HashKey Cloud joins Stacks' Genesis Bond pilot to time-lock Bitcoin

HashKey becomes second institution in Stacks pilot

HashKey Cloud has joined the Stacks network’s Genesis Bond pilot program. Stacks founder Muneeb Ali announced on X on Aug. 27 that the Asian infrastructure provider will deploy Bitcoin into the system. HashKey Cloud is the second institution announced for the program.

Under the program, participants time-lock Bitcoin on the Bitcoin base layer. They keep the private keys to the Bitcoin, meaning they retain custody of their assets. The participant must also hold STX tokens worth about 5% of the Bitcoin value being locked.

The bond is expected to begin around Sept. 10. HashKey did not disclose how much Bitcoin it plans to commit. On-chain data should show the total amount committed once the bond starts.

How the bond structure works

The Genesis Bond is designed as a protocol-level bond rather than a traditional loan. Participants do not lend their Bitcoin to a borrower or give custody to a third party. Instead, the Bitcoin sits in a time-locked output on the Bitcoin blockchain.

While the Bitcoin is locked, it cannot move unless the participant chooses to exit early. An early exit returns the Bitcoin principal but stops future yield payments. The paired STX tokens remain locked for the full duration of the bond, which creates different liquidity rules for the two assets.

Returns are not fixed. Stacks aims for about 3% annualized returns from Bitcoin committed by its miners. However, payouts depend on the price of STX and the economics of the Stacks network. If miner revenue falls short, returns could be lower than the target.

Code issue requires attention

The system launched under the PoX-5 update on July 30. While the code was audited by Trail of Bits, Clarity Alliance, and Asymmetric Research, a known issue remains.

A medium-severity flaw exists in the bond rollover path. If a participant moves from one bond period to the next near the end of a term, they might still be credited with old reward shares after withdrawing their collateral. This could result in other participants receiving a smaller share of the final reward.

The flaw does not affect ordinary enrollment in the Genesis Bond. However, because the public fix has not yet been released, the risk remains active in the current contract code.

Current controls and future changes

The first bonds are operating inside a managed program rather than an open market. During the PoX-5 phase, the Stacks Endowment sets the capacity, target yield, and allocation for each bonding period.

A future update called PoX-6 proposes to replace these manual settings with an algorithmic, permissionless auction. The current pilot serves as a test of the product within boundaries chosen by the Endowment.

• HashKey Cloud is the second institution to join the Stacks Genesis Bond pilot.
• Participants keep custody of their Bitcoin but must pair it with STX tokens.
• Program launch is expected around Sept. 10, with details on-chain.
• A rollover flaw in PoX-5 code requires a fix before future bond transitions.

What the announcement means

The participation of a major infrastructure provider like HashKey gives the program visibility. However, the actual weight of this participation depends on how much Bitcoin HashKey commits and whether the bond delivers its target returns. Weekly distributions and reserve data will help determine if miner revenue is sufficient to support the payouts.

• CryptoSlate