Author: Vanguard 0 As the price of Bitcoin continues to rise, breaking the record of the year, the global attention to the Bitcoin ecosystem has reached an unprecedented level. Data shows that the transaction volume of the Bitcoin network is increasing, and the number of daily transactions has set a new record. Bitcoin Ecological Data Growth Chart In such an environment, a core question gradually emerges: How to build an effective and practical application layer in the huge Bitcoin ecosystem? This issue is not only the focus of technology developers and investors, but also the key to the entire industry seeking breakthroughs. Among the many answers, Stacks is undoubtedly one of the most potential and innovative projects. As a smart contract layer running on the Bitcoin network, Stacks provides a new platform for developers and users to create and run applications and smart contracts using Bitcoin (BTC) as an asset or currency. It is worth mentioning that Stacks is about to receive a major upgrade in the first quarter of 2024. This upgrade not only means a lower development threshold, but also represents a significant improvement in the performance of the entire network. It is foreseeable that this upgrade will bring unprecedented development opportunities to Stacks, and may even trigger a new round of changes in the entire Bitcoin ecosystem. Understand Stacks: Allow Dapps and smart contracts to use BTC as their assets and settle their transactions on the Bitcoin main chain. Stacks, as an innovative Bitcoin smart contract layer, aims to realize the seamless integration of smart contracts on the Bitcoin blockchain. Use with trust while using Bitcoin as an asset for transaction settlement. The design and operation of Stacks have some unique features that make it unique in the digital currency space. First of all, Stacks has its own independent chain structure, compiler and proprietary programming language - Clarity. This design allows Stacks to run synchronously with the Bitcoin chain, essentially building a brand new chain with an independent governance structure and transaction model. This independent but closely connected relationship provides a solid foundation for the operation of Stacks. Another key feature is that Stacks does not rely on traditional cross-chain bridges to bridge assets. Instead, it integrates with the Bitcoin main chain by submitting anchor transactions on the Bitcoin main chain. These anchor transactions include a summary of the block header information on the Stacks chain and some additional information, which is broadcast to the Bitcoin network to ensure its immutability. Stacks allows applications and smart contracts to use BTC as their asset or currency, settling their transactions on the Bitcoin main chain.This design greatly enhances the practicality of BTC and opens the door to smart contracts and application layers. Regarding the consensus mechanism, Stacks adopts the PoX (Proof of Transfer) consensus algorithm. In this algorithm, miners and transaction validators are two different roles. Transaction validators need to stake STX tokens to mine BTC, while miners need to stake BTC on the Bitcoin main chain to mine STX. This unique consensus mechanism provides a novel and efficient driving force for the operation of Stacks. It is worth noting that Stacks is expected to usher in a major upgrade in the first quarter of 2024-Nakamoto upgrade. This upgrade will have a multi-faceted impact on Stacks, including achieving shared network security with BTC, launching sBTC, supporting BTC atomic swaps, speeding up block production, and supporting multiple development languages. These improvements are expected to further enhance the practicality and attractiveness of Stacks. The long-term value of Stacks depends on the growth of its ecosystem and the demand for Clarity smart contracts. With the arrival of the Nakamoto upgrade and the Bitcoin halving event, Stacks is expected to attract more attention and its ecology is expected to develop further. Next, we will take a detailed inventory of several key projects in the Stacks ecosystem to further explore the diversity and potential of this ecosystem. Take a look at the key projects in the Stacks ecosystem and lay out the value opportunities of the Bitcoin ecosystem in advance Alex Labs: Occupies nearly 85% of the TVL in the Stacks ecosystem Alex Labs is an open source platform dedicated to reshaping the role of Bitcoin in the field of decentralized finance (DeFi). The core team behind this platform is composed of industry veterans, including co-founders Dr. Chiente Hsu and Ms. Rachel Yu. Their goal is to introduce more DeFi features and opportunities in the Bitcoin ecosystem through innovative methods.Currently, Alex's total locked value (TVL) in the Stacks ecosystem has reached $28 million, accounting for nearly 85% of the TVL of the Stacks ecosystem. In addition, its total trading volume has exceeded $337 million, with 26,631 active wallets, which fully demonstrates Alex's market acceptance and user activity. Alex Labs' decentralized exchange (DEX) provides an automated market maker (AMM) and an off-chain order book designed to assist other projects built on Stacks. Featured decentralized applications (dApps) on the Alex platform include: 1. SWAP (AMM DEX): This is a decentralized exchange that uses an automated market maker (AMM) for seamless asset exchange within the Bitcoin ecosystem. 2. KICKSTART (Bitcoin Launchpad): This is an innovative platform dedicated to launching new projects, providing them with basic tools and visibility in the Bitcoin field. 3. TRADE (B20): This is a dynamic trading platform with order books for BRC20 and SIP10 tokens, designed for precise trade execution and optimized price discovery. 4. CONNECT (Bridge): This is a powerful bridge service that can seamlessly connect multiple blockchain networks, ensuring easy asset transfer and interoperability.Alex also offers the Alex Order Book, which is still on the testnet, which allows users to enable leveraged trading on its DEX. This innovative attempt provides users with more flexibility and trading options. $ALEX is the native token of Alex Labs. It is not only a prerequisite for participating in the platform, but also a reward medium for providing liquidity and staking. At present, the circulating market value of $ALEX is close to 50 million US dollars, showing its strong influence in the market. In addition, $ALEX allows holders to vote on important matters such as the future development of the project, staking policy, and reserve allocation. Arkadiko: Bitcoin on-chain version of MakerDAO Arkadiko is the second largest protocol in the Stacks ecosystem in terms of total locked value (TVL). Its positioning is similar to the famous MakerDAO in the Ethereum ecosystem, focusing on stablecoin projects. The emergence of Arkadiko has added an important financial tool to the Stacks ecosystem, allowing users to use their digital assets more flexibly. Through Arkadiko, users are able to use their Stacks native token $STX as collateral to mint Arkadiko's own stablecoin USDA. This mechanism is similar to a mortgage loan. By locking their $STX, users can obtain a corresponding amount of USDA, which can then be used for different financial activities. The introduction of USDA not only provides Stacks users with a stable store of value and medium of exchange, but also increases liquidity within the ecosystem. In addition to minting stablecoins, Arkadiko also supports Swap and lending services. Users can use the Swap function to quickly and directly exchange between different digital assets. At the same time, the lending service gives users the opportunity to borrow funds for investment or other financial needs.Within the Arkadiko protocol, USDA can also be used to participate in so-called “Farms.” Users can repay their loans by staking their assets in the Farm. The income of this Farm mainly comes from participating in the Stacks consensus mechanism, called Proof of Transfer (PoX). In this way, users can not only maintain the liquidity of their assets when staking their assets, but also earn additional income.These functions and features of Arkadiko make it play an important role in the Stacks ecosystem, providing users with diversified financial services while enhancing the health and stability of the entire ecosystem. Its success is not only reflected in its ranking in TVL, but also in the actual value and breadth of applications it brings to the Stacks ecosystem. Zest: The first native lending protocol built on the Bitcoin chain through Stacks The Zest protocol is the first Bitcoin native lending protocol built on Bitcoin through Stacks. It is currently in the early access stage.The main feature of the protocol is that it allows users to become liquidity providers and generate Bitcoin returns by investing their assets in lending pools managed by a professional team. These lending pools are mainly aimed at major institutions in the cryptocurrency industry, providing them with loan services. This model means that users can participate in the Bitcoin market through lending pools while providing financial support for the development of the cryptocurrency industry. A key feature of the Zest protocol is its diversified investment strategy. Each lending pool provides loans to multiple borrowers, which creates diversified investment opportunities for BTC liquidity providers. The purpose of this strategy is to diversify investment risks and improve overall investment security. It should be noted that as an emerging financial service, the Zest protocol is still developing and improving. Although it provides Bitcoin holders with new opportunities to participate in the lending market, as an investor, you need to understand and evaluate the potential risks of such emerging markets. Over time, the Zest protocol may play a more important role in the Stacks ecosystem, but its long-term impact and stability still need to be further observed. Liquidium: Allowing users to borrow and lend native Bitcoin with native Ordinals as collateral Liquidium is a peer-to-peer lending protocol that enables users to borrow and lend native Bitcoin with native Ordinals as collateral. It is currently in the Closed Beta stage. The core feature of the protocol is to allow Ordinal owners to use their inscriptions (i.e., unique identifiers linked to specific Bitcoins) as collateral to borrow Bitcoin. This feature not only allows users to access liquidity by using their own Ordinals as collateral, but also allows them to maintain ownership and exposure to the original Ordinals. This mechanism provides users with additional financial flexibility while ensuring the security of their assets.Liquidium operates entirely on the Bitcoin blockchain and is committed to providing a trust-minimized and non-custodial solution. This means that the entire loan process does not require the involvement of traditional intermediaries, thereby reducing transaction costs and complexity. The loan process is mainly facilitated by partially signed Bitcoin transactions (PSBT), and the results of the loan are verified by DeepLake oracles. This approach ensures the transparency and security of transactions. Conclusion: With the upcoming major upgrade, Stacks may bring huge incremental value to the Bitcoin chain ecosystem We can see that Stacks is not just a simple Bitcoin smart contract layer, it is actually nurturing an increasingly rich and diverse ecosystem. Each project contributes to the entire ecosystem in its own unique way, whether by providing innovative financial services such as DeFi platforms and stablecoins, or by developing new lending models and trading platforms. These projects are constantly pushing the boundaries of Bitcoin and expanding its application areas. Through these projects, Stacks has proved that it can not only enhance the functionality of Bitcoin, but also provide users and developers with a diverse and innovative platform. With Stacks about to usher in a major upgrade in 2024, we have reason to believe that this ecosystem will continue to grow and develop, bringing more value and opportunities to the Bitcoin community.

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