Topics Altcoins
Bybit Learn
Bybit Learn
Beginner
1 авг. 2022 г.

Stacks (STX): The Layer 1 Blockchain Secured by Bitcoin

There are a large number of cryptocurrency platforms on the market, some of which are far more valuable and important to the industry than others. Among the most important platforms for this industry is Stacks, an open-source Bitcoin network that's designed specifically to provide Bitcoin with smart contracts and decentralized applications, also known as DApps. 

While Bitcoin and Stacks are essentially two completely separate blockchains, they work together. If you're thinking about investing in the STX token and want to know more about this Bitcoin network, the following guide offers an extensive overview of what Stacks is and the benefits it provides.

What Is Stacks?

The Stacks protocol is a popular cryptocurrency project that aims to enhance the Bitcoin blockchain by facilitating decentralized applications (DApps) and smart contracts on the Bitcoin platform. The DApps on the Stacks network are highly modular.

This cryptocurrency project is centered on improving Bitcoin and making sure that the Bitcoin blockchain is as widely adopted as possible. Stacks is considered to be a Layer 1 ecosystem that's anchored directly to Bitcoin. Because of how this project is structured, its smart contracts don't alter any Bitcoin features.

Modular DApps means that developers can build on top of any app created on the Stacks network. Since Bitcoin is the base layer of Stacks, all aspects of the Stacks ecosystem are secured directly by the Bitcoin network.

History of Stacks

Stacks, originally named Blockstack before being rebranded in 2020, was co-founded by Ryan Shea and Muneeb Ali in 2013. In fact, Ali still works with Stacks to this day. The platform was developed as a response to the increased centralization of the internet.

When the Stacks protocol was first created, it was designed to work as a Layer 1 solution using the Bitcoin network as its base layer. Its native token, STX, is used to process transactions and execute smart contracts.

How Does Stacks Work?

Stacks focuses on the interactions that occur between two separate parties, which include stackers and miners. These interactions are fully regulated by a proof of transfer consensus mechanism. However, “miners” on the Stacks platform don't actually mine anything. Instead, they exchange mined BTC tokens taken from the Bitcoin network for the possibility of earning STX tokens. Because this type of mining is unique, any previous experience you've had with mining likely won't prepare you for being a miner on this platform.

Every block that's “mined” via the Stacks blockchain stores transactional metadata, as well as user identity information. This data is used to interact with every DApp that's housed within the Stacks ecosystem. Since Stacks is connected directly to Bitcoin, alterations that are made to wallet balances or IDs are verified through the Bitcoin network. The same is true of smart contracts.

Any data that isn't directly stored on Stacks is stored through Gaia, a separate solution that uses cloud storage and cold storage to provide users with numerous options. As for the Stacks coin — STX — it’s the main cryptocurrency token on which Stacks is based.

Proof of Transfer

Proof of transfer (PoX) is a consensus mechanism that defines what miners must do to develop blocks through the Stacks blockchain. Mining is necessary to verify transactions, and provides miners with cryptocurrency rewards. This mechanism is commonly used for Bitcoin by requiring miners to solve a unique puzzle with the processing power that their computer has, which adds more blocks to the chain.

Any blockchain consensus algorithm requires financial or compute resources to guarantee an extremely secure blockchain. Decentralized consensus ensures that malicious actors don't have the ownership stake or computing power to breach the network through an attack. PoX is based on the proof of burn consensus mechanism, in which miners destroy proof of work (PoW) crypto tokens as a method of providing computing resources.

PoX secures blockchains by using a PoW cryptocurrency from an entirely different blockchain. Instead of burning the currency, miners transfer any cryptocurrency they commit to other individuals within the network. 

There are several reasons why Stacks selected Bitcoin as the network that would effectively power the consensus. Since Bitcoin is considered to be the most secure cryptocurrency platform in existence, partnering with it doesn't come with much risk.

Bitcoin focuses primarily on stability as well as simplicity, which is why it's difficult for hackers to breach the network. BTC has also proven to be the most popular cryptocurrency, and is currently recognized by large corporations and governments alike.

Clarity Smart Contracts

Clarity is a smart contract language that allows smart contracts to be used on the Bitcoin network. The purpose of this language is to prevent many of the exploits and bugs that can exist with these contracts. To understand the benefits that Clarity provides, it’s first necessary to know how smart contracts interact with Bitcoin. There are three separate transactions that occur with a Bitcoin-Stacks smart contract, which include a single Bitcoin transaction and two Stacks transactions.

The receiver address, total amount of Bitcoin and other parameters are sent in the initial Stacks transaction. Once this occurs, a Bitcoin transaction is made, which determines the state of Stacks through the Bitcoin network. When this transaction has been confirmed, an additional Stacks transaction occurs, which verifies the previous Bitcoin transaction. The smart contract’s parameters are then executed.

It's possible to create and implement ample amounts of software logic when creating a Stacks smart contract. Some of the functions that Clarity can accommodate include:

  • App-specific blockchains

  • Fungible and non-fungible tokens

  • Access control

  • Business-model templates, of which a subscription is the primary one

Smart contract language included with this platform is fully optimized for security and predictability. The main difference between Clarity and some other smart-contract languages used on blockchain networks is that the language is decidable, and can be interpreted and displayed on the blockchain without any changes.

Because the language is shown as is, the smart contract code can always be read by humans, which makes it easy to audit the information. The “decidable” nature of this language indicates that the code can be accurately determined when it's executed. In fact, you're also able to identify what function the code has as well as its duration.

Features of Stacks

Stacks comes with a wide range of distinct features that you might want to know about before investing in the platform. These features include everything from mining functionality to the Gaia storage system.

Mining

Miners can spend Bitcoin when electing leaders. This process involves sending different transactions to the Bitcoin blockchain, after which a verifiable random function (VRF) will choose the leader for each round. This individual then writes the block on Stacks. For rewards, STX miners are provided with STX tokens, as well as Clarity contract execution fees and transaction fees for every block they mine.

Build Apps

As noted, developers can create DApps with the Stacks blockchain. These include everything from games and exchanges to non-fungible tokens. All DApps are made with Bitcoin technology. Once developed, they provide users with full control over their own digital assets, data and identities. Furthermore, all applications created via Stacks are decentralized. Stacks offers three separate functions for developing apps:

  • Data storage — Gaia can be used to save and obtain data for different users

  • Authentication — Users can register and sign in with separate identities via this blockchain

  • Transaction signing — Users can sign and show transactions with this blockchain

These functions can be used together in order to develop powerful and feature-rich experiences that are more useful than traditional apps. Even though Stacks provides developers with ample resources for creating DApps, the majority of resources that developers have access to are designed to accommodate developers who have experience with JavaScript.

Gaia Storage System

Any information that's not directly stored on Stacks is placed in the Gaia storage system. This particular solution uses Microsoft Azure, Dropbox and other cloud storage providers to deliver premium storage options. Users also have the opportunity to use cold storage (as opposed to cloud storage) if they have enough computing power.

Stacking

“Stacking” is designed to provide STX holders with rewards for taking part in the PoX consensus. Individuals who participate in this process are referred to as “stackers.” Whenever a block is mined, the blockchain sends BTC that has been committed by miners over to stackers. This Bitcoin is considered a reward for the value that stackers add to the Stacks network. These rewards are distributed once every seven days.

At the moment, STX holders are required to have a minimum amount of holdings (currently, roughly 100,000 STX) if they want to participate in the blockchain as stackers. Crypto investors who don't have enough STX can take part in stacking by using a third-party delegation service, which lets holders pool their holdings together (before taking part in stacking) as a form of joint participation.

StacksArt

StacksArt is the NFT marketplace housed on the Stacks blockchain. It supports all Bitcoin NFT projects. This is the very first NFT marketplace available through Stacks. With StacksArt, you can easily explore, purchase and sell digital collectibles.

Use Cases of Stacks

Stacks has many use cases, the primary of which include bringing DApps to Bitcoin and providing the Bitcoin network with smart contracts. As mentioned previously, Stacks uses a PoX consensus while connecting natively with Bitcoin. The implementation of the interface between Stacks and Bitcoin provides developers with enhanced privacy and security for creating applications and building games. This eliminates reliance on central authorities, such as banks and other financial institutions, for financial transactions and products.

As mentioned, the two main participants on this platform are STX miners and STX holders. While miners are given rewards in the form of transaction fees, Clarity contract execution fees and STX tokens, holders are rewarded with Bitcoin. Holders can participate in the consensus by committing a certain amount of STX for a specific cycle.

STX Tokenomics

All of the activities that occur on the Stacks blockchain are powered by the STX token. Fuel is used to facilitate transactions, and interaction with smart contracts. Around 1.3 billion STX tokens have been minted. These coins are distributed among founders, equity investors, treasury, employees, app mining and two separate token sales. Stacks is only available to individuals outside the U.S.

STX Price Prediction

The STX token is currently trading at around $0.45, which is close to its highest price since the beginning of June 2022. While STX dropped in price toward the beginning of the year, like many cryptocurrencies, its value has since increased. Its current market cap is approximately $606 million, with a fully diluted market cap of more than $830 million.

Where to Buy STX

STX is available for purchase on various crypto exchanges, including Bybit. If you want to purchase this coin on Bybit, go to the Bybit website, or use their mobile app, which is available for download on both the Google Play Store and Apple App Store. If you're looking to purchase or trade for the STX token, you first need to create a Bybit account or sign in to your existing account. You can then perform a trade with your crypto holdings, or pay for STX with a third-party payment method. The payment methods at your disposal include:

  • Credit card

  • ACH

  • Wire

  • Bank transfer

  • Maestro

  • Google Pay

Is STX a Good Investment?

STX delivers a high amount of value to the Bitcoin network by enabling smart contracts and the development of DApps. Using the Stacks blockchain means gaining access to the features of two separate blockchains for every activity you perform on the Stacks platform. Stacks also allows members to earn bitcoins via their rewards program, which bypasses the need to convert rewards to Bitcoin. STX has proven to be so useful that it's a good investment for any crypto holder.

Closing Thoughts

Stacks offers plenty of unique features that aren't available with other crypto projects. By providing the Bitcoin network with the ability to support smart contracts, Bitcoin's adoption in the crypto industry should expand even further in the months and years to come. Because of the many functions Stacks currently supports, it looks poised to continue garnering success.