After the explosion of Bitcoin in late 2023, the Bitcoin ecosystem has also flourished, and Stacks, which emerged as a Bitcoin Layer2 solution, is one of the outstanding ones. This article is written by Web3 researcher Jake Pahor and is organized, compiled, and written by PANews.
(Brief summary:
Bitcoin Layer2 ecosystem: Stacks’ main innovations and advantages)
(Background supplement:
New possibilities for Bitcoin in Layer2: Stacks, BNS, Ordinals..)
Bitcoin will usher in two major catalysts in 2024: ETF approval (already achieved) and Bitcoin halving. The Bitcoin Layer2 network Stacks is in a perfect position to capitalize on the influx of funds into Bitcoin DeFi.
Bitcoin has traditionally been considered a store of value/digital gold. Stacks is the smart contract layer of Bitcoin that provides new use cases for Bitcoin holders. These include:
– Bitcoin-supported lending
– DeFi on Bitcoin
– Trading NFTs using Bitcoin
The goal of Stacks is to bring DeFi to Bitcoin and unlock over $900 billion in capital. Stacks uses the Bitcoin network as a settlement layer and adds smart contracts and programmability. Applications run on the Stacks blockchain instead of centralized servers.
The Stacks ecosystem continues to expand, with over 30 teams actively involved in Stacks development. Some major projects include:
– Alex (DEX)
– StackingDAO (liquidity staking)
– Arkadiko (CDP)
Stacks aims to help expand the Bitcoin economy.
Stacks TVL on-chain is reaching new all-time highs, reaching $63 million. This is about 6 times higher than the low point in September 2023 ($10 million TVL). Trading volume has also significantly increased in the past few months, corresponding to the development of NFTs, DEXs, and domain name services in its ecosystem.
The Stacking protocol ensures the security of the Stacks network and provides real returns in Bitcoin for Stackers (currently around 7%). The returns are related to network activity. As network efficiency improves and block space becomes more valuable, the BTC costs miners need to pay will also increase, leading to higher earnings for STX stakers.
The Proof of Transfer (PoX) mechanism is the consensus mechanism of the Stacks blockchain. Miners validate transactions by bidding BTC to earn STX rewards. STX is the native token used for:
– Paying transaction fees
– Stacking (locking on the network to earn BTC rewards)
Similar to Bitcoin, Stacks also has a halving plan for miner rewards. STX also has a fixed and predictable supply, halving every 4 years. By 2050, the total supply of STX is expected to reach 1.82 billion.
Current supply statistics:
– Circulating supply: 1.43 billion
– Max supply: 1.82 billion
– Market cap: $2.6 billion
– FDV: $3.3 billion
According to the unlocking schedule, there are two major treasuries:
– Hiro PBC Treasury: 200 million STX (approximately $366 million)
– Stacks Foundation Treasury: 100 million STX (approximately $183 million)
The Stacks Foundation’s funds are used for investing in Stacks-based projects, and the exact amount used is not yet clear.
Anyone in the Stacks community can submit a Stacks Improvement Proposal (SIP). The committee then discusses and votes on each SIP. Joining the committee requires approval from the Stacks Foundation Board of Directors. This process is still relatively centralized.
Stacks was founded by Muneeb Ali and Ryan Shea in 2017. Over the years, it has raised over $45 million through multiple rounds of funding, private sales, and an ICO. Notable investors include Hashkey, SNZ Holding, Blockchain Capital, DCG, Winklevoss Capital, and Naval.
Despite other solutions in the market for the inefficiency of Bitcoin, such as the Lightning Network, Rootstock, Ark, and Liquid Network, only Stacks has its native token. This gives Stacks a significant competitive advantage.
Stacks has recently faced several obstacles:
– Discovery of a serious vulnerability in the “Stacking” mechanism
– “Mass review” of the mining layer
Interestingly, STX is the first token in the US to receive SEC qualification.
The Bitcoin ecosystem has tremendous growth potential, and upcoming catalysts for Stacks include:
– BTC ETF approval
– BTC halving (April 2024)
– Satoshi’s upgrade
– sBTC release
– Bitcoin DeFi and NFT trading
Overall weighted score = 8.3
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