Written by: Haotian
Riding on the impressive performance of the old coin sector, I would like to talk about the absolute old coin of the Bitcoin ecosystem, @Stacks.
1) Unintentionally riding the FOMO wave of BTC Layer2, but it has long been a 'pioneer';
2) The POX consensus mechanism relies on economic binding to hitch a ride on the rapid growth of BTC;
3) The sBTC native BTC cross-chain design, though lacking the cryptographic techniques of Babylon, 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 embroiled in the dispute 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 more application scenarios to support smart contract functionalities to compete with new chains like Ethereum.
Clearly, Stacks chose the latter, which seemed somewhat 'alternative' at the time. However, years later, the wave of BTC on-chain asset issuance initiated by the Ordinals protocol and the expansion of the BTC layer2 network, among other developments around the BTC ecosystem, have proven that the choice made by Stacks back then was strategically insightful.
Therefore, to some extent, Stacks can be considered the pioneer of this BTC ecosystem expansion craze, but during this BTC FOMO wave largely driven by the 'Chinese' community, Stacks seems to have been 'absent', not participating much in the hype and discussions. However, its purely technical orientation and robust development have allowed it to benefit from the market's expectations for BTC layer2, with overall market performance commendable.
After all, as a 'pioneer' that has undergone 7 years of accumulation and market validation, Stacks has already 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 impression is slightly 'alternative'. Why do I say that? It starts from its unique consensus mechanism:
Stacks did not adopt the more common POW or POS consensus mechanisms at the time, but instead utilized a special POX consensus mechanism, which can be simply understood as: POX stands for Proof of Transfer.
Stacks network miners must prove to the Bitcoin mainnet that they have initiated a BTC transfer to a specific address to earn the 'block rights' on the Stacks network, earning $STX rewards. Meanwhile, users (Holders) of the Stacks network who hold and stake STX for a certain period can proportionally receive dividends in BTC from this portion of miners' investments.
It is not difficult to see that the overall design of the POX consensus mechanism leans towards a 'dual-layer design', where the Bitcoin network serves as the foundational layer, locking in and securing BTC assets to provide 'consensus layer' security, while the Stacks network acts as the 'execution layer' for implementing complex smart contract-related applications and network communication 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 creation, in addition to the basic operational costs of running a node and 'electricity costs', the main cost lies in investing a certain amount of 'BTC'. The higher the BTC price, the higher the mining cost for miners, which also determines the preciousness of STX rewards.
Users can stake STX to maintain the security of the network, which is no different from how most POS networks maintain security. The difference is that the economic gains and losses of most POS networks cannot withstand the fluctuations of the secondary market itself. In contrast, users in the Stacks network can earn BTC rewards by staking $STX.
This creates a 'virtuous' economic cycle 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 for BTC rewards, subsequently reducing the circulation of STX and boosting the performance of BTC in the secondary market, thereby further motivating 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 earning tangible BTC rewards.
This special economic incentive mechanism gives it advantages in market volatility resistance and ecosystem stability, especially when BTC prices are continuously in an upward cycle. The entire network's consumption costs and dividend rewards will increase in sync, meaning the intrinsic value of the network itself will also grow. Moreover, it can adjust mining difficulty according to the secondary market price of BTC, and the cost of miners investing BTC and the rewards of STX will be proportional.
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 while also enhancing network expectations through BTC. The long-term dilemma of staking assets in POS networks, which often leads to 'losses', has been alleviated under the super growth buff of BTC assets.
3) Recently, Stacks' product head @andrerserrano shared an overview of the upcoming mainnet launch of sBTC, highlighting the unique aspects of sBTC as a so-called native BTC cross-chain asset.
Compared to the centralized custodial assets commonly used, the traditional Wrapped version of assets that lock assets on chain A and mint assets on chain B, sBTC achieves native security of BTC, cross-chain independence, atomic transactions, and no centralization risk points.
Stacks employs 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 perform 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 the user on the Stacks network.
The key point is that Stacks has deployed a large number of independent signing nodes, for example, 100. Only when a sufficient number of nodes sign and confirm (e.g., 68/100) will the transaction be genuinely verified.
To quickly understand the pros and cons of this multi-signature mechanism, I tried to make a comparison with @babylonlabs_io: Babylon's uniqueness lies in its use of mathematical cryptographic algorithm techniques to ensure that nodes do not act maliciously, as doing so would 'expose' their private keys, greatly limiting the possibility of wrongdoing;
In comparison, the mechanism of Stacks is relatively simple, relying on the trust of a large number of light nodes and a high threshold design to reduce the probability of wrongdoing. Once wrongdoing occurs, the mechanism of economic binding within the Stacks network complements this well, with severe slashing penalties significantly reducing the risk of node misconduct.
Of course, this multi-signature security mechanism, built upon a large scale, also has a somewhat inflexible characteristic. For instance, if most of the node addresses among 100 nodes change, the original multi-signature address assets must be forcibly migrated. Therefore, Stacks is exploring advanced 'dynamic member' management mechanisms like Multisig2 to expand multi-layer verification mechanisms and permission control features. In summary, it will continue to explore more precise and secure methods for ongoing technical optimization.
That's all.
Finally, aside from technical elements, it must be mentioned that Stacks has the dual Buff of being a local American company and the first compliant token with SEC Reg+ certification, which adds considerable imagination space under the current macro backdrop of Trump's 'crypto government'.
