Topics Altcoins

Stacks (STX): A Bitcoin Layer for Smart Contracts

Intermediate
Altcoins
2023年7月6日

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.

Key Takeaways:

  • Stacks is a popular cryptocurrency project that aims to enhance the Bitcoin blockchain by facilitating DApps and smart contracts on the Bitcoin platform.
  • Stacks is known to be a Bitcoin layer that shares some components with other Layer 1 and Layer 2 blockchains. To most users and developers, Stacks can be called a Bitcoin L2 blockchain, as it’s anchored directly to Bitcoin.
  • Looking to trade STX? Bybit now offers the STX/USDT Spot trading pair.

What Is Stacks?

The Stacks protocol is a popular cryptocurrency project that aims to enhance the Bitcoin blockchain by facilitating 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 known to be a Bitcoin layer that shares some components with other Layer 1 and Layer 2 (L1 and L2) blockchains. To most users and developers, Stacks can be called a Bitcoin L2 blockchain, as it’s anchored directly to Bitcoin. Because of how this project is structured, its smart contracts don't alter any features of Bitcoin.

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. The platform was developed as a response to the increased centralization of the internet. 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 (PoX) 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 with 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 (PoX)

Proof of transfer 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 on Bitcoin by requiring miners to solve a unique puzzle with the processing power that their computer has, adding more blocks to the chain.

Any blockchain consensus algorithm requires financial or computation 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 that they commit to other individuals within the network. 

There are several reasons why Stacks selected Bitcoin as the best network to 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 and 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. Its purpose 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 understand how smart contracts interact with Bitcoin. There are three separate transactions that occur with a Bitcoin-Stacks smart contract: 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. Once this transaction has been confirmed, an additional Stacks transaction occurs, verifying 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
  • Both fungible and non-fungible tokens (NFTs)
  • 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 Clarity’s 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 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) chooses 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
  • Transaction signing — Users can sign and show transactions

These functions can be used together in order to develop powerful and feature-rich experiences more useful than with traditional apps. Even though Stacks provides developers with ample resources for creating DApps, the majority of resources to which developers have access 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 90,000 STX) if they want to participate on 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. Some of these platforms only require a 0.1 STX minimum for you to start stacking.

Gamma

Gamma 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 Gamma, you can easily explore, mint, 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 described previously, Stacks uses a PoX consensus while connecting natively with Bitcoin. The implementation of the Stacks/Bitcoin interface 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 holders. While miners are given rewards in the form of transaction and 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 activities that occur on the Stacks blockchain are powered by the Stacks token. Fuel is used to facilitate transactions and interaction with smart contracts. 

STX Price Prediction

STX was launched on Oct 26, 2019 at $0.37. It immediately plummeted to a low of $0.08 by mid-December. Multiple fluctuations followed, although STX’s price generally ranged between $0.08 and $0.27 through 2020. A breakthrough occurred in Feb 2021 during the crypto bull run as STX’s price steadily increased, from $0.42 on Feb 1, 2021 to a high of $2.75 on Apr 6, 2021. Although the price of STX declined following this to $0.59, it increased once again, to its all-time high of $3.39 on Dec 1, 2021. 

STX’s price then fluctuated before crashing in May 2022, which corresponds with the Terra/LUNA crash that occurred during the same period. This caused STX’s price to tank, falling back to its previous low of $0.20 by Dec 2022. 

On Jan 1, 2023, STX’s price started to pick up, steadily increasing from $0.21 to $1.19 in three months’ time. This increase could be attributed to a few of the following factors:

Although STX price decreased once again, from Mar 24, 2023 to Jun 15, 2023, it increased in late June and early July. This could be attributed to the positive outlook in the market as Bitcoin surged from $24,904 on Jun 15, 2023 to $31,243 on Jul 4, 2023. 

The STX token is currently trading at around $0.67 (as of Jul 6, 2023). Its current market cap is approximately $932 million, with a circulating supply of almost 1.4 billion tokens. STX has a total and maximum supply of 1.818 billion tokens.

Where to Buy Stacks (STX)

STX is available for purchase on various crypto exchanges, including Bybit. If you're looking to purchase or trade the STX token, first create a Bybit account (or sign in to your existing one). Fund your account with cryptocurrency and proceed to the STX/USDT Spot trading page to start trading. 

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 BTC 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. Nevertheless, as always, it’s advisable you do your own research before investing in any cryptocurrencies.

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.

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