Author: Blue Fox Notes
During this bear market cycle, the crypto sector has experienced a rise in the BTC ecosystem. Although some staunch supporters of BTC as a value storage do not like BTC to have any ecosystem, the exploration of the BTC ecosystem has been ongoing. The motivations behind this exploration are twofold, aside from the important factor of 'speculation': one is to unlock the yield opportunities of BTC asset value; the other is to address the issue of BTC's future mining subsidies, which is also the core question for BTC's future, involving how to ensure the sustainability of the entire network's security. Without the rise of the BTC ecosystem, BTC would face challenges in solving this issue in the future.
In the exploration of BTC L2, there is also an exploration of Stacks, which is one of the earliest projects to enter this field. It attempts to provide opportunities for ecosystems such as DeFi to occur within the BTC ecosystem through its L2. So, how can we technically understand the evolution of Stacks? Here, Stacks is divided into the sidechain era and the L2 era. Although this classification is not very rigorous and there are different dimensions, it is mainly to make it easier for everyone to focus on and understand some of the most important stages in the development history of Stacks.
Sidechain Era
The concept of Bitcoin sidechains was proposed by Blockstream, which later developed the Liquid Network; at the same time, the Rootstock network was also launched during that period. In 2018, Stacks launched its mainnet and introduced Clarity contract development for oracles in 2019. Additionally, it applied to the SEC for compliant token issuance, which was a rare practice at that time. Its significance lies in the fact that under compliance and regulatory policies, Stacks won more exploration time for itself. Throughout this long cycle of bull and bear markets, Stacks has persisted.
The initial technical mechanism of Stacks is similar to the sidechain of BTC. However, it is not entirely the same as other sidechains, as it has a unique mechanism to ensure its security. Simply put, Stacks integrates with Bitcoin by utilizing an anchoring transaction mechanism, which includes block header information from the Stacks chain that needs to be broadcasted to the BTC network. Therefore, although it is referred to as a sidechain, it has different characteristics from the general concept of sidechains.
Stacks has a PoX mechanism, which is somewhat similar to the staking system of PoS. PoX stands for Proof of Transfer. There are two types of participants: miners and signature validators. Miners need to participate in transactions on the Bitcoin chain to obtain eligibility (the opportunity to write new blocks into the Stacks chain, i.e., mining eligibility), which is its unique feature. Miners on Stacks need to obtain opportunities to write new blocks into the Stacks chain to earn profits. To gain this opportunity, Stacks miners must participate in each round of leader elections by sending transactions on the BTC chain, and then a leader is randomly selected from these participants for each round using a VRF (Verifiable Random Function) to obtain the opportunity to write new blocks on the Stacks chain.
Each Bitcoin block will have a corresponding Stacks miner who obtains the production rights for all Stacks blocks during that block's term. When a Stacks miner adds a transaction to a Stacks block, the Stackers' signers perform signature verification. If more than 70% of the signers verify the validity and reach consensus, the new block can be added to the Stacks chain.
Stacks has a 'chain anchoring' mechanism for its interaction with the Bitcoin L1 layer. This mechanism binds the information on the Stacks chain to BTC L1. Each Stacks block contains a hash pointing to the previous Stacks block and a hash pointing to the previous Bitcoin block. Through this mechanism, the Stacks chain attempts to ensure that all state changes occurring within its network can be verified on the BTC L1 network.
In summary, during this process, Stacks miners need to spend BTC to gain the opportunity to become block leaders (which can yield profits). To increase their chances, Stacks miners will spend more BTC based on the cost-effectiveness of the yield. After a Stacks miner obtains the leader position, they gain the right to create new blocks in Stacks and add block transactions to the Stacks chain. Once the miner completes the work, they can receive STX token incentives. The sources of STX incentive tokens come from both the newly added STX token rewards from blocks and transaction fees from users on the Stacks chain.
In addition to Stacks miners obtaining the opportunity to write new blocks through PoX, there are also Stackers signers participating in verification, which is another important participant in the PoX mechanism. STX (Stacks token) holders can participate in the PoX consensus mechanism, mainly to validate the effectiveness of Stacks blocks and determine whether the block should be added to the chain. STX holders can participate in this Stacking process by staking STX and can earn a portion of the BTC that miners initially bid for, as well as STX as rewards. The Stacking rewards for STX holders will be based on the amount of STX staked and the duration of the stake. A Staking cycle lasts about 2 weeks (approximately 1800 blocks).
The total supply of STX tokens is 1.818 billion, currently approximately close to 1.5 billion (according to CoinMarketCap data). Mining rewards are the primary method of release in the future, with 1000 STX per block for the first four years, halving every four years until it reaches 125 STX per block, at which point it will no longer halve.
L2 Era
Stacks 2.0 enters the Bitcoin L2 era, with two major aspects: the Nakamoto upgrade and the launch of sBTC. The Nakamoto upgrade brings Stacks into the era of BTC L2 from a technical foundation, attempting to solve issues related to security and performance; while the launch of sBTC prepares for the practical implementation of its L2 ecosystem.
* The Nakamoto upgrade allows Stacks to evolve towards the Bitcoin L2 direction.
The Nakamoto upgrade is a significant milestone for Stacks itself. It evolves Stacks towards a true L2 direction.
The most important aspect of L2 is sharing the security of L1. The Nakamoto upgrade tries to implement this direction. After the Nakamoto upgrade, Stacks attempts to establish itself as a layer of the Bitcoin network, integrating more closely into the Bitcoin network, thus becoming a deeper part of the Bitcoin network and ecosystem.
