How Stacks and Mezo Are Unlocking the Utility of Bitcoin DeFi

As Bitcoin's market cap explodes this year, the opportunity only continues to grow for Bitcoin DeFi builders.

Two leading projects in Stacks and Mezo are finally helping people leverage their Bitcoin to earn yield and unlock other ways to earn and spend Bitcoin natively.

This year, Coinage is highlighting the best projects in crypto as part of our annual Crypto Project of the Year celebration. Our members will vote on which one of the 16 nominated projects will win the crown. Head to Coinage's Snapshot to vote — ( you'll need a Coinage Caucus or Network NFT.)

We caught up with Stacks co-founder Muneeb Ali to explore how Stacks is gaining traction and what they are about to unlock.

How Stacks' Latest Upgrade Brings Bitcoin Closer to a New DeFi Era

For those unfamiliar, Stacks extends Bitcoin’s utility by making it programmable. As Ali explains, “Bitcoin is simple and durable by design... but that doesn’t mean you cannot deploy Bitcoin capital. You can move your BTC from the layer one [to Layer-2], which is Stacks... faster, cheaper, but more importantly, programmable.” This ability to use Bitcoin in ways traditionally reserved for Ethereum or Solana opens the door to swapping, lending, and yield generation — all using the world's most secure blockchain as a base layer.

This year has been a pivotal year for Stacks, buoyed by its monumental Nakamoto Upgrade. After years of development, the upgrade introduces faster transactions, reduced latency, and enhanced security by tying Stacks’ consensus more deeply to Bitcoin’s. “You get 100% of Bitcoin’s hash power securing the transactions that happen on the Layer-2,” Muneeb noted. By maintaining Bitcoin’s security while dramatically improving usability, the upgrade addresses one of Bitcoin’s long-standing challenges: its slow and clunky user experience.

The Nakamoto Upgrade also paves the way for sBTC, a non-custodial, decentralized Bitcoin-pegged asset. sBTC will enable Bitcoin to flow seamlessly between its Layer-1 and Layer-2 while maintaining a 1:1 backing. “You lock your BTC on the L1 and basically get this asset called sBTC, which is 1-to-1 backed by Bitcoin,” Muneeb said. Scheduled to go live in December, sBTC is set to unlock vast amounts of dormant Bitcoin capital.

This innovation positions Stacks to capitalize on a massive opportunity. Bitcoin, with a market capitalization nearing $2 trillion, has an unparalleled capital base. Yet, as Muneeb highlighted, “Most of the Bitcoin capital is actually not deployed... it’s mostly in cold storage and just sitting there.” Stacks aims to mobilize this capital, creating a thriving Bitcoin economy on its Layer-2 network.

Mezo, for its part, has also made its own headway in that endeavor. The Thesis-backed project has also sought to deliver on a similar roadmap with its tBTC wrapped asset.

"We're not just recycling TradFi ideas, but using Bitcoin's strength as hard money to secure new networks," says Thesis co-founder and Mezo builder Matt Luongo.

But beyond the Bitcoin DeFi technical advancements, Stacks is building bridges to the broader Web3 ecosystem. Recent partnerships with Aptos and Solana exemplify its strategy of integrating Bitcoin into other blockchain ecosystems. “If Aptos wants to have a Bitcoin asset, they don’t have to redo all the work that Stacks has already done,” Muneeb explained, emphasizing the value of interoperability.

As Bitcoin ETFs bring unprecedented institutional inflows, the timing for Stacks’ growth couldn’t be better. However, Muneeb is clear that the untapped Bitcoin capital itself — less than 1% of which is currently deployed — offers ample opportunity even before institutional players fully participate. The focus, he says, remains on scaling the technology to handle this capital efficiently.

Stacks still has plenty to deliver in 2025: Enhancements to network speed, integrations with major ecosystems, and initiatives to onboard developers are all in progress. Muneeb even teased potential support for Rust, a popular programming language, to attract more developers to the platform.

When asked about broader crypto trends, Muneeb offered sharp insights. He noted Ethereum’s struggles to maintain its early dominance, suggesting that it’s “stuck in the middle” between Bitcoin’s security and Solana’s high-performance app ecosystem. While Muneeb doesn’t see Ethereum fading entirely, he firmly believes Solana and other Layer-1 platforms are better positioned to dominate the app ecosystem.

Stacks, meanwhile, stays true to its Bitcoin roots. Its deep integration with Bitcoin and the upcoming sBTC launch are designed to appeal to Bitcoin’s staunchest advocates. “Stacks follows Bitcoin’s security, Bitcoin’s finality... it’s built in a way that makes a lot of Bitcoiners who would rather not use anything else much more comfortable using Stacks,” Muneeb explained.

As the crypto market matures, Stacks has positioned itself as a key player in Bitcoin’s evolution. By combining Bitcoin’s unparalleled security with the programmability of modern blockchain platforms, Stacks is not only empowering developers and users but also expanding what’s possible with the world’s largest cryptocurrency. As Muneeb succinctly put it, “The future of Bitcoin and Bitcoin Layer-2s is just getting started.”

Coinage NFT holders can vote now in our Snapshot vote to advance Stacks or Mezo to the next round. Voting closes December 9, mint a Coinage NFT now to have your voice heard!