Stacks

Stacks, originally known as Blockstack, was founded in 2013 by Muneeb Ali and Ryan Shea, two Princeton University alumni. The project aimed to bring decentralized applications (dApps) and smart contracts to the Bitcoin blockchain. The founders spent several years researching and developing the platform, releasing the blockchain design in 2015. They launched the testnet in the second quarter of 2018 and the mainnet in October 2018.

The team worked closely with the U.S. Securities and Exchange Commission (SEC) to ensure compliance and held an SEC-qualified token sale in July 2019, raising $23 million. This made Stacks the first-ever blockchain network to receive SEC approval for a token sale.

By October 2019, over 300 applications had been built on Stacks. In 2020, the project underwent a full rebrand from Blockstack to Stacks, and Blockstack PBC became Hiro Systems PBC. The launch of Stacks 2.0 in January 2021 marked a significant milestone, as the network became decentralized and was no longer considered a security.

Throughout its development, Stacks has focused on enhancing the capabilities of the Bitcoin blockchain without altering its core features. The project's innovative consensus mechanism, Proof of Transfer, and its own smart contract language, Clarity, have contributed to its unique position in the blockchain landscape.

Stacks (STX) is a cryptocurrency project that aims to unlock the full potential of the Bitcoin blockchain by bringing smart contracts and decentralized applications (dApps) to the platform. Here's how it works:

Stacks is a layer-1 solution that uses Bitcoin as its base layer. It is powered by the Stacks (STX) token, which fuels the execution of smart contracts, processes transactions, and registers new digital assets. The project was originally known as Blockstack but was rebranded to Stacks in 2020.

The consensus mechanism used by Stacks is called Proof of Transfer (PoX). This mechanism involves miners committing already mined Bitcoin (BTC) to earn the right to mine new blocks of STX tokens. The miners do not actually mine anything; instead, they exchange BTC for a chance to earn STX coins. This process is governed by its own rules and is designed to ensure the security of the Stacks platform by linking it to the security of the Bitcoin blockchain.

Stacks allows for the execution of smart contracts and the creation of dApps. These contracts and applications are open and modular, enabling developers to build on top of each other's apps and generate new features. The smart contracts are powered by the STX token, which is used to pay transaction fees and deploy the contracts.

Stacks holders can participate in the consensus process by "stacking" their STX tokens. This involves temporarily locking up STX tokens to support the network's security and consensus. As a reward, participants can earn up to 10% APY in Bitcoin (BTC).

Stacks transactions are capable of scaling independently of Bitcoin. The Stacks blockchain stores user identity and transactional metadata, which interacts with all applications in the Stacks ecosystem. Although the Stacks blockchain is anchored to Bitcoin, it can process thousands of transactions without taking up additional Bitcoin block space.

Stacks has its own dedicated wallet for storing STX tokens, but the tokens are also compatible with a broad range of third-party wallets. Users can choose from hardware wallets, software wallets, or custodial wallets, depending on their needs and technical expertise.

Stacks was founded by Muneeb Ali and Ryan Shea, who were motivated by the idea of creating a decentralized, user-owned internet. The project has undergone significant development, including a successful SEC-qualified token sale in 2019 and the launch of Stacks 2.0 in 2021.

Overall, Stacks is designed to enhance the capabilities of the Bitcoin blockchain by bringing smart contracts and decentralized applications to the platform while maintaining the security and stability of Bitcoin.

Stacks (STX) has several strengths that contribute to its unique position in the cryptocurrency market:

1. PoX Consensus Model: Stacks uses a novel Proof-of-Transfer (PoX) consensus mechanism, which leverages transactional entropy to secure the network. This mechanism allows for the creation of a decentralized platform that supports smart contracts and decentralized applications (dApps) while utilizing the security and finality of the Bitcoin network.

2. On-Chain TVL Increasing: Stacks has seen a significant increase in its on-chain total value locked (TVL), indicating a growing adoption and usage of its platform.

3. sBTC Integration: The integration of sBTC, a pegged Bitcoin token, enhances the security and functionality of the Stacks network by allowing stackers to sign the threshold signature wallet that holds the pegged-in Bitcoin.

4. Bridges to EVM Chains: Stacks has bridges to Ethereum and Binance Smart Chain, which unlocks new capital, developers, and marketing opportunities. This integration provides a greater surface area for applications and potentially expands the reach of the Stacks network.

5. Uses Bitcoin as Data Availability Layer: By anchoring to Bitcoin, Stacks inherits some of its most desirable properties, including decentralization and security. This focus on the Bitcoin ecosystem for data availability brings a novel level of security to the dApp space.

6. SEC-Approved Token Offering: Stacks was the first cryptocurrency to receive SEC qualification for a token sale, making it an attractive asset for traditional financial market participants.

7. STX Validator Incentives: Stacks offers real yield to network participants through its consensus model, where stackers receive Bitcoin that is used within the network. This creates a real-world demand vector for the STX token.

These strengths position Stacks as a pioneering blockchain project that extends the capabilities of Bitcoin beyond simply a digital currency, into a foundation for decentralized apps and smart contracts, all while leveraging Bitcoin’s unmatched security.

Stacks (STX) faces several risks that could impact its success and adoption. Here are some of the key risks associated with Stacks:

• Contract Exploitation: Stacks' smart contracts are vulnerable to potential exploits, which could lead to losses for users. However, Stacks mitigates this risk by locking STX in the Stacks consensus mechanism, making it more secure than other DeFi applications.

• Consensus Mechanism Issues: Stacks relies on the Proof-of-Transfer (PoX) consensus mechanism, which could be vulnerable to issues. While no such issues have occurred since Stacks' launch in 2021, this risk remains.

• External Swap Service Issues: Stacks relies on external services to swap BTC rewards into STX, which could be affected by issues outside of Stacks' control.

• Blockchain Exploitation: Stacks is vulnerable to a 51% attack, which could compromise the security of the blockchain.

• Developer and User Adoption: Stacks faces the risk of lack of interest from developers and users, which could hinder its growth and adoption. This is particularly concerning given the limited number of dApps currently on the network.

• Bitcoin's Stability: Stacks is closely tied to Bitcoin, and its success depends on Bitcoin's continued stable operation. A Bitcoin crash would likely have a significant impact on Stacks.

• Wrapped Bitcoin Solutions: Stacks competes with wrapped Bitcoin solutions like xBTC on other chains, which could attract users away from Stacks.

• Scalability and Adoption: Stacks needs to improve its user experience and scalability to attract more users and developers. If it fails to do so, it may struggle to compete with other blockchain networks.

These risks highlight the challenges Stacks faces in establishing itself as a viable blockchain network.

• Muneeb Ali: Co-founder of Stacks (formerly Blockstack), Muneeb Ali is a Princeton University alumnus who began working on the project immediately after graduating in 2013.
• Ryan Shea: Co-founder of Stacks, Ryan Shea is also a Princeton University alumnus who co-founded the project with Muneeb Ali in 2013.