Stacks aims at enhancing the Bitcoin network via facilitating smart contracts as well as DApps. Stacks is basically built on Bitcoin as a layer-1 blockchain. Stacks has inherited all the strengths of Bitcoin while maintaining large capital, high security, and impressive network effects. There are a few inherent problems with Bitcoin, such as scalability. So, Stacks solves these issues by working with DeFi applications, which are usually on top of this work.
Stacks was initially funded by a range of prominent venture capital funds, including Y Combinator, Digital Currency Group and Winklevoss Capital. It was developed by Blockstack PBC, which has its headquarters in New York.
Bitcoin has long been the most popular cryptocurrency with the highest adoption rate. However, it has limited scalability. Instead of reinventing the wheel, Stacks extends Bitcoin with new functionality.
- Not a sidechain
- Not a layer 2 blockchain
- Not a token
- Not proof-of-stake chain
Stacks blockchain is a layer-1 blockchain, which uses a novel and unique mining protocol called proof-of-transfer (PoX).
Layer 1 is the main blockchain network in charge of on-chain transactions, while Layer 2 is the connected network in charge of off-chain transactions. Stacks is not competing with bitcoin, Stacks is here to give more value to Bitcoin.
People are asking why Stacks exists? Stacks is bringing Web 3.0 to bitcoin. Stacks is using Bitcoin security.
Stacks is an open source network that is bringing Smart contracts to Bitcoin. Stacks extends Bitcoin to enable apps that are open, permissionless, and decentralized. Decentralized apps are computer programs that run on the Stacks blockchain instead of a centralized server, enabling new kinds of apps that couldn’t exist before.
Mining and Proof of Transfer
Just like Bitcoin, Miners receive Stacks fees for transactions mined in any block they produce.
Definition of Proof of Transfer: Transfer a base cryptocurrency to mint units of a new cryptocurrency.
Miners commit Bitcoin to two addresses in every leader block commit. The amount committed to each address must be the same. The addresses are chosen from the current reward set of stacking participants. Addresses are chosen using a verifiable-random-function, and determining the correct two addresses for a given block requires monitoring the Stacks chain.
Instead of burning electricity on proof of work, PoX reuses already minted bitcoins as “proof of computation” and miners represent their cost of mining in bitcoins directly. Proof-of-Transfer is a new proposed mining mechanism (introduced in SIP-007) that uses the proof-of-work cryptocurrency of an established blockchain to secure a new blockchain. Miners receive coinbase rewards for blocks they win.
The reward amounts are:
- 1000 STX per block are released in the first 4 years of mining
- 500 STX per block are released during the following 4 years
- 250 STX per block are released during the following 4 years
- 125 STX per block are released from then on indefinitely.
These “halvings” are synchronized with Bitcoin halvings.
Coin holders that have active stakes are rewarded by bitcoin for providing a vital service to the network.
Stacking is locking your STX temporarily to support the Stacks network. As a reward, you’ll earn bitcoin.
How it works
With Stacks you could create DApps and use bitcoin in your project. Bitcoin is the biggest cryptocurrency ever created and existed. This is possible thru Clarity
Clarity is a decidable smart contract language that optimizes for predictability and security, designed for the Stacks blockchain. Smart contracts allow developers to encode essential business logic on a blockchain.
Clarity differs from most other smart contract languages in two essential ways:
- The language is interpreted and broadcast on the blockchain as is (not compiled)
- The language is decidable (not Turing complete)
If you have an amazing idea and you want to build it on Stacks, we invite you to apply to their Grant program! By mentioning IqraCrypto in your application, your request will be fast tracked!