIP and the companion Bitcoin Staking white paper specify the consensus changes required for Bitcoin Staking and include an alignment of the STX emissions schedule.

Consideration Advisory Board votes

Introduction

Bitcoin Staking will anchor capital to Stacks by offering Bitcoin-denominated self-custodial yield, something no other product live in production can replicate. As more BTC holders enter the Stacks ecosystem, participation is intended to increase activity and transaction fees, accelerating the transition toward fee-driven consensus economics. Because STX is the capacity asset paired against BTC positions, participation in Bitcoin Staking is expected to create STX demand and reduce circulating supply via locking.

Design principles (from Section 2.2):

  • BTC holders earn rewards in BTC without giving up custody.
  • Bitcoin Staking extends existing Stacks infrastructure rather than replacing it.
  • Participation is designed to work for holders of any size via pooling support.

Specification

3.1 Bitcoin Staking Mechanism

3.1.1 Protocol Bonds

  • Participation pairs BTC timelock (Bitcoin L1) + STX lock (Stacks L2) for a ~6-month bonding period.
  • L1 commitment uses timelocked P2WSH UTXO with OP_CHECKLOCKTIMEVERIFY (BIP-65).
  • L2 commitment calls Bitcoin Staking contract; Stacks node matches L1 timelocks against registered L2 commitments.
  • Bitcoin side can be native BTC on L1 or sBTC on Stacks; STX-only path remains available.

3.1.2 Bonding Periods and Timing

  • Auction Window: ~1 week before new bonding period.
  • Bonding Period: 25,200 Bitcoin blocks (~6 months).
  • Reward Distribution: 1,050 Bitcoin blocks (~1 week), 24 distributions per bonding period.
  • Signer Cycle: 2,100 Bitcoin blocks (~14 days).
  • Six overlapping bonding periods; new period opens every ~4,200 blocks (~monthly cadence).
  • Optional Early Exit unlocks BTC early with forfeiture of remaining-period undistributed yield.

3.1.3 Capacity Allocation and Auction Mechanism

  • Target yield and capacity derived from on-chain inputs; protocol stabilizes by adjusting capacity.
  • PoX-5 bootstrap uses Endowment-managed capacity allocation to approved partners.
  • Full auction mechanism deferred to PoX-6.

3.1.4 Yield Distribution and Waterfall Structure

  • Tranche 1: active protocol bonds earn target BTC yield.
  • Tranche 2: STX-only stakers receive cycle excess (initially 85% of excess).
  • Tranche 3: reserve fund receives remaining excess (initially 15%) and buffers shortfalls.

3.1.5 Coverage Ratio Requirements

  • Coverage Ratio = reward pool per cycle / paired BTC obligations per cycle.
  • Target coverage multiple is 2.0x (acceptable range 1.5x to 3.0x).
  • Response bands: Excess (>=2.0x), Healthy (1.5-2.0x), Caution (1.0-1.5x), Stressed (0.8-1.0x), Distribution Failure Risk (<0.8x).

3.2 Emission Schedule Alignment

3.2.1 Current State Under SIP-029

  • SIP-029 stepped block reward from 1,000 STX to 500 STX in April 2026, with further scheduled reductions.

3.2.2 Proposed Change

  • Restore rewards to 1,000 STX per block and remove SIP-029 reduction schedule.
  • Add temporary +500 STX boost (1,500 total) for first bonding period (25,200 blocks ~6 months).
  • Boost expires automatically; reward returns to 1,000 STX unless changed by separate SIP.
  • Boost funded as new issuance; SIP-031 emissions unchanged.

3.2.3 Justification

  • Yield capacity and launch competitiveness.
  • Network security via sustained miner participation.
  • Transition path to fee-driven economics.
  • Inflation alignment and market-impact modeling (Appendix 3/4 context).

3.3 Phased Rollout

  • PoX-5 bootstrap phase ratified here; PoX-6 is directional only and requires separate SIP.
  • PoX-5 bootstrap uses Endowment-set parameters (capacity, target yield, BTC:STX ratio, allocation) and constrained guardrails.
  • Initial program conditions include 3,000 BTC capacity, 5% minimum STX ratio, and 3% BTC target APY at launch (subject to finalization).

3.4 Staking Process Improvements

  • Remove cooldown cycle on reward-address change.
  • Persist pool commitment across cycles to remove per-cycle commitment requirement.

3.5 Burn Mechanism Alignment

  • Replace PoX-4 burn-address routing behavior so committed BTC routes to reward pool via waterfall distribution.

3.6 Smart Contract and Off-Chain Components

  • PoX-5 contract includes bond registration, STX locking, event emission for L1/L2 matching, signer association/pool registration, coverage monitoring, and reserve tracking.
  • Off-chain components include sBTC autobridging, Early Exit signer set, multisig circuit-breaker, and PoX-5 off-chain auction clearing.

4 Activation

  • Voting threshold for stacked STX: 80% (recommended).
  • Minimum quorum: 80M STX (recommended).
  • Snapshot, voting window, and activation heights finalized post review.
  • At epoch 4.0 activation, pox-5 is deployed and pox-4 locks are released for restacking.

5 Backwards Compatibility

  • Hard fork transition impacts pool operators, custodians/wallets, and existing stackers; migration details expected in SIP V2.

6. Reference Implementations

6.1 Security Audits

  • Independent security audit is a precondition for activation timeline.

7 Related Work

  • SIP-007, SIP-015, SIP-021, SIP-029 (superseded post-activation), SIP-031, and Bitcoin Staking Whitepaper.

8 Security Considerations

  • Trust assumptions cover Bitcoin timelocks, Stacks consensus liveness, miner bid economics, and reward distribution correctness.
  • Economic risks include reflexivity, concentration risk, and opportunity cost during lock periods.
  • Protocol risks include hard-fork coordination and bootstrap dependencies.
  • L1 scalability/cost risk acknowledged for enrollment and autobridging transaction overhead at scale.

Reference links

Source Materials

Published proposal link: https://stacks.link/sip-pox5 Read in-app PDF viewer: /sip/sip-045/pdf Direct hosted PDF file: /sips/bitcoin-staking-sip-draft.pdf Forum thread: https://forum.stacks.org/t/introducing-the-bitcoin-staking-sip-v1-draft/18862