What Is Stacks? All You Need to Know About STX

What Is Stacks?

Stacks, a layer-1 blockchain, is used by Bitcoin to support DeFi, NFTs, apps, and smart contracts. A set of solutions known as a layer-1 blockchain enhances the fundamental protocol and broadens system scalability. Stacks enables the creation of decentralized applications and smart contracts that are natively integrated with the stability, capital, and security of Bitcoin. The goal is to launch Bitcoin by building a user-owned, decentralized internet. Stacks’ standard currency is STX.

Due to the fact that the network applications that use the data are executed locally on the user’s browser, it enables users to fully own and control their personal data. All of the content on Blockstack can be accessed using a suitable browser.

It offers software for internet access that powers a computing network, an environment for decentralized applications, and development tools (dApps). Its main goal is to reduce reliance on apps that gather and sell user information and centralized cloud service providers. Users can directly own digital assets like usernames, domain names, computer programs, etc. through the Stacks network. Computing is done on the Stacks blockchain at the edges (client devices), whereas applications on the platform store data separately and only use the blockchain when necessary.

Stacks’ History and Team

To address the underlying issues with current online and mobile apps, Muneeb Ali and Ryan Shea founded Blockstack (later rebranded as Stacks) in 2013 at the Princeton Computer Science department. In the summer of 2014, the two guided their brand-new startup through the Y Combinator accelerator. After finishing, they raised a seed round with involvement from Naval Ravikant, SV Angel, and others, and it was led by Union Square Ventures (USV).

The company unveiled the first design for the then-Blockstack platform in 2015 after launching a blockchain-based decentralized identity (DID) system in 2014. The peer-to-peer communication and data storage system they developed got underway. The R&D phase was completed in 2017 with the introduction of Blockstack’s developer platform’s alpha version, which featured a developer release of the Blockstack Browser and a decentralized storage system. Series A led by USV with participation from Lux Capital, Digital Currency Group, and others as well as a token offering through the Reg D framework were two further funding rounds the company secured by the end of 2017.

Rethinking user interactions with programs, Blockstack continued to work toward achieving its goal of creating a full-stack solution for decentralized apps after securing its initial investment (dApps). The platform’s main goal is to displace centralized cloud service providers and apps that depend on user data being stored on these services in order to function.

Stacks 2.0

The Stack team has enhanced its original innovation with Stacks 2.0, which will enable secure apps and smart contracts for Bitcoin.

With the launch of Stacks 2.0’s mainnet, programmers can use the Stacks protocol to create a user-owned internet based on Bitcoin. Users can earn Bitcoins using the platform.

Clarity Programming Language

The Stacks Blockchain supports decentralized apps and smart contracts. Additionally, it facilitates the development of adaptable virtual assets that are simple to transfer. The network employs the Clarity programming language to protect these operations in an effort to facilitate these smart contracts.

Clarity is a predictable programming language without a compiler. This programming language has been used by Stacks to assist in bringing smart contracts to Bitcoin. In order to execute smart contracts while publishing them on the blockchain nodes, the programming language leverages predictable source code.

How Does Stacks Work?

Stacks works based on the relationship between miners and stackers, who are the two parties at the center of the operations.

It might come as a bit of a surprise that miners don’t actually mine anything in the Stacks network. Instead, they trade already-mined Bitcoin (BTC) off the network and commit it in exchange for a chance to win STX coins. Check out the Stacks Mining portion of this article which is lower down for more information on how this type of mining operates under its own set of rules.

To connect with all of the applications in the Stacks ecosystem, each block mined on the Stacks blockchain holds user identity and transactional metadata. Any modifications to Stacks IDs or wallet balances can be confirmed using the Bitcoin blockchain because they are linked to the cryptocurrency. This also holds true for Stacks smart contracts, which are created using a unique coding language that Algorand created and tested specifically for Stacks.

Every time a new block is created on the Stacks blockchain, the protocol distributes BTC committed by miners to stackers as payment for adding value to the network. Every qualifying stacker receives BTC about once every stacking cycle (e.g. 7 days, though the exact duration is prone to change).

A dynamic minimum amount of STX is required for stack holders to participate directly (an estimated 100,000k STX upon mainnet, though this amount is prone to fluctuate based on overall participation and supply). Those who don’t meet that requirement can still participate in Stacking delegation services provided by third parties, which enables them to combine their holdings with those of others for group participation.

Stacks’ Features: NFTs, DeFi and BNS

Bitcoin NFTs

NFTs on the Stacks blockchain are produced using Clarity smart contracts, just as fungible tokens. NFTs created on Stacks settle to and are secured by Bitcoin as a result of the link between Stacks and Bitcoin. Some marketplaces, such as Gamma, now support Lightning and Bitcoin payments, and Stacking-powered NFTs that generate bitcoin yield complete the exciting new possibilities.

Source: Gamma

Bitcoin DeFi

Given Bitcoin’s nearly $1 trillion market valuation and growing institutional use, the Bitcoin DeFi industry is enormous and untapped. Bitcoin hasn’t been as profitable a resource for DeFi as other cryptocurrencies without passing via either centralized exchanges or distinct blockchains in the form of wrapped BTC, despite the fact that it is increasingly used as sovereign money. It is altered by stacks.

Given that Stacks contracts can see the state of Bitcoin and have an innate capacity to use Bitcoin’s security and settlement guarantees, Stacks is in a unique position to enable real Bitcoin DeFi. Since the Proof of Transfer consensus algorithm is used by the Stacks chain, all Stacks transactions settle on the Bitcoin network. As a result, Stacks will share Bitcoin’s unmatched, long-term security for transaction reorgs.

BNS

Without relying on any centralized sources of control, the Blockchain Naming Mechanism (BNS) is a network system that connects Stacks’ usernames to off-chain data.

In contrast to DNS, anyone can create a namespace and modify its settings. Namespaces are made available on a first-come, first-served basis and, once made, are permanent.

The following three crucial characteristics of BNS names make them an effective tool for creating a variety of network applications.

Source: Stacks

Stacks Ecosystem

The Stacks Ecosystem is a decentralized network of autonomous organizations engaged in the study, expansion, and instruction of the Stacks Network.

Source: Stacks

Proof-of-Transfer (PoX)

Stacks has created a new consensus algorithm that is ideally suited for its operation and to secure the network, in contrast to other blockchain projects that use the proof-of-work and proof-of-stake mechanisms to secure their networks. The Proof-of-Burn idea serves as the basis for the method. The Proof of Transfer (PoX) consensus technique is the first to utilize two blockchains. This idea prevents the burning of already mined and existing currency on a real, confirmed blockchain. They instead protect the new blockchain.

The Proof of Transfer mechanism does away with the cryptocurrency burning system. It necessitates the distribution of mined coins to other ecosystem actors.

The network’s reward protocol is made easier by the new Proof of Transfer consensus mechanism. What’s more intriguing is that the mechanism enables network users to get rewards and transaction payouts in real, established coins. These participants now have the chance to simultaneously take part in the new blockchain.

Source: Stacks

Stacks is able to do away with problems that consumers run across when using new blockchains thanks to this technology. As a result, new users are at ease entering the network.

Furthermore, the network employs an exceptionally secure blockchain (Bitcoin) to secure new chains without the need for new Proof-of-Work chains and cryptocurrencies because it is essentially connected with an already-existing blockchain (Bitcoin).

What Is the STX Token?

The Stacks Blockchain’s exclusive token is called the STX token. STX tokens are required for network operations.

In essence, STX coins help smart contracts run on the Stacks network. By using the token, new smart contracts can be added to the blockchain. Additionally, it is utilized for transactional procedures like obtaining rewards and paying costs.

Source: Stacks

Is Stacks (STX) a Good Investment?

Yes, investing in Stacks will help you make some money. With use cases built on smart contracts, Stacks offers the singular advantage of mining on the largest cryptocurrency network ever, the Bitcoin network. The price of STX may significantly increase if the Bitcoin network’s support for smart contracts expands in a manner similar to that of Ethereum-based smart contracts.

As of now, STX has shown respectable returns and suggests a good chance of once again becoming a popular cryptocurrency. According to the state of the market, there has thus far been no bearish indication for the price prediction of STX. However, based on your investment goals, conduct your own research.

How to Own Stacks (STX)?

One way to own STX is to go through a centralized crypto exchange. The first step is to create a Gate.io account and complete the KYC process. Once you have added funds to your account, check out the steps to buy STX on the spot or derivatives market.

News on Stacks

The increase in the number of transactions for domain names ending in .btc is said to have reached 260% during the first week of November 2022. Why? Think of a .com for Web3. To access a website in the early days of the internet, users had to input a lengthy and difficult IP address. Then came Domain Name Service (DNS), a naming scheme that allowed people to reach their preferred websites by typing in a human-readable text string ending in .com. BNS, also known as .btc, has the potential to improve Web3 user experience in the same manner that DNS did for the Internet.