> For the complete documentation index, see [llms.txt](https://docs.zestprotocol.com/start/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zestprotocol.com/start/stacks-vaults/introducing-stacks-vaults.md).

# Introducing Stacks Vaults

<figure><img src="/files/DOWeadSQnGgQ7MbfuC7L" alt=""><figcaption></figcaption></figure>

**Stacks Vaults** are automated yield strategies built on top of Zest Protocol's lending markets on Stacks. Users deposit a single asset into a vault, and the vault executes a yield strategy on their behalf: no position management, no rebalancing, no juggling markets.

Stacks Vaults mark the evolution of Zest Protocol from a lending market into yield infrastructure. Every yield source on Stacks becomes a strategy that can be automated and offered as a single-deposit product.

The first vault is the levered Bitcoin Staking vault, built around stBTC, the liquid Bitcoin Staking token from Stacking DAO.

### The Levered Bitcoin Staking Vault

Users deposit BTC, sBTC, or stBTC into the vault. The vault uses stBTC as collateral on Zest Protocol's lending market to borrow sBTC, stakes the borrowed sBTC into stBTC, and repeats the process to build a leveraged staking position.

The result is compounded yield on top of the base Bitcoin Staking rewards, while the user holds a single vault position.

**Target yield: 6 to 8% APY,** derived from Bitcoin Staking on Stacks.

**Deposit.** Deposit BTC on Bitcoin L1, or sBTC or stBTC on Stacks. BTC and sBTC deposits are converted into stBTC on entry. The user receives a vault position representing their share of the strategy.

**Automated leverage.** The vault posts stBTC as collateral on Zest Protocol, borrows sBTC against it, stakes the borrowed sBTC into stBTC, and re-deposits. The loop runs until the target leverage is reached. Zest Protocol manages the loop automatically.

**Yield source.** All yield originates from Stacks Bitcoin Staking rewards, carried into the vault through stBTC's auto-compounding ratio. The strategy is profitable when the stBTC staking yield exceeds the sBTC borrow rate. No emissions, no incentives, no external yield sources.

**Continuous monitoring.** Zest Protocol monitors the position continuously: collateral ratio, borrow rates, and staking yield. The vault adjusts leverage as market conditions change.

**Withdrawals.** Users can withdraw at any time. The vault unwinds the required share of the position: repaying borrowed sBTC and releasing stBTC, and returns the underlying assets to the user's wallet.

{% hint style="info" %}
Stacks Vaults are fully non-custodial. The vault contract can only execute strategy actions on Zest Protocol's lending markets. It cannot move funds anywhere else, and only the user can withdraw their position.&#x20;
{% endhint %}

**Key features:**

* **Non-custodial** – The vault contract is restricted to strategy actions on Zest Protocol. Only the user can withdraw their funds
* **One deposit, one position** – Deposit BTC, sBTC, or stBTC and hold a single position while the strategy runs itself
* **Pure Bitcoin yield** – Target 6 to 8% APY derived entirely from Bitcoin Staking on Stacks, with no token emissions
* **Built on live markets** – The vault runs on Zest Protocol's lending markets: two years in production, over a thousand liquidations processed without bad debt
* **First of many strategies** – STX-based strategies, stablecoin and credit-based strategies, and structured yield products will follow on the same foundation. In the future, external curators will be able to manage their own strategies on Stacks Vaults

> **Stacks Vaults are separate from Bitcoin Collateral Vaults**, Zest Protocol's upcoming flagship product that allows users to borrow against native BTC on any chain (e.g. Ethereum).

### Risks

Leveraged staking carries risks that unlevered holding does not:

* **Rate risk.** If the sBTC borrow rate rises above the stBTC staking yield, the loop becomes unprofitable until the vault deleverages
* **Liquidation risk.** The vault maintains conservative collateral ratios, but a sharp move in the stBTC/sBTC ratio could trigger deleveraging
* **Smart contract risk.** The vault inherits the risk of the underlying contracts: Zest Protocol's lending market and Stacking DAO's stBTC

Stacks Vaults will launch alongside stBTC, before Stacks Bitcoin Staking goes live. More details at [zestprotocol.com](https://zestprotocol.com).