Zest Protocol Review: 2026 Bitcoin Loan Comparison
Market data verified Invalid Date · Verified daily
Zest Protocol is a Bitcoin DeFi protocol that lets you borrow stablecoins against your Bitcoin at among the lowest variable rates of any tracked onchain Bitcoin lending market, and at one of the largest scales of any protocol on a Bitcoin L2. As of Invalid Date, Zest’s borrow rate is 2.12% variable APR. Zest runs 1 onchain market we track for borrowing stablecoins against sBTC, a decentralized 1:1 Bitcoin-backed asset, on the Stacks Bitcoin L2. It is a permissionless set of smart contracts with no application, no credit check, and no custodian. Rehypothecation of your collateral is your choice: put it to work, or keep it fully segregated. Rates vary with pool utilization. The protocol has reached $100M+ peak TVL, among the largest of any Bitcoin L2 lending market.
Your Zest Protocol loan
BTC $65,839 · liveYour loan purpose, wrapped-Bitcoin choice, and location are recorded to improve the options we surface. They don’t change Zest Protocol’s onchain terms, which are the same for every borrower.
Estimate only, at BTC $65,839. Self-custody · Confirm live terms on Zest Protocol.
Disclaimer. Every figure here, including the projected rate, is an estimate for general information, not a quote, an offer of credit, or financial advice. DeFi lending protocols are permissionless smart contracts, not regulated entities. Rates are variable and change continuously with pool utilization; the rate shown is a point-in-time snapshot. Your Bitcoin collateral is held on-chain — by the protocol's smart contracts, not a custodian — and can be liquidated automatically if your loan-to-value ratio crosses a liquidation threshold, without notice and without recourse. Smart contracts can contain bugs or be exploited. Some protocols rehypothecate deposited collateral. We are a publisher, not a DeFi protocol operator, broker, or investment adviser; nothing here is a recommendation to use any protocol. Verify all terms directly with each protocol before acting.
Zest Protocol is the leading Bitcoin lending protocol. The team has built on Bitcoin since 2020, spun out of Trust Machines in 2023, and has run a live lending market on Stacks since March 2024: $100M+ peak TVL, 800+ BTC deposited, and 1,500+ liquidations with zero bad debt. Every deposit, borrow, and liquidation is on-chain and verifiable by anyone.
V2 introduced risk groups, soft liquidations that trim positions instead of closing them, and made rehypothecation a borrower choice: put your collateral to work, or keep it fully segregated, never lent out or reused, enforced by smart contract rather than policy. The Stacks market is the proof of execution.
What we are building next is Bitcoin Collateral Vaults: BTC locked in vaults on Bitcoin L1, stablecoins borrowed on EVM chains against it, with no wrapping, bridging, or custodian. We would rather you verify than believe us. The contracts, the audits, and the full liquidation history are public.
About Zest Protocol
Zest Protocol is a Bitcoin lending protocol spun out of Trust Machines and built on the Stacks Bitcoin L2, live on mainnet since March 2024. It is among the largest DeFi protocols on any Bitcoin L2, with $100M+ peak TVL, 800+ BTC deposited, and 1,500+ liquidations executed with zero bad debt. In the market we track, you post sBTC as collateral and borrow USDCx stablecoins, with no repayment schedule and no margin calls. The February 2026 V2 upgrade added risk groups, soft liquidations that sell only what is needed to restore a position’s health, and made rehypothecation a per-borrower choice.
Stacks is the Bitcoin Layer 2 that Zest runs on. Each Stacks block anchors to a Bitcoin block, so confirmed transactions inherit the finality of Bitcoin’s proof-of-work. Block production is tied to Bitcoin economically as well: Stacks miners commit real BTC to compete for blocks, linking the chain’s security budget to Bitcoin rather than an independent validator set. Contracts are written in Clarity, a language built so that code can be fully audited before it is deployed.
Zest Protocol markets
Every Zest Protocol market we track, sorted by lowest variable borrow rate. Rates are variable point-in-time snapshots.
1 market
Collateral & rehypothecation
Accepted collateral: sBTC, a decentralized, non-custodial asset backed 1:1 by BTC on the Stacks blockchain. Where centralized wrapped tokens like wBTC depend on a single custodian, sBTC is operated by a signer set through a threshold-signature arrangement on Bitcoin itself, with the backing BTC held on-chain and the system governed through Stacks’ proof-of-transfer consensus.
Rehypothecation: your choice. Since V2, each borrower decides what happens to their own collateral. Choose to rehypothecate and your sBTC is put to work in the lending market; choose not to and it is never lent out or reused, enforced at the contract level. Most DeFi lending protocols make this decision for you at the protocol level — among the Bitcoin markets we track, Zest is unusual in making it a per-borrower setting.
Liquidation
Zest replaces traditional margin calls and full-position liquidations with a graduated schedule. If your LTV reaches 70%, third-party liquidators can begin trimming the position at a 7.5% penalty, selling only enough collateral to restore health. If the position deteriorates to 75% LTV, the penalty steps up to 10%. A borrower who drifts over the line loses a slice of collateral, not the whole position, and the penalty schedule rewards catching it early.
There is no notice period and no grace window; positions are monitored and liquidated automatically, with price feeds from Pyth. Zest’s liquidation engine has processed 1,500+ liquidations with zero bad debt, verifiable on-chain. Liquidations execute within a single Stacks block, and since the Nakamoto upgrade Stacks blocks are produced in seconds, so execution speed is comparable to faster EVM chains.
Audits & security
Zest is audited by Clarity Alliance, Asymmetric Research, and Graybeard Security, with the V2 upgrade audited before launch. The contracts have held user funds through $100M+ peak TVL and multiple market drawdowns without a reported security incident. An audit reduces but does not remove smart-contract risk — treat audit status as one input, not a guarantee, and verify the current posture on the protocol directly.
Supported wallets
You interact with Zest Protocol from a self-custody wallet you control on the Stacks network; we never ask you to connect a wallet here.
How Zest Protocol compares
| Protocol | Lowest rate | Max LTV | Structure | Rehypothecation |
|---|---|---|---|---|
| Zest Protocol | 2.12% | 60% | Configurable | Optional |
| Fluid | 7.12% | 85% | Isolated | No |
| Morpho | 3.18% | 86% | Isolated | No |
| Euler v2 | 5.47% | 84% | Configurable | Optional |
| Kamino | 5.73% | 82% | Pooled | Yes |
| Dolomite | 7.85% | 75% | Pooled | Yes |
| Compound v3 | 3.97% | 80% | Isolated | No |
| Aave v3 | 3.65% | 78% | Pooled | Yes |
| Benqi | 6.13% | 65% | Pooled | Yes |
| Venus | 4.05% | 80% | Pooled | Yes |
Frequently asked
What is Zest Protocol?
Spun out of Trust Machines, Zest Protocol is a non-custodial Bitcoin DeFi lending protocol built on the Stacks Bitcoin L2 and live since March 2024. It runs a configurable lending market with risk groups that isolate asset exposure and rehypothecation set per borrower, where Bitcoin holders borrow stablecoins against sBTC at a variable APR without selling, with no application and no credit check, while liquidity providers earn yield by supplying assets. It is among the largest lending protocols on any Bitcoin L2, having reached $100M+ peak TVL, with a track record of 1,500+ liquidations and zero bad debt.
What is USDCx?
USDCx is a dollar stablecoin on Stacks, fully backed 1:1 by USDC held in Circle’s xReserve infrastructure. Circle provides cryptographic attestations for deposits and minting, and Circle Gateway and CCTP handle movement between chains, so USDCx is interoperable with USDC across supported networks without third-party bridges or wrapped assets. It launched on Stacks in December 2025 and can be redeemed for USDC on Ethereum via the official Stacks bridge.
How do soft liquidations work on Zest Protocol?
When a position crosses 70% LTV, liquidators can repay debt and take collateral at a 7.5% penalty, but only enough to restore the position’s health rather than closing 50 to 100% of it as on typical DeFi protocols. If the position reaches 75% LTV, the penalty rises to 10%. The borrower keeps the remaining collateral, and the two-step schedule rewards positions that are caught early. Price feeds come from Pyth.
How do I borrow against my Bitcoin with Zest Protocol?
Bridge your BTC to sBTC using the Stacks sBTC bridge. Then connect a compatible wallet (Leather or Xverse) at app.zestprotocol.com, deposit sBTC as collateral, and borrow USDCx up to 60% LTV. There is no repayment schedule; you can hold the position as long as your LTV stays healthy.
Can I earn yield on Zest Protocol?
Yes. Suppliers earn yield on every asset in Zest’s markets: sBTC, stSTX, USDCx, USDh, STX, and USDC. Interest paid by borrowers flows to suppliers, so you can earn on your Bitcoin, your stablecoins, or your STX from the same protocol. The USDCx pool has historically held around $10M, supplied in part by institutional LPs.
Does Zest Protocol rehypothecate my collateral?
Only if you want it to. Since V2, rehypothecation is a per-borrower choice: rehypothecate your collateral and it is put to work in the lending market, or keep it segregated and it is never lent out or reused, enforced by smart contract rather than policy. Most protocols make this decision at the protocol level; on Zest it is yours.
How are Zest Protocol’s borrowing rates set?
Rates are variable, determined algorithmically by pool utilization. The interest rate model follows the same structure as Aave: a base rate and gentle slope up to a kink at 85% utilization, then a steep slope beyond it. At current utilization the USDCx borrow rate is roughly 2% APR, though it moves with utilization — the live figure is always at app.zestprotocol.com.
Is Zest Protocol custodial?
No. Zest is a permissionless set of smart contracts on Stacks. Your collateral is held onchain by the protocol’s contracts, not by a company, and no application or credit check is required. The contracts are audited by Clarity Alliance, Asymmetric Research, and Graybeard Security. There is no counterparty to call if something goes wrong, and smart-contract risk is yours to assess.
What are Bitcoin Collateral Vaults?
Zest’s next product: BTC locked in vaults on Bitcoin L1, with stablecoins borrowed on EVM chains against it, and no wrapping, bridging, or custodian. This review covers the live Stacks market; Bitcoin Collateral Vaults are not yet live and will be reviewed separately once they are.
DeFi lending protocols are permissionless smart contracts, not regulated entities. Rates are variable and change continuously with pool utilization; the rate shown is a point-in-time snapshot. Your Bitcoin collateral is held on-chain — by the protocol's smart contracts, not a custodian — and can be liquidated automatically if your loan-to-value ratio crosses a liquidation threshold, without notice and without recourse. Smart contracts can contain bugs or be exploited. Some protocols rehypothecate deposited collateral. We are a publisher, not a DeFi protocol operator, broker, or investment adviser; nothing here is a recommendation to use any protocol. Verify all terms directly with each protocol before acting.