Stacks is a decentralized protocol that enables decentralized apps and smart contracts to use Bitcoin as an asset and settle transactions on the Bitcoin blockchain. The platform is driven by the Stacks (STX) token, which is responsible for executing smart contracts, handling transactions, and registering new digital assets. The protocol was co-founded by Muneeb Ali and Ryan Shea in 2013. ^[1][2]

History

Blockstack, now known as Stacks, originated in 2013 as a computer science Ph.D. project at Princeton University. In 2014, the project transformed into a startup and received incubation support from Y-Combinator. ^[3]

Overview

The Stacks layer allows applications and smart contracts to utilize BTC as their currency or asset, and conduct their transactions on the main Bitcoin blockchain.

Proof of Transfer

The Stacks layer utilizes a consensus mechanism called Proof of Transfer (PoX) that relies on both STX and BTC. PoX miners use already-mined BTC and receive STX rewards. PoX operates similarly to Proof of Work (PoW) in that miners bid by spending BTC and the bid weight determines their probability of becoming a leader. The leader election takes place on the Bitcoin chain, and new blocks are written on the Stacks layer. This approach allows PoX to reuse the work done by Bitcoin miners without requiring significant additional energy consumption, as only the cost of running standard laptops or computers for Stacks nodes to bid using BTC is necessary. ^[4]

Stacks records user identity and transactional metadata in each block, which is utilized by all the applications in the Stacks ecosystem. The integration with Bitcoin allows for any changes made to Stacks IDs or wallet balances to be verified on the Bitcoin blockchain. This also applies to Stacks smart contracts, which are programmed using a specialized language developed and tested for Stacks by Algorand. ^[4][5]

Microblocks

As it is connected to the Bitcoin blockchain, the Stacks blockchain is constrained by Bitcoin's 10-minute block time. To address this, the Stacks protocol implements microblocks, which allow numerous transactions to be processed between Bitcoin blocks. The completed transactions within these microblocks are subsequently recorded on the Bitcoin blockchain. ^[6]

Clarity

Stacks utilizes the Clarity programming language for its smart contracts, which is created by the Stacks team. Although it is not as versatile as other languages since it's not Turing complete, Clarity prioritizes security through its predictable code feature. This feature permits developers to precisely determine a program's actions, data usage, and operational cost. ^[7]

STX Token

STX serves as the primary digital currency on the Stacks network, supporting smart contracts for Bitcoin, rewarding miners on the open Stacks network, and facilitating the earning of Bitcoin through Stacking for STX holders. ^[8]

Stacks miners use Bitcoin to participate in leader elections and mine newly minted STX tokens. By locking STX tokens, holders can earn BTC rewards through a process called Stacking. The leader election process uses a verifiable random function (VRF) to randomly select a leader for each round, with more weight given to higher BTC bids. The selected leader then writes the new block on the Stacks blockchain.

In addition to earning BTC rewards, STX miners also receive newly minted STX tokens as transaction and contract execution fees, which are paid in STX. The cost of mining is expressed in BTC and miners spend BTC to participate in leader elections. The BTC bids are sent to a specific address corresponding to STX token holders participating in the consensus. This process ensures that BTC consumed in the mining process is used as a reward based on the Stacks holder's holdings of STX. ^[9]

Team

Muneeb Ali and Ryan Shea started Stacks during their Ph.D. studies. As the project developed from a research paper to a startup and then to an ecosystem, the team expanded to include computer science experts from various universities like MIT, Harvard, and Stanford. The Stacks protocol is developed and upgraded by Hiro PBC. ^[3]