Layer 2 4 U | Blog
August 16, 2023
8 min read

Stacks: The Ultimate Savings Account

Stacks: The Ultimate Savings Account

By now, most people understand that the fiat dollar system can not be trusted to keep the value of your money safe over the long term. The advice that you received to save your money and put it in the bank to earn interest from your mom, dad, grandma, or grandpa doesn’t apply in 2023.

Banks can’t be trusted, point blank. They tend to blow up when you least expect it, even when they have triple-A ratings from Fitch and Moody.

Signature Bank becomes next casualty of banking turmoil after SVB

Silicon Valley Bank Fails After Run on Deposits

Both of these banks happened waaay back in, oh wait, March and April of 2023. As you can see, that wasn’t too long ago. Don’t get me started on 2008 and the Great Financial Crisis or Wells Fargo opening fake accounts in their customers’ names. (Apparently, they are still doing this)

The bottom line is you should trust the banks to hold onto your money. So if you can’t trust banks to keep your money safe, where can you save your money while earning a decent return?

Side note: This isn’t financial advice; please do your own research before making any purchases of the Stacks Token.

Stacks (STX) Is Your New Savings Vehicle

If you have been following me on Twitter for a while, you may know I am a Bitcoin maximalist. I believe in the protocol's core tenets and that it will unleash untapped human potential around the globe once global adoption reaches a scale of sufficient size. Until then, the messengers for Bitcoin will keep spreading the message far and wide, me included.

I also believe that Bitcoin is going to need layer 2 solutions once it grows in orders of magnitude simply because the transaction per second is alone around 7 tps, and when Bitcoin is priced at $1 million per coin, transaction fees are going to be quite expensive.

Stacks as a layer two solution is perfectly situated to help grow the Bitcoin economy. I like Stacks because you can earn Bitcoin by hodling the Stacks token. It’s ingenious if I say so myself. When you “stack” or lock your stacks on the protocol, you are enhancing the security of the stacks blockchain and earning Bitcoin as a reward for doing so. Here are four ways you can benefit from hodling stacks.

  1. Stacks Price Appreciation: By buying and holding stacks for the long term, you can benefit from the price appreciation of the token.

  2. Earn Bitcoin: In addition to the price of the Stacks token, you will also receive the hardest money ever created for hodling stacks.

  3. Bitcoin Price Appreciation: The Bitcoin you earn from stacking your STX could rise in value over time, thus increasing your wealth.

  4. Borrow Against Stacks Holdings: Did you know that you can even borrow against your stacks holdings and have it pay for itself? Using Arkadiko Finance, you can use your STX as collateral for a loan. You place your collateral in a vault and earn a yield while your STX is locked up. The yield is higher than the interest charged; thus, the loan pays for itself over time. I thought this was a cool feature that should be discussed more often.

Self Custody Is The Way

The best thing about using stacks is that you can self-custody your assets. There is no reliance on a middleman to manage your stacks or Bitcoin. Stacks stays true to the Bitcoin ethos of “not your keys, not your coin.” As long as you have control of your private keys, your assets are your assets, and no one can take them away from you.

In order to earn a Bitcoin yield on your stacks, you need to stack them in a pool of other stackers or self-stack if you have enough STX tokens. Pooling your tokens with other stackers is easier because the threshold to stack and earn Bitcoin is much lower.

I highly recommend using the Xverse wallet because it is user-friendly and can be used on your phone or desktop.

I would also recommend using the HIRO wallet as well. Again it is highly user-friendly and easy to set up. The only drawback with Hiro is that it is desktop only. You can lock up your STX tokens using a variety of web-based pools such as:

I can’t say enough good things about Stacks. I believe it’s one of the best Bitcoin Layer 2’s out there. I enjoy using it and exploring the new use cases that are being developed on Stacks. Plus, it’s secured by Bitcoin. What more could you ask for? If you have questions, feel free to contact me on Twitter or Nostr.

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