After the outbreak of the Bitcoin inscription in late 2023, the Bitcoin ecosystem also flourished, and Stacks, which emerged as a Layer2 solution for Bitcoin, is one of the outstanding ones. This article is written by Web3 researcher Jake Pahor and compiled, translated, and written by PANews.
(Briefing:
Bitcoin Layer2 Ecology: Stacks’ main innovations and advantages)
(Background:
New possibilities for Bitcoin in Layer2: Stacks, BNS, Ordinals..)
Bitcoin will usher in two major catalysts in 2024: the approval of ETF (already achieved) and Bitcoin halving. The Bitcoin Layer2 network, Stacks, is in a perfect position to leverage the influx of funds into Bitcoin DeFi.
Bitcoin has traditionally been regarded as a store of value/digital gold. Stacks is the smart contract layer for Bitcoin, providing new use cases for Bitcoin holders, including Bitcoin-backed lending, DeFi on Bitcoin, and trading NFTs using Bitcoin.
The goal of Stacks is to bring DeFi to Bitcoin and unlock over $900 billion in capital. Stacks uses the Bitcoin network as a settlement layer and adds smart contracts and programmability. Applications will run on the Stacks blockchain instead of centralized servers.
The Stacks ecosystem continues to grow, with over 30 teams actively participating in Stacks development. Some major projects include Alex (DEX), StackingDAO (liquidity staking), and Arkadiko (CDP).
Stacks aims to help expand the Bitcoin economy.
Stacks TVL on the chain is reaching a new all-time high of $63 million. It has increased about 6 times compared to the low point of $10 million TVL in September 2023. The trading volume has also significantly increased in the past few months, corresponding to the development of NFTs, DEX, and domain services in its ecosystem.
The Stacking protocol ensures the security of the Stacks network and provides stackers with actual returns in Bitcoin (currently around 7%). The returns are related to network activity. As network efficiency improves and block space becomes more valuable, the BTC cost that miners need to pay will also increase, resulting in increased earnings for STX stakers.
Proof of Transfer (PoX) mechanism is the consensus mechanism of the Stack blockchain. Miners verify transactions by bidding BTC to receive STX rewards. STX is the native token used for transaction fees and stacking (locking on the network to earn BTC rewards).
Similar to Bitcoin, Stacks also has a plan to halve miner rewards. STX also has a fixed and predictable supply, halving every 4 years. By 2050, the total supply of STX is expected to reach 1.82 billion.
Current supply statistics:
Circulating supply: 1.43 billion
Max supply: 1.82 billion
Market cap: $2.6 billion
FDV: $3.3 billion
According to the unlocking schedule, there are two major treasuries:
Hiro PBC Treasury: 200 million STX (approximately $366 million)
Stacks Foundation Treasury: 100 million STX (approximately $183 million)
The exact amount used by the Stacks Foundation for investing in Stacks-based projects is not clear.
Anyone in the Stacks community can submit a SIP (Stacks Improvement Proposal). Then, the committee will discuss and vote on each SIP. Joining the committee requires approval from the Stacks Foundation Board, making this process still relatively centralized.
Stacks was founded in 2017 by Muneeb Ali and Ryan Shea. Over the years, it has raised over $45 million through multiple rounds of financing, private placements, and ICOs. Notable investors include Hashkey, SNZ Holding, Blockchain Capital, DCG, Winklevoss Capital, and Naval.
Despite the inefficiency of Bitcoin in the market and other solutions such as the Lightning Network, Rootstock, Ark, and Liquid Network, only Stacks has a native token, giving it a significant competitive advantage.
Stacks has recently faced several obstacles:
A serious vulnerability discovered in the “Stacking” mechanism
“Mass review” of the mining layer
Interestingly, STX is the first token issuance in the United States to receive SEC accreditation.
The Bitcoin ecosystem has enormous growth potential, and upcoming catalysts for Stacks include the approval of BTC ETF, BTC halving (in April 2024), Satoshi Nakamoto upgrade, sBTC release, and Bitcoin DeFi and NFT trading.
Overall weighted score = 8.3