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Cryptocurrencies

Stacks

Stacks (STX)

Stacks is a decentralized protocol designed to enable decentralized applications and smart contracts to use Bitcoin as an asset while settling transactions on the Bitcoin blockchain. The platform operates with the Stacks (STX) token, which plays a crucial role in executing smart contracts, processing transactions, and registering new digital assets. The protocol was co-founded by Muneeb Ali and Ryan Shea in 2013.

History

Stacks, originally known as Blockstack, began in 2013 as a computer science Ph.D. project at Princeton University. By 2014, it transformed into a startup and received support from the Y-Combinator incubator.

Overview

stacks background
Ticker STX
Category Infrastructure
Website http://stacks.co/
Twitter @Stacks
Telegram StacksChat
Reddit https://www.reddit.com/r/stacks

The Stacks layer allows applications and smart contracts to use Bitcoin (BTC) as their currency or asset and conduct transactions on the main Bitcoin blockchain.

Proof of Transfer

Stacks employs a consensus mechanism called Proof of Transfer (PoX) that relies on both STX and BTC. PoX miners utilize already-mined BTC and earn STX rewards. This mechanism, akin to Proof of Work (PoW), involves miners bidding by spending BTC, with the bid weight influencing their leader selection probability. The leader election occurs on the Bitcoin chain, and new blocks are created on the Stacks layer. This method leverages existing Bitcoin mining efforts without significant additional energy use, requiring only standard computing resources for Stacks nodes to participate.

Stacks records user identity and transactional metadata in each block, which is accessible to all applications within the Stacks ecosystem. Integration with Bitcoin enables verification of Stacks IDs and wallet balances on the Bitcoin blockchain. Stacks smart contracts are developed using a specialized language created specifically for Stacks by Algorand.

Microblocks

The Stacks blockchain is linked to the Bitcoin blockchain, with a 10-minute block time. To improve efficiency, the Stacks protocol introduces microblocks, allowing numerous transactions to occur between Bitcoin blocks. These transactions are later recorded on the Bitcoin blockchain.

Clarity

Stacks uses the Clarity programming language for its smart contracts, developed by the Stacks team. Although Clarity is not Turing complete and therefore less versatile than some other languages, it emphasizes security through predictable code. This feature enables developers to accurately predict a program's actions, data usage, and operational costs.

Team

Muneeb Ali and Ryan Shea began Stacks as part of their Ph.D. studies. As the project evolved from a research paper to a startup and then into an ecosystem, the team expanded to include computer science experts from institutions like MIT, Harvard, and Stanford. Hiro PBC is responsible for the development and upgrading of the Stacks protocol.

STX Token

STX is the primary digital currency within the Stacks network, supporting Bitcoin smart contracts, rewarding miners, and enabling STX holders to earn Bitcoin through a process called Stacking. Stacks miners use Bitcoin to participate in leader elections and gain newly minted STX tokens. By locking STX tokens, holders can earn BTC rewards via Stacking. The leader election process involves a verifiable random function (VRF) to choose a leader for each round, giving more weight to higher BTC bids. The chosen leader then writes the new block on the Stacks blockchain.

In addition to BTC rewards, STX miners receive newly minted STX tokens as transaction and contract execution fees, paid in STX. The cost of mining is expressed in BTC, used by miners to participate in leader elections. BTC bids are sent to specific addresses linked to STX token holders in the consensus, ensuring that BTC spent in the mining process rewards STX holders based on their holdings.

The Stacks 2.1 upgrade

The Stacks 2.1 upgrade, a significant development for the Stacks blockchain, was implemented at block 781,551. This upgrade highlights the Stacks community's dedication to decentralized decision-making, with substantial support from STX holders.

Key features of Stacks 2.1 include:

  1. Enhanced Stacking: Continuous Stacking is enabled by removing the "cooldown" cycle between reward cycles. Stackers can now add to their STX pool without meeting the previous minimum threshold.

  2. Support for Taproot and Segwit addresses: These addresses are now supported, potentially reducing Bitcoin transaction fees and enabling decentralized Stacking pools.

  3. Easier bridge building: Improvements in the Clarity programming language facilitate building bridges between Stacks and other blockchains, allowing smoother asset transfers and integration of vital DeFi services.

  4. Stacks assets in Bitcoin wallets: This upgrade enables the transfer of Stacks NFTs, tokens, and other assets to Bitcoin wallets, simplifying the user experience.

Stacks 2.1 serves as a foundation for future developments like sBTC and the Nakamoto Release, paving the way for exciting possibilities in DeFi on Bitcoin and enhancing the Stacks blockchain's operational speed.

Nakamoto upgrade

The upcoming Nakamoto upgrade, expected in Q1/Q2 of 2024, is a major advancement for Stacks, aiming to enhance performance and fortify Bitcoin integration. It focuses on accelerating transactions and securing the Stacks-Bitcoin connection, improving user experience and functionality.

Highlights of the Nakamoto upgrade

  1. Faster transactions: This upgrade aims to significantly reduce confirmation times, benefiting decentralized applications (dApps) and DeFi platforms by allowing transactions to confirm in seconds.

  2. Bitcoin-level security: Aligning Stacks transactions with Bitcoin's security ensures robust and irreversible transactions.

  3. Handling Bitcoin reorganizations: New measures will enable Stacks to adapt to Bitcoin reorganizations, maintaining transaction validity.

  4. Mining fairness: Strategies will be implemented to ensure equitable STX reward distribution among miners.

  5. Improved scalability: Enhancing transaction throughput will make Stacks more capable of handling a larger volume of transactions.

  6. Backward compatibility: A smooth transition from Stacks 2.0 to the Nakamoto update will be ensured.

The Nakamoto upgrade is set to transform the Stacks blockchain, significantly enhancing transaction speed while upholding Bitcoin’s security standards. This upgrade marks a crucial step towards a faster, more secure, and equitable blockchain environment, enhancing the platform for both users and developers.

sBTC

sBTC will launch on the Stacks layer about two months after the Nakamoto release, with the exact timing dependent on network stability, bug fixes, and overall security considerations. The innovation of sBTC lies in its ability to use Bitcoin in smart contract applications without centralized intermediaries.

Traditional methods like wrapped Bitcoin (wBTC) on Ethereum have been centralized. However, sBTC offers a decentralized alternative, operating through a 'peg in and peg out' system bridging the Bitcoin and Stacks layers. This process is managed by an evolving group of signatories within the Stacks ecosystem, leveraging the Proof of Transfer (PoX) consensus mechanism for seamless and feeless Bitcoin to sBTC conversion and vice versa.

For the broader crypto community, especially investors, sBTC opens new opportunities. It extends Bitcoin's utility to DeFi and significantly enhances the STX token's value proposition, positioning the Stacks blockchain as an essential layer for Bitcoin. This development could lead to increased liquidity and a new wave of Bitcoin-centric DeFi applications.