Taking advantage of the eye-catching performance of the old coin sector, I want to talk about Stacks, the absolute old coin of the Bitcoin ecosystem.
1) Unintentionally riding 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 the 'fast train' of BTC growth.
3) The sBTC native BTC cross-chain design, while lacking the cryptographic techniques of Babylon, is still considered 'native'.
Now, let's dissect the above three points from a technical perspective, point by point.
1) As early as 2017, when Bitcoin was still caught in a struggle between conservatives and innovators, conservatives firmly believed in simplifying functions to focus solely on being a reserve asset, while innovators argued that BTC needed to expand its application scenarios to support smart contract functions to compete with new chains like Ethereum.
Clearly, Stacks chose the latter, which was somewhat 'alternative' in the context of the time. However, years later, the wave of asset issuance on the BTC chain initiated by the Ordinals protocol and the expansion of BTC layer 2 networks, all of which revolve around the development of the BTC ecosystem, have proven that Stacks' choice back then was very strategically insightful.
Thus, to some extent, Stacks can be considered the pioneer of this BTC ecosystem expansion wave. However, during this BTC FOMO wave primarily driven by 'Chinese' participants, Stacks seems to have been 'absent', not overly participating in the hype and discussions. Nevertheless, its purely technical orientation and robust development have allowed it to benefit from market expectations for BTC layer 2, with overall market performance being noteworthy.
After all, as a 'pioneer' and with 7 years of accumulation and market validation, Stacks has explored a complete technology stack, providing a viable solution model for BTC to explore smart contract practices.
2) Speaking of the operational mechanism of Stacks' technical architecture, my overall impression is slightly 'alternative'. Why do I say this? This has to do with its special consensus mechanism.
Stacks did not adopt the more common POW or POS consensus mechanisms at the time, but instead implemented a special POX consensus mechanism, which can be simply understood as: POX means Proof of Transfer.
Miners in the Stacks network must prove to the Bitcoin mainnet that they initiated a BTC transfer to a specific address before they can earn the 'block rights' on the Stacks network and win $STX rewards. Meanwhile, users (Holders) of the Stacks network who hold and stake STX for a certain period can proportionally receive dividends of the BTC invested by these miners. It is not difficult to see that the overall POX consensus mechanism is somewhat 'dual-layered', with the Bitcoin network serving as the foundational layer that accumulates and locks BTC assets to provide security for the 'consensus layer', while the Stacks network serves as the 'execution layer' for implementing complex smart contract-related applications and network communication collaborations.
This design fully maintains the authority of the Bitcoin mainnet and achieves a 'strong correlation' with the Bitcoin mainnet through 'economic binding'. How should this be understood?
To participate in block production, miners need to cover not only the basic network operation costs of running nodes and 'electricity costs' but also invest a certain amount of 'BTC'. The higher the BTC price, the higher the mining costs for miners, which also makes STX rewards more valuable.
Users can stake STX to maintain network security, which is no different from how most POS networks maintain security. The difference is that the economic profit and loss ratio of staking in most POS networks cannot withstand the fluctuations of the secondary market itself. However, users in the Stacks network can earn BTC rewards by staking $STX.
This creates a 'virtuous' economic internal circulation, where miners consume $BTC to compete for block rights, and this portion of BTC is then distributed to Stakers, encouraging more users to actively stake to obtain BTC rewards, thereby reducing the circulation of STX and enhancing the performance of BTC in the secondary market, further motivating miners to consume BTC for mining.
For miners, if STX mining is not profitable, the mining industry will not thrive. For users, the risks of staking STX assets can be hedged through the tangible BTC rewards received.
This special economic incentive mechanism gives it advantages in terms of market volatility resistance and ecological stability, especially when BTC prices continue to rise, the overall consumption costs and dividend rewards of the entire network will increase synchronously, meaning that the value accumulated within the network will also grow. Moreover, it can adjust mining difficulty based on the secondary market price of BTC, with the cost of BTC invested by miners being proportional to the rewards of STX.
In my view, the alternative or advanced aspect of Stacks' POX consensus mechanism lies in its binding to BTC, the most stable asset in the market, relying on BTC for network security and gaining enhanced network expectations through BTC. The long-standing dilemma of 'loss' of staked assets common to POS networks has been alleviated under the super growth buff of BTC assets.
3) Recently, Stacks' product head @andrerserrano shared an overview of the upcoming deployment of sBTC on the mainnet, highlighting the uniqueness of sBTC as a so-called native cross-chain asset for BTC.
Compared to the traditional Wrapped asset model where assets are locked on chain A and minted on chain B, which is commonly used for centralized custody assets, sBTC achieves native security of BTC, cross-chain immunity, atomic transactions, and eliminates centralization risk points, among other native technical features. How is this achieved?
Stacks uses a multi-signature threshold mechanism to ensure the security of the Stacks network. Therefore, there are many 'signers' on the Bitcoin mainnet to verify transactions and implement multi-signature operations. Users send BTC assets to a designated BTC multi-signature address, and after transaction confirmation, the signers of the Stacks protocol monitor and verify the transaction, automatically minting the corresponding sBTC for users on the Stacks network.
The key point is that Stacks has deployed a large number of independent signing nodes, for example, 100. Only after a sufficient number of threshold nodes sign and confirm will the transaction be truly validated and confirmed, 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 special feature of Babylon is that it uses mathematical cryptographic algorithms to ensure that nodes do not act maliciously because if a node behaves maliciously, its private key would be 'exposed', greatly limiting the possibility of misconduct.
In contrast, the mechanism of Stacks is relatively simple, relying on the trust of a large number of light nodes and a higher threshold design to reduce the probability of malicious behavior. If malicious behavior occurs, the Stacks network's reliance on the economic binding mechanism will complement this well, and the severe slashing punishment characteristics will greatly reduce the risk of node misconduct.
Of course, this multi-signature security mechanism built on scale may also have a less flexible characteristic. For example, if a majority of the node addresses among the 100 nodes change, the assets of the original multi-signature address would have to be forcibly migrated. Therefore, Stacks is exploring advanced 'dynamic member' management mechanisms like Multisig2 to expand the multi-layer verification mechanism and flexible features such as permission-level control. In summary, it will explore more precise and secure methods for continuous technical optimization.
That's all.
Finally, aside from technical elements, one point cannot be overlooked: Stacks has the dual buff of being a U.S. domestic enterprise and the first compliant token certified by SEC Reg+, which adds considerable imagination space in the current macro backdrop of Trump's 'crypto government'.
