How to Stake Bitcoin (BTC)

Content

Why Bitcoin (BTC) Can Be Staked

For a long time, Bitcoin has been viewed primarily as a store of value. Most users buy BTC and hold it, expecting its price to appreciate over time, rather than earning yield through staking like on Proof-of-Stake (PoS) blockchains. In recent years, however, a new idea has begun to emerge: staking BTC to earn rewards.

At first glance, this may seem counterintuitive. Bitcoin operates on a Proof-of-Work (PoW) consensus mechanism and does not support native staking. So how can BTC staking be possible?

Advances in cross-chain security and protocol-level innovation now allow Bitcoin to be used as economic security for other PoS networks through specialized mechanisms. In this model, BTC is securely locked on the Bitcoin blockchain, without being transferred or sold, and contributes to PoS network security while generating real rewards.

👉 To learn more about how BTC staking works in practice, the different models involved, and how Lombard enables you to earn BTC rewards while continuing to hold Bitcoin, please click here.

How Lombard’s Bitcoin Staking Works

When you deposit BTC through Lombard, the Bitcoin is securely locked on the Bitcoin blockchain using a time-locked script, and a corresponding amount of LBTC is minted as a liquid staking token representing your position.

Through the Babylon protocol, the locked BTC is registered as economic security for participating PoS blockchains, helping strengthen their consensus security.

In return, these PoS networks pay staking rewards. Babylon first aggregates rewards from different PoS blockchains, and Lombard then converts the aggregated rewards into BTC. This value is reflected directly in the appreciation of LBTC. When you unstake, you simply redeem LBTC back into BTC and receive both your original principal and the accumulated rewards. The entire process is transparent, simple, and preserves Bitcoin’s native security.

Why Stake BTC with CoolWallet

Supported Products

✅ CoolWallet Pro

✅ CoolWallet Go

✅ CoolWallet HOT (hot wallet)

Benefits of Staking BTC with CoolWallet

Staking BTC with CoolWallet allows you to earn yield while maintaining strong security and convenience:

• Self-Custody Security
  CoolWallet is a self-custody wallet, giving you full control of your assets without relying on centralized intermediaries.
• Enhanced Security
  With CoolWallet Pro or CoolWallet Go, private keys are securely stored within the wallet’s card-based secure element, minimizing the risk of key exposure.
• Mobile Convenience
  Stake, unstake, and monitor your assets easily through the CoolWallet App, anytime and anywhere.
• Clear Asset Visibility
  The staking process is transparent, allowing you to track your LBTC holdings and staking status at any time.
• Flexible Asset Management
  You can add more BTC or partially unstake whenever needed, enabling flexible adjustment of your asset allocation and yield strategy.

Instructions

Staking Guidelines

• BTC staking requires both BTC and Ethereum addresses
  To stake BTC, you must select a BTC address to send BTC for staking and an Ethereum address to receive the minted LBTC.

• Only Taproot BTC addresses (bc1p) are supported
  Please ensure your BTC address uses the Taproot (bc1p) format. Other address types are not supported at this time.
• Rewards start only after LBTC is successfully minted
  Staking rewards begin accumulating only after BTC is successfully staked and LBTC has been minted.
• Rewards are based on the value of LBTC held
  BTC staking rewards are calculated based on the value of LBTC you hold. The more LBTC you hold, the more rewards you accumulate over time.
• LBTC balance changes affect rewards immediately
  Whether you receive LBTC from another platform or transfer LBTC obtained through CoolWallet staking to another platform, your staking balance is updated in real time. Rewards are always calculated based on your current LBTC balance, so any increase or decrease directly affects future rewards.
• LBTC can be freely managed
  During staking, you may freely hold or manage your LBTC, including using it in DeFi for lending, liquidity provision, or trading. Rewards continue to accumulate based on your current LBTC balance.
• You can add more BTC at any time
  You can stake additional BTC at any time by minting more LBTC. Newly minted LBTC is automatically combined with your existing balance and participates in reward accumulation.
• You can unstake at any time, including partial unstaking
  You may choose to unstake part or all of your position. When unstaking, the selected amount of LBTC is redeemed for the corresponding value of BTC. Redemption typically takes around 7 – 9 days, depending on network conditions.

How to Add a New Stake

Step 1. Open the CoolWallet App and go to Wallet → Earn → BTC to enter the BTC Staking page.

Step 2. Tap Stake, review the information, then tap Stake Now.

Step 3. When staking BTC through Lombard, you will receive an equivalent value of LBTC as a staking certificate. Select the BTC address to send BTC from and the Ethereum address to receive minted LBTC.

After confirming the amount and addresses, you must complete an authorization transaction. This authorizes Lombard to mint LBTC and charge the applicable minting fee. Authorization does not transfer your assets; it enables the staking process.

Step 4. Verify the transaction details and sign the authorization (CoolWallet Pro or CoolWallet Go users should prepare their hardware wallet).
After authorization, tap Stake to proceed.
Because each LBTC becomes redeemable for more BTC over time, the amount of LBTC minted may be slightly less than the BTC staked, while representing equal BTC value.

Step 5. After staking, wait for the transaction to be confirmed and LBTC to be minted. Minting usually takes about 60 minutes.

When the staking status changes from Processing to Staking, LBTC has been successfully minted.

Manual LBTC Minting and Reauthorization

Due to network conditions, minting fees may occasionally exceed the amount you originally approved, or the transaction may still be in the automatic minting queue, resulting in LBTC not being minted yet.

In this case, you may wait for fees to decrease or choose to mint immediately by tapping Mint LBTC. If you mint immediately, the minting fee will be paid in ETH instead of being deducted from the minted LBTC.

Additionally, during periods of network congestion, the previously approved minting authorization may expire. In that case, you will need to reauthorize to continue minting LBTC. Tap Reauthorize to proceed. No additional fees are charged for reauthorization.

How to Increase Your Staked Amount

To increase your staking amount, simply repeat the steps in How to Add a New Stake.

How Staking Rewards Work

Staking rewards are automatically reflected in the appreciation of LBTC. When you unstake, you can redeem the appreciated LBTC for BTC, and the accumulated rewards will be included in the BTC you receive.

How to Unstake

Step 1. On the BTC Staking page, tap Unstake and select the BTC address to receive the redeemed BTC.

Step 2. Enter the amount to unstake and sign the transaction (CoolWallet Pro or CoolWallet Go users should prepare their hardware wallet).
You may choose to unstake part or all of your position.

Step 3. After the transaction is confirmed, redemption usually takes 7 – 9 days, depending on network conditions.

Step 4. Once the BTC is returned, the corresponding staking record will be removed from the BTC Staking page.

FAQs