How far can Bitcoin's star public chain Stacks go in the future

With the popularity of Bitcoin NFT protocol Ordinals, a new round of competition has begun in the entire Bitcoin NFT market. As one of the first blockchains capable of producing Bitcoin ordinals, Stacks has benefited greatly from it. In the past ten days or so, the price of its token STX has quadrupled. Although the market has recently started a downward trend and the price of STX has fallen back to $0.69, it is still a popular currency and is favored by many investors. However, the popularity of Ordinals has also raised a problem. As more and more Bitcoin NFT projects emerge, the Bitcoin network may become congested, which will test the concept of Bitcoin minimalism. For Stacks, as a Bitcoin L2 public chain, this is both a challenge and a rare opportunity.

Bitcoin's star public chain Stacks was born for breakthroughs

Blockchain has always had a technical problem called the "impossible triangle", that is, in the three aspects of decentralization, security and scalability, only two of them can be satisfied at the same time. As one of the earliest public chains, Bitcoin also follows this principle. Bitcoin has done the best in decentralization and security, but has made great compromises in scalability, resulting in very poor scalability. It takes 10 minutes to write a new block, and the transaction confirmation time is as high as dozens of minutes. Because of these limitations, although Bitcoin has been developed for more than ten years, it still exists as a pure value public chain.

In addition to technical aspects, social differences are also one of the reasons that affect the expansion of Bitcoin. Bitcoin fundamentalists believe that Bitcoin is already good enough as a value chain and does not need to be expanded to increase transaction speed. They believe that expansion may change the consensus mechanism of Bitcoin, leading to a hard fork of Bitcoin, affecting the security and decentralization of Bitcoin. In addition, the deployment of various complex smart contracts and applications on the Bitcoin network will also cause congestion in the Bitcoin network and increase Gas fees, which deviates from Satoshi Nakamoto's vision of Bitcoin as a peer-to-peer (P2P) cash system. Therefore, they oppose the expansion of Bitcoin and advocate maintaining the simplicity and stability of the Bitcoin network.

Technical difficulties and community disagreements have made the process of Bitcoin expansion slow and tortuous. Before the advent of Stacks, there were many projects that tried to improve Bitcoin's scalability, but most of them disappeared, and only a few forked projects became popular for a short time due to hype. In comparison, Stacks is undoubtedly the most successful one.

The success of Stacks mainly comes from the fact that it finds a balance between Bitcoin fundamentalism and expansion.

The native Bitcoin network itself does not support smart contracts and decentralized applications, so a second-layer protocol is needed to implement these functions. Stacks is such a protocol, which implements the functions of deploying smart contracts and decentralized applications on the Bitcoin network by building a new blockchain. The Stacks blockchain interacts with the Bitcoin network, using Bitcoin's security and network effects to ensure its security and decentralization, while not making any modifications to the Bitcoin network, keeping the Bitcoin network simple and stable.

Stacks' technological innovation and advantages

Recently, due to the popularity of Ordinals, the public has begun to focus on the issue of Bitcoin expansion, which had not been given much attention before. People were surprised to discover the existence of Stacks. When people habitually thought that Stacks was also a short-term Internet celebrity product, they did not know that Stacks had been quietly working on building the Bitcoin second-layer network for nearly 10 years.

Stacks is an independent blockchain based on the Bitcoin blockchain, created by Muneeb Ali and Ryan Shea in 2013. It uses the "Proof of Transfer" (PoX) protocol, and uses the security of Bitcoin and Stacks tokens (STX) to implement smart contracts. In the early days, it focused on DApps development and provided a decentralized experience in combination with Bitcoin security. With Bitcoin congestion and high fees, Stacks began to study the use of Bitcoin's second-layer technology (such as the Lightning Network) to expand network throughput and transaction speed, and launched Stacks 2.0 to achieve high-throughput, low-cost and instant settlement transactions.

Stacks has many technical advantages, which are embodied in the following aspects:

(1) PoX Mining Mechanism: Stacks uses the PoX mining mechanism instead of the traditional PoW or PoS mining mechanism, thereby solving many problems existing in the traditional mining mechanism, such as energy consumption and computing power competition.

(2) Clarity Smart Contract Language: Stacks has developed a smart contract language called Clarity, which has a strong type system and clear execution logic. It can execute secure smart contracts without the need for middlemen, thereby improving the reliability and operability of smart contracts.

(3) Decentralized Authentication: Stacks provides an authentication system called Blockstack, which uses blockchain technology and public key infrastructure to achieve decentralized authentication and management of users, thereby improving user privacy and security.

(4) Integration with Bitcoin: Stacks is integrated with Bitcoin, which can extend the security, reliability, and market participation of Bitcoin to the Stacks ecosystem, thereby achieving higher decentralization and security.

(5) Compatibility with existing Web technologies: Stacks can be compatible with existing Web technologies, such as using JavaScript to develop decentralized applications, making it easier for developers to build decentralized applications.

In short, Stacks' technological innovation and advantages enable it to achieve higher decentralization, higher security and reliability, and better scalability and sustainability, providing strong support for the development of its ecosystem.

The rise of Bitcoin NFT, opportunities and challenges for Stacks

The emergence of Ordinals has triggered another wave of enthusiasm in the field of Bitcoin applications. As a representative L2 project of Bitcoin, Stacks is in an excellent position to benefit from market hype. According to data from Defi Llama, the funds on Stacks have increased by 254% in the past 30 days (February 1st to March 2nd), and the TVL has increased from US$7.56 million to US$26.8 million. Stacks' native token STX has doubled in the past ten days. Although the price of STX has rebounded in recent days due to the decline of the market, investors are generally optimistic about the future of STX.

Investors are optimistic about STX mainly based on the expectation of Bitcoin halving in 2024. As the token of Bitcoin's second-layer expansion protocol, the value of STX is closely related to Bitcoin. Therefore, although STX now seems to have exhausted the growth trend brought by the positive news of Ordinals, due to the future halving of Bitcoin and the good development trend of Stacks, STX is still regarded as a cryptocurrency worthy of long-term investment.

The Bitcoin NFT craze started by Ordinals is getting bigger and bigger. This year may become the summer of Bitcoin NFT. This is an excellent development opportunity for Bitcoin scaling protocols such as Stacks. In particular, Stacks is not only highly integrated with the Bitcoin ecosystem in terms of technology, but its economic model is also more sustainable and decentralized, giving it greater room for development than other public chains.

In addition to the positive side, the popularity of Ordinal also raises a previous question: If NFT causes network congestion, the Bitcoin minimalist ideology will be put to the test. Will the Bitcoin community allow such speculation or block the network to develop in the long run?

At present, the opposition's point of view is that NFT damages the original use case of Bitcoin. One community member said, "Allowing Bitcoin to be used for NFT is a bit like allowing hospitals to be used for rave parties." Supporters believe that the rise of Bitcoin NFT has found new application scenarios outside of traditional value storage, providing Bitcoin with more gameplay and financial use cases. From the data point of view, both views can be verified. According to OKLink data, Ordinal's "inscription" is consuming 50% of Bitcoin block space, and the block space utilization rate has reached 100%. On the other hand, from the perspective of the miner group, the emergence of Bitcoin NFT has also brought them new ways to increase revenue. In the past week, the cost of engraving "inscriptions" through the Ordinal protocol has accumulated to US$880,000.

At present, neither side can convince the other. This seems to be back to the debate between Bitcoin fundamentalists and expansionists that Stacks initially faced. Last time, Stacks found a balance between the two sides. This time, whether the debate about Bitcoin NFT can find a balance that both sides can accept is a severe challenge for Bitcoin second-layer networks such as Stacks.

Stacks popular ecological projects inventory

With the rise of the Bitcoin NFT craze, more and more investors are optimistic about Stacks. As an important part of the Bitcoin ecosystem, Stacks provides users with more secure, efficient and sustainable smart contract services, and has the potential for collaborative innovation with other cryptocurrency projects and traditional financial markets. Given Bitcoin's huge user base, Stacks' close integration with the Bitcoin ecosystem, more sustainable and decentralized economic model, better privacy protection and higher performance give it greater room for development compared to other public chains. At present, Stacks projects worth paying attention to are:

Alex

Recently, Bitcoin has undergone a cultural and technological transformation through Ordinals and Stacks. On Stacks, a project that is expected to stand out in the future is ALEX. ALEX is a DEX designed specifically for Bitcoin, and it is the first platform to provide one-stop DeFi services on Bitcoin through Stacks.

The core functions of the ALEX protocol include decentralized trading and decentralized lending. Users can trade on decentralized exchanges and obtain liquidity from liquidity providers. With collateral-based lending, users can pledge digital assets to obtain stablecoins so that they can manage funds without having to sell assets. ALEX also issued a governance token, ALEX, and users holding ALEX tokens can participate in the governance process of the protocol, including making proposals, voting, and decision-making. Through the liquidity mining mechanism, ALEX Labs encourages users to provide liquidity, participate in the ecosystem of the protocol, and obtain ALEX tokens as rewards by providing liquidity.

Gamma

Gamma is an NFT market based on the Stacks ecosystem, previously known as STXNFT. The market aims to become a Web3 hub, attracting collectors, creators, and investors to explore, trade, and display NFTs through the Bitcoin ecosystem.

Recently, with the rise of BTC NFT (Ordinals technology), NFT activities on Stacks have also been gradually increasing. According to DappRadar data, Gamma's transaction volume has increased by more than 300% in the past 30 days. This is mainly due to the low cost and fast NFT minting speed provided by the Stacks ecosystem.

Gamma is a premier NFT marketplace where users can explore dozens of different collections that are growing in popularity. Additionally, the Gamma platform offers a professional, creator-first NFT Launchpad for digital artists looking for easy ways to deploy low-code smart contracts. With Gamma, even inexperienced artists can create smart contract functions for their NFTs in minutes, thereby ensuring ownership of their NFTs and protecting their work, just like copyright. Beyond that, Gamma acts as a social platform where creators can come together to collaborate and share ideas. Gamma currently already has many popular NFT collections that have built a cult following in the Web3 world. In fact, many collections are already so popular that some projects have even launched secondary collections to lower the barrier to entry to their community.

Arkadiko

Arkadiko is a DeFi platform built on the Stacks ecosystem, which aims to provide users with a variety of financial products and services, including lending, trading, staking, earning income, etc. Unlike other DeFi platforms, Arkadiko is built on the Stacks ecosystem and adopts Stacks' unique technical architecture, which means it can realize decentralized financial services on the Bitcoin blockchain.

The main application of the Arkadiko platform is the USDA stablecoin of the mortgage asset casting platform. The model is similar to MakerDAO. Users deposit STX in Arkadiko's Vault and cast USDA, a stablecoin soft-anchored to the US dollar, through over-collateralization. The STX deposited can also rely on Stacks' PoX mechanism to obtain income. In addition, users can also use STX tokens as a tool for transactions and payment of fees, and obtain loans by pledging STX tokens. Arkadiko's lending rate is low, which is very attractive to users. In addition, Arkadiko also provides functions such as liquidity pools, stablecoin transactions, and yield farms, allowing users to participate in more DeFi products and services. At the same time, Arkadiko's development team is committed to providing more innovative DeFi products and services to provide users with a better financial experience.

CityCoins

CityCoins is a cryptocurrency designed to provide financial support to cities and promote the development of urban economies. The project was co-founded by Muneeb Ali and Ryan Shea in 2021 and is powered by the Stacks ecosystem.

The main function of CityCoins is to provide financing for cities and help them achieve sustainable development. People who hold CityCoins can choose to invest them in a fund for a specific city, thereby providing financial support for that city. These funds can be used for various projects in the city, such as infrastructure construction, public services, and community development. People who hold CityCoins can receive income from the fund and receive benefits in CityCoins. In addition, CityCoins can also be used to purchase goods and services in a specific city. For example, tourists can use CityCoins to purchase tickets for restaurants, hotels, and tourist attractions, as well as other city goods and services. Overall, CityCoins aims to provide more economic support to cities while also bringing financial returns to holders. This innovative cryptocurrency model provides a new financing mechanism for the sustainable development of cities and provides holders with an interesting way to invest.

Summarize

With the popularity of Ordinals, the Bitcoin NFT market is developing rapidly. This is both an important opportunity and a severe challenge for Stacks. In order to meet the high throughput requirements of Bitcoin NFT projects, Stacks needs to further leverage its technical advantages in Bitcoin's second-layer expansion solutions and launch a more scalable network solution. At the same time, Stacks also needs to further strengthen its integration with the Bitcoin network to ensure its security without affecting the stability of the Bitcoin network. If Stacks can successfully overcome these challenges, it will become one of the most successful expansion solutions in the Bitcoin field and lay the foundation for the future development of the Bitcoin network.