Zest V2 Review 2026: Bitcoin Lending on Stacks and L1 Vaults

Zest V2 is listed on DefiLlama under Lending on the Stacks chain, with about $46.6 million in TVL and a ZEST token. The project describes itself as an open-source, on-chain lending platform built for Bitcoin, letting users earn on or borrow against their BTC.

The homepage positions Zest as the capital layer for Bitcoin. It highlights two pieces: Stacks markets, where users supply and borrow assets such as sBTC, STX and USDCx, and Bitcoin Collateral Vaults, which keep BTC on Bitcoin L1 while its value is used on another chain.

Zest says it was built by Stacks core contributors, with 2+ years of mainnet lending experience, a $100M peak TVL, zero bad debt and no BTC lost. Those are self-reported figures. Public reporting also indicate the vault product launched in May 2026, and that some documentation describes demo status and differences from the production design.

Zest runs on-chain lending markets. Users supply assets such as sBTC or STX to earn yield, and borrowers lock collateral and borrow other assets such as USDCx. If a loan's collateral value falls too far, part of it can be liquidated to repay the debt. The homepage mentions soft liquidations and partial withdrawals.

The newer Bitcoin Collateral Vaults aim to avoid wrapping or bridging. BTC goes into a self-custodial Taproot vault on Bitcoin L1. The vault's state is represented on a destination chain, where applications can act on it, for example to issue a stablecoin loan, while the BTC stays on Bitcoin.

Zest says the design uses BitVM to bring fraud proofs to Bitcoin, and that each user's BTC is never pooled with anyone else's. A debt-free withdrawal is described as programmatic, with recovery possible even if the destination chain fails. These are project claims drawn from the homepage and should be checked against the documentation.

Fees are not fully published. The homepage shows example supply and borrow rates for Stacks markets, such as a 3.41% borrow rate on USDCx and a 4.34% APY on a Stacks vault, but these are variable snapshots rather than fixed prices.

Users should also expect network transaction fees on Bitcoin and Stacks, plus any liquidation-related costs. The app and the documentation are where current rates, protocol parameters and any fees would be shown.

DefiLlama lists no audits for Zest V2, and its homepage provided does not cite specific audit reports. Users should look for audit and security information in the documentation before depositing significant funds. The project does claim zero bad debt and no BTC lost over 2+ years of mainnet lending, but that is self-reported.

The vault design relies on BitVM fraud proofs and a Taproot vault, which are newer technologies. Public reporting suggests parts of the vault product were in demo status, with wallet-integration requirements that differ from production. Lending carries standard risks such as smart-contract bugs, oracle errors, volatile collateral and liquidation. This is not financial advice.

Zest V2 is for BTC holders and Stacks users who want to borrow stablecoins or earn yield on sBTC and STX while keeping Bitcoin exposure. It suits people who understand collateral ratios and liquidation, and who are willing to read technical documentation. It is less suited to beginners seeking a fixed-rate, insured or custodial product.