With the impressive performance of the old coin sector, let me talk about the absolute old coin in the Bitcoin ecosystem, Stacks.
1) It does not intentionally compete for the FOMO wave of BTC layer 2, but it has long been a 'pioneer.'
2) The POX consensus mechanism leverages economic binding to hitch a ride on BTC growth;
3) The native BTC cross-chain design of sBTC, while lacking Babylon's encryption techniques, is still considered 'native.'
Now, let's analyze the above three points from a technical perspective, point by point:
1) As early as 2017, when Bitcoin was still in the struggle between conservatives and innovators, conservatives firmly believed that functionalities should be simplified to focus solely on reserve assets, while innovators argued that BTC needed to expand more application scenarios to support smart contract functionalities to compete with new chains like Ethereum.
Clearly, Stacks chose the latter, which was somewhat 'alternative' given the environment at the time. However, years later, the wave of asset issuance on the BTC chain and the expansion of BTC layer 2 networks driven by the Ordinals protocol have confirmed that Stacks' choice back then was highly strategic.
Thus, to some extent, Stacks can be considered a pioneer in this wave of BTC ecosystem expansion. However, during this wave of BTC FOMO primarily driven by 'Chinese' stakeholders, Stacks seems to be 'absent' and did not participate much in the hype and discussion. Nevertheless, its purely technical orientation and robust development have allowed it to benefit from the market's expectations for BTC layer 2, resulting in commendable overall market performance.
After all, as a 'pioneer' that has undergone seven years of accumulation and market validation, Stacks has explored a complete technical stack, providing a viable solution example for BTC's exploration of smart contract practice.
2) Speaking of the operational mechanism of Stacks' technical architecture, my overall feeling is slightly 'alternative.' Why do I say this? It must be discussed from its special consensus mechanism:
Stacks did not adopt the more common POW or POS consensus mechanisms at the time but instead adopted a unique POX consensus mechanism, which can be simply understood as: POX stands for Proof of Transfer.
Miners in the Stacks network must prove to the Bitcoin mainnet that they initiated a BTC transfer to a specific address in order to earn the 'block production rights' in the Stacks network and receive $STX rewards. Meanwhile, users (Holders) of the Stacks network who hold and stake STX for a certain period can proportionally obtain BTC dividends from the miners' inputs. It is not difficult to see that the POX consensus mechanism is overall biased towards a 'dual-layer design,' with the Bitcoin network serving as the foundational layer that accumulates and locks BTC assets to provide 'consensus layer' security, while the Stacks network serves as the 'execution layer' for implementing complex smart contract-related applications and facilitating network communication and collaboration.
This design fully maintains the authority of the BTC mainnet and achieves a 'strong correlation' with the Bitcoin mainnet through 'economic binding.' How should this be understood?
For miners to participate in block production, aside from the basic operational costs of running nodes and 'electricity costs,' the main cost lies in investing a certain amount of 'BTC.' The higher the BTC price, the higher the mining costs for miners, which also determines the increased value of STX rewards.
Users can stake STX to maintain the security of the network, which is no different from the way most POS networks maintain security. The difference is that the economic gain and loss ratio of staking in most POS networks cannot withstand the fluctuations of the secondary market itself. However, users of the Stacks network can earn BTC rewards by staking $STX.
This brings about a 'virtuous' economic internal circulation, where miners consume $BTC to strive for block production rights, and this part of BTC will be distributed to Stakers, encouraging more users to actively stake for BTC rewards, thereby reducing STX circulation and driving the impressive performance of BTC in the secondary market, which further motivates miners to consume BTC for mining.
For miners, if STX mining is not profitable, the mining industry cannot thrive. For users, the risks of staking STX assets can be hedged by obtaining tangible BTC rewards.
This special economic incentive mechanism gives it advantages in terms of market volatility resistance and market ecosystem stability, especially when BTC prices remain in an upward cycle. The overall consumption costs and dividend rewards of the network will increase simultaneously, indicating that the value accumulated by the network itself will also grow. Moreover, it can adjust the mining difficulty based on the secondary market price of BTC, with the cost of miners' BTC investment and the rewards of STX being proportional.
In my opinion, the alternative or advanced aspect of Stacks' POX consensus mechanism is that it binds to BTC, the most stable asset in the market, relying on BTC for network security and gaining enhanced network expectations through BTC. The long-term dilemma of 'loss' associated with staking assets, a common problem in POS networks, has been resolved under the super growth buff of BTC assets.
3) Recently, the product lead of Stacks, @andrerserrano, shared an overview of the upcoming deployment of sBTC on the mainnet, highlighting the unique aspects of sBTC as a so-called native BTC cross-chain asset.
Compared to the commonly used centralized custody assets, the traditional Wrapped version of asset wrapping that locks assets on chain A and mints assets on chain B, sBTC achieves native BTC security, cross-chain immunity, atomic transactions, and no centralized risk points as technical native features. How is this achieved specifically?
Stacks uses a multi-signature threshold mechanism to ensure the security of the Stacks network. Therefore, there are a large number of 'signers' on the Bitcoin mainnet to verify transactions and carry out multi-signature operations. Users send BTC assets to a specified BTC multi-signature address, and after the transaction is confirmed, the signers of the Stacks protocol monitor and verify the transaction, automatically minting the corresponding sBTC for the user on the Stacks network.
The key point is that Stacks has deployed a large number of independent signing nodes, for example 100. The transaction will only be truly validated and confirmed once a sufficient number of nodes sign it, such as (68/100).
To quickly understand the advantages and disadvantages of this multi-signature mechanism, I tried to compare it with @babylonlabs_io: The uniqueness of Babylon lies in its use of mathematical encryption algorithm techniques to ensure that nodes do not act maliciously, as any malicious action would expose their private keys, significantly limiting the possibility of misbehavior.
In contrast, Stacks' mechanism is relatively simple, relying on a large number of light nodes' trust and a high threshold design to reduce the probability of malfeasance. Once malfeasance occurs, the mechanism that Stacks relies on for economic binding will effectively complement this, and the severe slashing penalties will greatly reduce the risk of node malfeasance.
Of course, this multi-signature security mechanism built on a large scale has a characteristic of being inflexible. For instance, if most node addresses among 100 nodes are changed, the original multi-signature address's assets must be forcibly migrated. Therefore, Stacks is exploring advanced 'dynamic member' management mechanisms like Multisig2 to expand multi-layer verification mechanisms and flexible features such as permission level control. In short, it will explore more sophisticated and secure methods to continuously optimize technology.
That's all.
Finally, aside from technical elements, one point must be made: Stacks has the dual benefit of being a local American enterprise and the first compliant token with SEC Reg+ certification, which adds a lot of imaginative potential under the current macro background of Trump's 'crypto government.'
