# Zest Protocol

> Zest Protocol is a projects-and-protocols that builds DeFi infrastructure to let Bitcoin holders put BTC to work as collateral while keeping BTC on Bitcoin, offering lending markets, vaults and swap primitives primarily on Stacks.

- Canonical URL: https://iq.wiki/wiki/zest-protocol
- Categories: Projects & Protocols
- Tags: Bitcoin, DeFi, Infrastructure
- Created: 2026-10-01T17:54:58.566Z
- Last updated: 2026-10-01T18:36:06.619Z
- Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki)

---

**Zest Protocol** is a [Bitcoin](https://iq.wiki/wiki/bitcoin)-focused [decentralized finance](https://iq.wiki/wiki/defi) protocol that provides lending, yield strategies, token swaps, and [Bitcoin](https://iq.wiki/wiki/bitcoin) [collateral](https://iq.wiki/wiki/collateral) products. Its product suite includes lending markets and automated vaults on [Stacks](https://iq.wiki/wiki/stacks), as well as Bitcoin Collateral Vaults that allow [BTC](https://iq.wiki/wiki/bitcoin-btc) to be used as [collateral](https://iq.wiki/wiki/collateral) while remaining on the [Bitcoin](https://iq.wiki/wiki/bitcoin) network. [\[1\]](#cite-id-3e09x40lks) 

## Overview

Zest Protocol is a [Bitcoin](https://iq.wiki/wiki/bitcoin)-focused [decentralized finance](https://iq.wiki/wiki/defi) platform that provides lending, yield strategies, and token swaps through Bitcoin Collateral Vaults and a suite of products on [Stacks](https://iq.wiki/wiki/stacks). Bitcoin Collateral Vaults let users lock [BTC](https://iq.wiki/wiki/bitcoin-btc) on the [Bitcoin](https://iq.wiki/wiki/bitcoin) network and borrow [stablecoins](https://iq.wiki/wiki/stablecoin) on other chains, using BitVM to enable destination-chain lending markets to verify the state of [Bitcoin](https://iq.wiki/wiki/bitcoin) [collateral](https://iq.wiki/wiki/collateral) without requiring [BTC](https://iq.wiki/wiki/bitcoin-btc) to leave the base layer. On [Stacks](https://iq.wiki/wiki/stacks), Zest operates a lending market where users can supply assets such as [sBTC](https://iq.wiki/wiki/sbtc), [STX](https://iq.wiki/wiki/stx-token), and stSTX to earn yield or use them as [collateral](https://iq.wiki/wiki/collateral) for overcollateralized loans. Its Stacks Vaults package automated yield strategies into single-deposit products, including a leveraged [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) strategy that uses collateralized borrowing and [staking](https://iq.wiki/wiki/staking), while Stacks Swap aggregates liquidity across supported [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange) and routes trades between pools and intermediate tokens.  [\[2\]](#cite-id-pwvo0gqm75) 

## Features

### Bitcoin Collateral Vaults

Bitcoin Collateral Vaults allow users to use [BTC](https://iq.wiki/wiki/bitcoin-btc) as collateral for [stablecoin](https://iq.wiki/wiki/stablecoin) borrowing while keeping the underlying [BTC](https://iq.wiki/wiki/bitcoin-btc) in a vault on the [Bitcoin](https://iq.wiki/wiki/bitcoin) network. Each position is tied to a customer-specific [Taproot](https://iq.wiki/wiki/taproot-exchange) vault and a corresponding [collateral](https://iq.wiki/wiki/collateral) record on a destination chain, allowing the [BTC](https://iq.wiki/wiki/bitcoin-btc) to remain on [Bitcoin](https://iq.wiki/wiki/bitcoin) rather than being wrapped, bridged, or transferred to a third-party custodian. The vault's spending conditions are established when the position is created, while connected lending markets manage borrowing and [liquidation](https://iq.wiki/wiki/liquidation) rules on the destination chain. The architecture supports partial [liquidations](https://iq.wiki/wiki/liquidation), [collateral](https://iq.wiki/wiki/collateral) top-ups, and withdrawals of excess [collateral](https://iq.wiki/wiki/collateral), with the remaining [BTC](https://iq.wiki/wiki/bitcoin-btc) staying in the original vault.

The system initially uses customer-authorized [Bitcoin](https://iq.wiki/wiki/bitcoin) transactions and independent guardians to enforce settlement conditions, while a planned BitVM-based phase would use cryptographic proofs and an open challenge process to verify events on external chains. In the BitVM design, repayment or [liquidation](https://iq.wiki/wiki/liquidation) events on a destination chain would be submitted as claims on [Bitcoin](https://iq.wiki/wiki/bitcoin), and challengers could dispute invalid claims before [BTC](https://iq.wiki/wiki/bitcoin-btc) is released. The architecture connects [Bitcoin](https://iq.wiki/wiki/bitcoin-btc) vaults, [collateral](https://iq.wiki/wiki/collateral) records, lending-market positions, event observations, and settlement transactions, with controls intended to prevent conflicting claims on [collateral](https://iq.wiki/wiki/collateral). Zest Protocol announced a working [mainnet](https://iq.wiki/wiki/mainnet) prototype in May 2026, with production deployment planned in phases and stablecoin borrowing initially targeting [EVM](https://iq.wiki/wiki/ethereum-virtual-machine-evm)-based destination chains. [\[3\]](#cite-id-5kglxc9rww)  [\[6\]](#cite-id-hln2xim6dc) 

### Stacks Market

![](https://ipfs.everipedia.org/ipfs/QmTbBRb5EYigRnGPaV3iY6rqEr2odraeSCjC6A6svot9NF)

Stacks Market V2 is Zest Protocol’s lending market on [Stacks](https://iq.wiki/wiki/stacks), introducing pair-specific risk parameters, partial liquidations, and optional non-rehypothecation. Unlike the V1 model, where each [collateral](https://iq.wiki/wiki/collateral) asset used the same loan-to-value ratio, [liquidation](https://iq.wiki/wiki/liquidation) threshold, [liquidation](https://iq.wiki/wiki/liquidation) penalty, and other parameters regardless of the borrowed asset, V2 uses Risk Groups that configure these settings for individual [collateral](https://iq.wiki/wiki/collateral) and debt pairs. This allows markets with different volatility, liquidity, or correlation characteristics to use separate borrowing limits and [liquidation](https://iq.wiki/wiki/liquidation) conditions. The market also supports partial [liquidations](https://iq.wiki/wiki/liquidation), which reduce unhealthy positions in stages rather than immediately liquidating the entire position; the applicable Risk Group determines the [liquidation](https://iq.wiki/wiki/liquidation) amount and penalty. Suppliers can additionally enable non-rehypothecation, keeping supported deposits segregated as [collateral](https://iq.wiki/wiki/collateral) rather than making them available for borrowing, although these positions remain subject to [smart-contract](https://iq.wiki/wiki/smart-contract), [oracle](https://iq.wiki/wiki/oracle), and [liquidation](https://iq.wiki/wiki/liquidation) risks.

Stacks Market V2 also introduces a [liquidation](https://iq.wiki/wiki/liquidation) model with separate partial and full [liquidation](https://iq.wiki/wiki/liquidation) thresholds, allowing positions to move through a [liquidation](https://iq.wiki/wiki/liquidation) range rather than being liquidated at a single threshold. The model uses a [liquidation](https://iq.wiki/wiki/liquidation) slope and exponent curve, with penalties varying within configured minimum and maximum ranges, while pricing data is provided through Pyth. Risk Groups can assign different parameters to individual markets, such as higher LTVs for relatively stable asset pairs and lower limits for more volatile combinations. The V2 market supports migration from V1 through a single-transaction process in the Zest Protocol application, while users can also migrate manually by closing V1 borrowing positions, withdrawing liquidity, and redepositing it into V2. [\[8\]](#cite-id-0268sncybm)  [\[7\]](#cite-id-dgrwasn0ry) 

### Stacks Vault

![](https://ipfs.everipedia.org/ipfs/QmSc3ZSqKv1p4FZUXLkWYunJygxCXm66WbdrZAxNd6TEvr)

Stacks Vaults are automated yield strategies built on top of Zest Protocol’s lending markets on [Stacks](https://iq.wiki/wiki/stacks). Users deposit a supported asset into a vault and receive shares representing their proportional position, while the vault executes the configured strategy and reflects returns through changes in the share price. Each vault has its own supported assets, strategy, withdrawal process, fees, and risk parameters, and its net asset value is calculated from the vault’s assets and liabilities. The vault architecture separates custody from strategy execution, allowing strategy logic to be maintained independently while restricting the actions the vault can perform. Vaults use controls such as deposit caps, position limits, onchain timelocks, and emergency pause functions, although they remain subject to [smart-contract](https://iq.wiki/wiki/smart-contract), market, liquidity, and [liquidation](https://iq.wiki/wiki/liquidation) risks.

The first Stacks Vault is the zvstBTC Vault, which implements a leveraged [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) strategy using stBTC, a liquid [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) token from Stacking DAO. The vault deposits stBTC as collateral on Zest Protocol, borrows sBTC against the [collateral](https://iq.wiki/wiki/collateral), stakes the borrowed sBTC into additional stBTC, and repeats the process within its configured risk limits. Users do not need to manage the individual lending and [staking](https://iq.wiki/wiki/staking) positions or claim separate rewards, as returns are reflected through the value of their vault shares. The realised return depends on factors including [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) yield, borrowing costs, market utilisation, fees, and market conditions. [\[9\]](#cite-id-zbfxx6apso) 

#### zvstBTC Vault

![](https://ipfs.everipedia.org/ipfs/QmNjU8FZ1bPmWKg7fEsX82gDL7YRKtvqEcauZzdLQLnV9G)

The zvstBTC Vault is Zest Protocol’s first Stacks Vault and automates a leveraged [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) strategy using stBTC from Stacking DAO. Users can enter by depositing stBTC directly, depositing sBTC that is converted into stBTC through the supported [staking](https://iq.wiki/wiki/staking) path, or depositing [BTC](https://iq.wiki/wiki/bitcoin-btc) that is converted through the supported sBTC and [staking](https://iq.wiki/wiki/staking) process. The vault uses the deposited stBTC as [collateral](https://iq.wiki/wiki/collateral) on Zest Protocol’s [Stacks](https://iq.wiki/wiki/stacks) lending market, borrows sBTC against it, and stakes the borrowed sBTC into additional stBTC. The resulting stBTC is added as [collateral](https://iq.wiki/wiki/collateral), allowing the borrowing and [staking](https://iq.wiki/wiki/staking) cycle to repeat within configured risk limits. Returns are reflected in the vault’s net asset value and the value of zvstBTC shares rather than through separate reward distributions, with realised returns depending on [staking](https://iq.wiki/wiki/staking) yield, borrowing costs, utilisation, fees, and market conditions. The vault uses deposit caps, collateral and borrowing limits, exchange-rate checks, onchain timelocks, and emergency pause functions as risk controls. These measures do not eliminate exposure to [smart-contract](https://iq.wiki/wiki/smart-contract), [liquidation](https://iq.wiki/wiki/liquidation), liquidity, [oracle](https://iq.wiki/wiki/oracle), stBTC, and [Bitcoin](https://iq.wiki/wiki/bitcoin) [staking](https://iq.wiki/wiki/staking) risks. Withdrawals use a request, cooldown, and claim process that allows the vault to reduce its leveraged position, with payouts made in stBTC. Users seeking sBTC can redeem their stBTC through Stacking DAO’s supported redemption process. [\[9\]](#cite-id-zbfxx6apso) 

### Stacks Swap

![](https://ipfs.everipedia.org/ipfs/QmcXJH4MVNMKsEzaVHQWspy1Tw3LBCbC7KLNvyswFoBcps)

Stacks Swap is a non-custodial swap aggregator on [Stacks](https://iq.wiki/wiki/stacks) that compares liquidity and routes trades across supported [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange), including Bitflow, Velar, [ALEX](https://iq.wiki/wiki/alex), and Arkadiko. Its routing system can split trades across multiple pools or [DEXes](https://iq.wiki/wiki/decentralized-exchange) and use intermediate tokens when these routes provide better available output, while also supporting direct conversions through Stacking DAO for certain assets. Each trade executes as a single atomic [Stacks](https://iq.wiki/wiki/stacks) transaction, meaning the transaction either completes at or above the user’s specified minimum received amount or reverts. Tokens remain in the user’s wallet between transactions, with no deposits or account balances required, and the minimum-received amount is enforced through [Stacks](https://iq.wiki/wiki/stacks) transaction post conditions.  [\[10\]](#cite-id-zri1kx2p1t) 

## ZEST

ZEST is the native token of Zest Protocol. The protocol’s current products include Bitcoin Collateral Vaults and lending and yield strategies on [Stacks](https://iq.wiki/wiki/stacks), while governance and [staking](https://iq.wiki/wiki/staking) are planned features rather than current token utilities. The protocol’s stated priorities include developing Bitcoin Collateral Vaults, expanding protocol usage, and adding markets for [Bitcoin](https://iq.wiki/wiki/bitcoin)-based financial activity. Governance and [staking](https://iq.wiki/wiki/staking) are expected to become active after the protocol reaches the required scale and establishes the mechanisms to implement them.  [\[11\]](#cite-id-g71qr16e4a) 

### Tokenomics

![](https://ipfs.everipedia.org/ipfs/QmNay6EoqNRFYDqmXATSPFmcjymiNfdXFGdrFQxfT1H6xs)

ZEST has a total supply of 1B tokens and has the following allocation: [\[5\]](#cite-id-bef4vjp5ht) 

* **Community**: 27.83%
* **Team**: 25%
* **Ecosystem Development**: 24.82%
* **Investors**: 22.35%

## Partnerships

* [Binance](https://iq.wiki/wiki/binance)
* [Gate.io](https://iq.wiki/wiki/gate)
* [Uniswap](https://iq.wiki/wiki/uniswap)
* [KuCoin](https://iq.wiki/wiki/kucoin)
* [MEXC](https://iq.wiki/wiki/mexc)
* [Aerodrome](https://iq.wiki/wiki/aerodrome-finance)
* [ByBit](https://iq.wiki/wiki/bybit)
* [Bitget](https://iq.wiki/wiki/bitget)
* Bitflow