We took some time to interview the Stacks team to get an inside scoop into what they have been working on and how they are forging new frontiers on Bitcoin.
What is Stacks and what does it hope to accomplish for Web3?
Stacks addresses the main difficulties of building on top of Bitcoin. There are two fundamental challenges to building apps and smart contracts on Bitcoin:
- Scalability: Bitcoin blockchain has a limited capacity for transactions.
- Secure contracts: to preserve the security of the Bitcoin blockchain, the smart contract scripting language is quite limited.
Stacks has developed a solution for both issues. Instead of deploying smart contracts directly on the Bitcoin chain, Stacks executes them on its own Layer-1 blockchain and uses Bitcoin for settlement only.
For non-crypto natives, what do Stacks plan to bring to the user experience of crypto, and what will be its main applications?
Stacks brings Apps and Smart Contracts to Bitcoin. Apps built on Stacks inherit all of Bitcoin’s powers. They run their logic on the blockchain with smart contracts, are controlled by code instead of companies, and are accessible to anyone. This enables decentralised apps to do things that regular apps can’t.
What are the differentiating features of Stacks and how does it differ from other projects with a similar mission?
A typical first question when approaching Stacks and other Bitcoin based projects is to try to identify what layer they are. Sidechains and Layer 2s are well known approaches within the crypto ecosystem, but there are additional models to explore when it comes to expanding functionality of Bitcoin as a base cryptocurrency.
Sidechains typically port a direct 1-1 relationship value from a token to a new blockchain. In the case of RSK and Liquid, there is no new token introduced, rather a tokenised version of Bitcoin to be used on a different network, usable in ways that it can’t be on the Bitcoin blockchain natively today.
Stacks is an independent chain — with a native token to incentivise Stacks miners — that’s anchored to Bitcoin via the PoX consensus. The Stacks network introduces a token for transacting on the network, as is the case with almost every smart contract platform to prevent spam and ensure efficient network and compute resourcing. It doesn’t port Bitcoin value 1-1 as a side chain, and is a fully separate blockchain — so not quite a layer 2 blockchain, either.
Can you introduce your team to the readers? What relevant experience do they have and what projects have inspired them in their designs?
Stacks was initially funded by a range of prominent venture capital funds, including Y Combinator, Digital Currency Group and Winklevoss Capital. It was developed by Blockstack PBC, which has its headquarters in New York. Blockstack PBC now operates under the name Hiro Systems PBC and joins a wide range of companies such as the Stacks Foundation building on Stacks’ platform.
The Stacks Foundation is the home for governance of Blockstack’s open-source technology, serving as neutral ground for various parties to come together and reach consensus on the path forward.
We support independent researchers, contributors, and collaborators to help build a better user owned internet through research and development.
We provide tools to educate new users and developers about Stacks technology. We support the educational resources and forums to share knowledge, like events and community meetups.
We create new avenues for innovation through funding research, ecosystem development, and developer incentives.
How did you achieve your funding requirements? Was it from an exclusive token sale or private funding? When was it?
The project raised $47M in a token offering for the Stacks cryptocurrency in 2017, and an additional $23M through the first-ever SEC-qualified US Reg A offering and concurrent Reg S offering in 2019. More than 4,500 Stacks holders participated in these offerings, including USV, Lux, DCG, Winklevoss Capital, Blockchain Capital, Foundation Capital, Hashkey, Fenbushi, and others. In 2020, Blockstacks rebranded to Stacks and launched Stacks 2.0 mainnet in January 2021 with Clarity smart contract compatibility.
What parts of the Stacks roadmap is the team most excited for?
As a community, we see the incredible potential of Bitcoin and are committed to building the best tools to make it more useful. Stacks is the top Web3 project on Bitcoin today, and this is just the beginning. We’re excited to highlight the updates proposed for the network in Stacks 2.1 — an upgrade that will strengthen the connection between Stacks and Bitcoin.
Among other upgrades, Stacks 2.1 can enable more efficient Bitcoin yield via Stacking, make bridges to other networks more robust, simplify the ways developers can link and trigger interactions between Stacks and Bitcoin, and lay some helpful groundwork for Subnets which can bring additional speed and scalability to the network when launched.
Why did you choose to develop in connection with the Bitcoin Network and how does the future of Bitcoin impact Stacks (ex. When Bitcoin mining ends)?
Smart contracts for Bitcoin have always been a holy grail in crypto. We have figured out a way to do this directly on Bitcoin, which is a major breakthrough.
Our thesis is that successful experiments from various blockchains will eventually get created on Bitcoin. The network effects of Bitcoin mean that smart contracts around Bitcoin have access to more crypto capital and benefit from higher security. We believe that Bitcoin can be the foundation for a better user-owned internet much like TCP/IP for the traditional internet.
When block rewards sunset on the Bitcoin chain, miners will look for transaction fees to fund mining to profitability. We’ll need more transactions in bitcoin to support the security of bitcoin over time, Stacks supports this through adding more utility on top, more value created on top of bitcoin, and creating more bundled transactions to the Bitcoin chain.
What is Proof-of-Transfer, why not Proof-of-Stake and how does Proof-of-Transfer leverage Bitcoins security?
Proof of Transfer (PoX) allows Stacks miners to write new blocks on its own blockchain through the mining energy consumed by those same miners on the Bitcoin blockchain. No further energy consumption is thus needed.
The traditional Proof-of-Work mechanism on the Bitcoin blockchain basically works like this: miners spend electricity to guess the hash of the preceding block and the first one able to do this receives bitcoin as rewards for its effort.
All Stacks transactions settle on Bitcoin. This enables Stacks transactions to benefit from Bitcoin’s security. Because of the need for the Stack blockchain to broadcast its block headers to the Bitcoin blockchain, implementing a Proof-of-Work algorithm on Stacks would have implied an additional energy consumption.
What differentiates PoX from Proof-of-Stake (PoS)? The first difference is that miners and stackers are not the same entity whereas in PoS they can coincide. Moreover, miners actually spend tokens to participate in the miner election whereas validators in PoS help achieve consensus through bonding their capital in the form of native tokens. Contrary to a PoS blockchain, the Stacks blockchain can fork because it is not affected by the “weak subjectivity” problem. Weak subjectivity means that no miner/validator is able to identify the “correct” chain without trusting other nodes. The ability to fork allows a blockchain to survive critical failures that could severely impact the functioning of a PoS chain. Finally, actors participating in the consensus (i.e. stackers) earn rewards in a different token (BTC) than the one locked in the blockchain (STX).
What is the primary use case of the $STX token?
As for most of the Layer-1 blockchain native coins, Stacks cryptocurrency (STX) is designed to pay for transaction fees and smart contract execution. This makes the long-term value of Stacks dependent on the growth of the Stacks ecosystem and the related demand for Clarity smart contracts because:
- Miners can see the blocks mined increasing in value because of the higher transaction fee component and this provides incentives for them to acquire STX to participate in consensus.
- STX stackers will be able to benefit from the growth in the Stacks ecosystem since their rewards in bitcoin depend not only on the coinbase reward but also on the network usage.
Why should users stake $STX and what benefits should they expect outside of normal staking rewards?
The average stacking APY is in the 8-10% range. You can see estimated APY per cycle at stacking.club
How does Stacks plan to fast-track the adoption of the Stacks’ Clarity smart contracts, and how do they differ from other smart contracts that use Solidity?
Clarity: Better Developer and End User Experience
Clarity is an interpreted language, not a compiled one like other smart contract languages. Outside of blockchains, this might not be such a significant advantage. Most new compiled languages today can match the benefits of interpreted languages while offering better performance. Not only is this not the case for blockchain, but it won’t ever be in the future. As an interpreted language, the source code of every Clarity contract is published directly on the Stacks blockchain. This allows you to plug the code into a testing environment to verify what it will do before it goes live formally. With a compiled language, the machine code is on the blockchain, not the source code, and there’s no way to prove what the corresponding source code is for that machine code. This is not only more secure for developers and leads to fewer bugs, but it is more secure for end-users.
Are there any exciting updates, announcements, or partnerships coming up in the immediate future that you can disclose today?
Our entire community is pretty excited about the upcoming network upgrade that will strengthen the connection between Stacks and Bitcoin. For example, it will enable bitcoin native applications as 2.1:
- makes it easy to write Clarity contracts that react to Bitcoin transactions
- makes it easy to write Clarity contracts that ingest off-chain data
Stacks is also poised to be an uprising L1 as 2.1 unlock full support for bridges, oracles, and other services that need to relay data to the Stacks chain.
Where is the best place for the community to interact with you?
You can find me on Twitter and you can join our community of builders, entrepreneurs and creators in our discord. At the Foundation, we have also 100M STX treasury to invest in open source contributions to Stacks. Lastly, if you’re thinking of building your next project on STX, the Stacks Accelerator would love to hear from you. They are currently investing $50k uncapped notes (the most generous terms available in the startup industry)
Why is Staking Rewards the best partner for your project?
On-chain analytics and Staking data aggregation platform is very beneficial for a protocol like Stacks. Staking rewards provides an in-depth data room, that we utilize to guide our decisions on where to leverage our effort for our staking product, Stacking.
You can take part in the Stacks Network by locking your STX temporarily to support the Stacks network. As a reward, you’ll earn Bitcoin. Follow our Step-by-Step staking tutorial here and check out their asset profile to get real-time staking data!