StakeStone: An Omnichain Liquidity Infrastructure

Key Takeaways

* StakeStone is a decentralized protocol designed to improve how liquidity moves across different blockchain networks.

* It enables seamless cross-chain liquidity using omnichain infrastructure and LayerZero technology.

* The protocol aims to make assets like ether (ETH) and bitcoin (BTC) more usable in decentralized finance (DeFi). It solves problems such as fragmented liquidity, inefficient yield generation, and complicated cross-chain operations.

What Is StakeStone?

StakeStone is a blockchain protocol that builds an “omnichain” liquidity infrastructure. This means it helps assets flow smoothly between different blockchain networks. The protocol aims to solve common problems in DeFi, where assets are often stuck in isolated networks, making it difficult for users to transfer them or earn rewards efficiently.

The project offers several services and tools, including:

STONE: A token that represents staked ETH and earns yields while remaining usable in DeFi.

SBTC and STONEBTC: Tokens that make BTC liquid and yield-generating across multiple chains.

LiquidityPad: A platform that helps new blockchains attract and manage liquidity.

STO Token: A governance token that enables users to vote on how the protocol operates.How Does StakeStone Work?

StakeStone operates through a combination of technical components and governance mechanisms. Here are some of its main features and how they function.

STONE: yield-bearing ETH

The STONE token represents staked ETH. When users deposit ETH into StakeStone, they receive STONE, which earns staking rewards and can be used in DeFi applications like lending or trading. This solves the problem of ETH holders having to choose between staking or participating in DeFi.

STONE is designed as an Omnichain Fungible Token (OFT) using LayerZero, a technology that enables seamless movement across chains. Its price is set by the protocol’s smart contract, not decentralized exchanges (DEXs), which can create arbitrage opportunities if DEX prices differ.

SBTC and STONEBTC: liquid and yield-bearing BTC

To address the limited functionality of Bitcoin smart contracts, StakeStone introduced two tokens:

SBTC (liquid BTC): Integrates various BTC derivatives, like WBTC, BTCB, into a single, liquid token that can be used across chains such as Ethereum, BNB Chain, and others. Users deposit BTC derivatives into a vault, and the Minter issues SBTC, which supports DeFi activities like trading or lending.

STONEBTC (yield-bearing BTC): Expands on SBTC by generating yields through strategies in DeFi, centralized-decentralized finance (CeDeFi), and real-world assets (RWA). Users deposit SBTC or other BTC derivatives, and STONEBTC automatically allocates assets to optimize returns.

These tokens make Bitcoin more versatile in DeFi, reducing fragmentation and improving capital efficiency. StakeStone integrates with networks like Mantle, Linea, and Zircuit to ensure SBTC and STONEBTC are widely usable.

LiquidityPad

LiquidityPad is a platform that helps emerging blockchains attract and manage liquidity. It acts as a bridge between Ethereum’s well-established DeFi ecosystem and newer networks. Users deposit assets like ETH, BTC derivatives, or stablecoins into ecosystem-specific vaults, receiving LP tokens in return. These tokens can be used in both Ethereum DeFi and the emerging chain’s ecosystem, engaging in both and capturing yields.

This bidirectional flow enables new blockchains to access Ethereum’s deep liquidity, while Ethereum users can benefit from yield opportunities in growing ecosystems. LiquidityPad reduces reliance on unsustainable token incentives, promoting long-term growth.

Omnichain liquidity infrastructure

At the core of StakeStone’s innovation is its omnichain liquidity system. It aims to eliminate the need for traditional bridges, which can be slow and risky. Instead, StakeStone uses a Credit Margin Engine (CME), a market-making system that:

Maintains consistent liquidity across chains.

Optimizes prices to reduce slippage and ensure fairness.

Enables one-click cross-chain transactions, in contrast to the multi-step processes of traditional bridges.

The CME works with Native’s infrastructure, which includes automated market-making and a universal compatibility engine. As of May 2025, StakeStone supports over 20 chains and 100 protocols.

Governance and the STO Token

The STO token is central to StakeStone’s governance. Users can lock STO to receive veSTO, which grants voting power. For example, veSTO holders decide how to allocate liquidity incentives across STONE-Fi, BTC-Fi, and LiquidityPad pools. They also receive yield boosts based on their locked tokens.

The governance system includes:

Bribe system: Protocols can deposit STO or partner tokens to attract liquidity. STO bribes are partially burned, reducing token supply, while partner token bribes diversify the protocol’s treasury.

Swap mechanism: STO holders can exchange tokens for treasury assets (e.g., partner tokens) when arbitrage opportunities arise, creating value and maintaining deflationary pressure.

Vesting: Converting veSTO back to STO requires a 3