# The Importance of Liquid Stacking

## The Problem Stacking DAO solves

Stacking, as it stands, isn’t a smooth experience—and it’s become even more complex with the Stacks Nakamoto upgrade:

1. Each stacking cycle lasts **2 weeks**, which means long wait times to unlock and restack
2. **Rewards don’t start immediately**—users may wait a full cycle before seeing any yield
3. A **high minimum** of around **90,000 STX** is required to participate
4. With Nakamoto live, users must now **run a node with liveness** to stack directly

StackingDAO was built to solve these issues and make stacking more accessible, efficient, and rewarding.

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What is Stacking?\
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**Stacking** is the process of locking STX to participate in the **Stacks consensus mechanism**, helping to secure the network. It’s similar to staking ETH on Ethereum.

Currently, over **400 million STX** are stacked, earning an annual yield of **9% or more**. You can track live statistics on the [stacking-tracker website](https://stacking.club/).
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## The Solution

StackingDAO offers a **liquid stacking protocol** that provides users with tokenised representations of stacked STX: **stSTX** and **stSTXbtc**. Think of it as **Lido or Jito**, but for Stacks.

Key benefits include:

1. **No more 2-week unstacking delays** – With stSTX-STX pools on a DEX, users can trade back to STX anytime (for both stSTX and stSTXbtc)
2. **Instant, continuous yield** – Rewards start accruing daily from the moment of deposit
3. **No 90k STX minimum** – Users can stack any amount
4. **No need to run a node** – StackingDAO handles node liveness post-Nakamoto upgrade

As liquid, yield-bearing assets, **stSTX** and **stSTXbtc** are positioned to become core building blocks of the emerging **Bitcoin DeFi ecosystem**—particularly as collateral. For STX holders, borrowing against these tokens is likely to be the most **tax-efficient way to access liquidity**.

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Why hasn’t liquid stacking taken off on Stacks before?

Although Stacks has been live since 2021, **liquid stacking only became technically feasible in 2023**. Before April of that year, Stacks smart contracts didn’t support continuous stacking, which is essential for liquid solutions.

Demand for delegated stacking is now expected to rise significantly. With the **2024 Nakamoto upgrade**, users must run a node with liveness to stack—an added technical hurdle that will likely push most users toward **custodial or delegated stacking options**.

For these reasons, **StackingDAO received a grant from the Stacks Foundation** to research and develop a liquid stacking protocol purpose-built for the post-Nakamoto era.
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