Bitcoin seems to be just around the corner to break through $100,000, and the community is still eagerly looking forward to the development of the Bitcoin ecosystem.
Although the performance of tokens in the relevant ecosystem is not impressive enough, US compliant trading platforms such as Coinbase and Kraken have recently issued cbBTC and KBTC respectively. Industry giants have never stopped exploring the Bitcoin ecosystem. Whether compared with other chains or with its own market value of nearly 2 trillion, the Bitcoin ecosystem has a long way to go, but it also contains huge development opportunities.
Percentage of total TVL in the market accounted for by each chain, with the Bitcoin ecosystem accounting for only 3.4%
From the perspective of the secondary market, the hot money in the market has always had the need to rotate tracks and switch from high to low. In the Bitcoin ecosystem, Stacks, as a leader in this field, has become the best representative of Bitcoin ecosystem exploration through its iterative path. Stacks continues to build technology and ecology from scratch, which is particularly solid and eye-catching in the current market environment.
Recently, the case between Ripple and the SEC has come to an end, and the resignation of the SEC chairman has triggered a super bull market for XRP. Like Ripple, Stacks is also a representative of compliance in the crypto industry. In July 2024, the U.S. Securities and Exchange Commission (SEC) terminated its investigation into Stacks and Hiro. Not only that, Stacks is the first token issuance project in history approved by the SEC.
Stacks' technical iteration path
The dream of smart contracts on Bitcoin: from Blockstack to Stacks
The history of Stacks can be traced back to Blockstack, which was founded by Muneeb Ali and Ryan Shea from Princeton in 2013. As the initial v1 version, Blockstack is committed to creating a decentralized Internet ecosystem, using a distributed computing network and a full-stack approach to replace traditional cloud computing. At that time, Blockstack had a large number of DApps.
In 2021, Blockstack's v2 version, the Stacks mainnet, was officially launched. At this point, the team's goal has undergone an important shift - from serving the decentralized Internet to empowering Bitcoin. Through the Stacks protocol, developers can build applications with smart contract functions on the Bitcoin network without modifying Bitcoin itself. In the process, Stacks was inevitably criticized by Bitcoin "maximalists", but Muneeb has always persisted in conveying the concept of Stacks to the community.
PoX and Clarity: Deep integration of Bitcoin and Stacks
Stacks can be safely integrated with Bitcoin thanks to its innovative Proof of Transfer (PoX) consensus mechanism. The core idea of the PoX mechanism is to allow miners to participate in Stacks block mining by transferring Bitcoin, rather than relying on competition that consumes computing power. In this way, Stacks not only inherits the security of the Bitcoin network, but also allows Bitcoin holders to become direct participants in the ecosystem.
Compared with traditional proof of stake (PoS), the design concept of PoX is more in line with the decentralized spirit of Bitcoin. It uses a unique way to transfer the value of Bitcoin to the Stacks ecosystem, forming a close economic bond between the two. For miners, the PoX mechanism provides a new way to capture value, and for developers, this deep integration also gives them greater confidence in implementing smart contracts on the Bitcoin network.
Along with the launch of the Stacks mainnet, there is also Clarity, a smart contract language designed specifically for Bitcoin. Clarity is a non-Turing-complete language, which means that it focuses on implementing verifiable functions while avoiding uncertainty in complex calculations. When using Clarity, developers can preview the results of smart contracts in advance, and this transparency greatly reduces the risk of unexpected behavior. In addition, Clarity runs directly on the chain, avoiding vulnerabilities that may be caused by traditional smart contract compilers. This language designed specifically for Bitcoin lays the foundation for DeFi, NFT, and other complex applications.
Nakamoto upgrade: faster, more stable, safer
Just as no code is perfect, there is room for improvement in how Stacks extends Bitcoin.
The original design of Stacks tied block production to Bitcoin block production. This resulted in high latency due to slow block production, and even microblocks could not completely solve the problem. At the same time, the security of the Stacks network was not completely tied to Bitcoin, because the cost of reorganizing the last N blocks in the Stacks blockchain is the cost of generating the next N + 1 Stacks blocks, and the cost of attacking Stacks is lower than the cost of 51 attacking Bitcoin.
In view of this, Stacks launched the "Nakamoto Upgrade" in 2024 and officially completed the upgrade on October 29. The significance of this upgrade is not only a technical optimization, but also a key step for the prosperity of the Bitcoin ecosystem.
In the past November, the number of on-chain transactions of Stacks hit a recent high
Fast block confirmation: Optimize user experience
The Nakamoto upgrade allows users to achieve closer to real-time transaction confirmation on Stacks by introducing a fast block confirmation mechanism. Micro-blocks and Bitcoin-anchored blocks will be canceled and replaced by continuously produced Stacks blocks, allowing miners to produce multiple blocks during a Bitcoin block period, significantly improving transaction speed.
The time required for user-submitted transactions to be processed is no longer 10 to 40 minutes, but only about 5 seconds. This not only improves network efficiency, but also opens the door to high-frequency trading and instant payment scenarios.
Two-way authentication: Enhanced security
After the upgrade, Stacks adopted a two-way verification mechanism that requires miners to remain active on both the Bitcoin and Stacks networks. This design increases the security of the network while ensuring a collaborative relationship between the two chains. For an attacker to tamper with Stacks data, he must also control the consensus of the Bitcoin network, which significantly increases the cost. This upgrade also solves the MEV problem and modifies the cryptographic selection algorithm to ensure that Bitcoin miners cannot receive unfair block rewards due to their advantages. The cost for Bitcoin miners to participate in Stacks mining has been increased, making it necessary to invest resources comparable to other miners.
sBTC and Stacks Ecosystem: Unlocking the Potential of Bitcoin
After the Nakamoto upgrade is completed, sBTC, which will release its roadmap in 2023, will also be launched as planned. According to the latest news, the testnet phase of sBTC has been completed, and the launch of the mainnet will be divided into three phases:
Phase 1 (expected to launch on December 16, 2024): Introducing the function for users to deposit BTC and mint sBTC. Early depositors will be eligible to participate in the sBTC reward program.
Phase 2 (expected to be launched within 6-8 weeks after Phase 1, between February 1 and 15, 2025): Unlock the sBTC withdrawal function, allowing users to redeem sBTC for BTC.
Phase 3 (specific time to be determined): Open the signer set and gradually form a completely decentralized, open, and permissionless signer network.
sBTC design and working principle
The core of sBTC lies in its decentralized design, which avoids the trust risk of traditional centralized custody solutions. Through the Dynamic Signer Group, sBTC ensures the security and transparency of the exchange process between Bitcoin and sBTC. After users lock BTC on the Bitcoin network, they can generate an equal amount of sBTC on the Stacks chain. When redemption is required, users destroy sBTC to release the corresponding amount of BTC. This process is completely managed by smart contracts, ensuring the transparency and security of operations. sBTC has an elite signer network, including industry leaders such as Blockdaemon, Kiln, Luganodes, Copper, Figment, etc.
Advantages and innovations of sBTC
The design of sBTC incorporates multiple innovations and demonstrates significant advantages. First of all, it uses a dynamic signer group for management, completely avoiding the risks that may be caused by traditional centralized custody solutions. This design is highly consistent with the decentralization concept advocated by Bitcoin. Secondly, sBTC gives Bitcoin programmability and can interact seamlessly with smart contracts on Stacks. In addition, all sBTC operations are executed through Clarity smart contracts, ensuring that users can transparently understand every process and status. This transparency not only reduces the cost of trust, but also further improves the security of operations and provides users with higher protection.
The impact of sBTC on the Stacks ecosystem
Recently, wBTC has been facing community doubts. BA Labs proposed in August to reduce the liquidation threshold of wBTC to 0% on Sky (formerly MakerDAO), but after discussions with BitGo, it decided to suspend the divestiture plan indefinitely. Recently, Coinbase decided to delist wBTC. Perhaps due to the impact of the above events, the TVL of wBTC has also dropped from 152,000 bitcoins in August to 136,000 bitcoins today.
As mentioned above, there is an incentive plan in the early stages of sBTC. Perhaps sBTC can rely on internal and external forces to not only fill the existing BTC market gap on the chain, but also attract more native Bitcoin to join the L2 and DeFI fields, while also injecting strong vitality into the Stacks ecosystem. sBTC gives Bitcoin programmability, enabling it to participate in a variety of DeFi applications, including decentralized lending, yield mining, and synthetic asset trading, greatly enriching the diversity of the Stacks ecosystem. In addition, sBTC provides developers with new opportunities to build complex applications on the Bitcoin network, stimulating the emergence of more innovative ideas and further promoting the rapid development of the Stacks ecosystem. Through sBTC, Bitcoin has successfully transformed from a single value storage tool to an asset with programmability.
New Developments in the Stacks Ecosystem
Coinflip, the world's leading Bitcoin ATM operator, announced that it will integrate with Stacks and plans to support sBTC to enhance the programmability and accessibility of Bitcoin. sBTC will also be available on Aptos Network and Solana to further enhance Bitcoin's role in the growing cross-chain DeFi ecosystem. Through Stacks' Best & Brightest event, Immunefi announced a partnership with Asymmetric Research and Bitcoin L2 Labs to improve the security of sBTC and facilitate seamless transfers of Bitcoin between the main chain and Stacks through the upcoming "Attackathon" hackathon event.
Bitcoin accelerator Bitcoin Frontier Fund (BFF) announced plans to invest in teams that build projects using sBTC. Stacsk on-chain lending protocol Zest also announced this year that it had completed an investment with participation from Tim Draper, Binance Labs, Bitcoin Frontier Fund and Flow Traders.
The TVL of the Stacks ecosystem will also grow significantly in 2024, which is mainly supported by the liquidity staking protocol StackingDAO, DEX ALEX and the lending platform Zest. In addition to the above-mentioned well-known projects, the Stacks ecosystem also includes the over-collateralized stablecoin protocol Arkadiko, the domain name platform .locker, the tool Console serving the DAO organization, the NFT platform Gamma, the payment system GoSats that supports Bitcoin, and the introduction of On Chain Game. Stacks of Skullcoin. Not only existing projects, but at the recent Harvard Hackathon organized by EasyA and Stacks, the number of Bitcoin projects hit a record high.
With the gradual launch of sBTC, the Stacks ecosystem will usher in more innovation and development. In the future, Stacks plans to further optimize network performance, reduce transaction costs, increase throughput, attract more developers and users, and build a comprehensive Bitcoin smart contract ecosystem. Through cooperation with other blockchain networks, Stacks and sBTC are expected to be widely adopted around the world and promote the prosperity and development of the Bitcoin ecosystem.
