# Stacks > Stacks is a decentralized protocol enabling smart contracts and decentralized apps to leverage Bitcoin for transactions and asset management, co-founded by Mune... - Canonical URL: https://iq.wiki/wiki/stacks - Categories: Projects & Protocols - Tags: Infrastructure - Created: 2023-05-01T07:14:00.567Z - Last updated: 2026-07-09T22:42:33.331Z - Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki) --- **Stacks** is a [blockchain](https://iq.wiki/wiki/blockchain) layer built on top of [Bitcoin](https://iq.wiki/wiki/bitcoin) that enables [smart contracts](https://iq.wiki/wiki/smart-contract) and [decentralized applications](https://iq.wiki/wiki/decentralized-application) without modifying [Bitcoin](https://iq.wiki/wiki/bitcoin) itself. It leverages [Bitcoin’s](https://iq.wiki/wiki/bitcoin) security while enabling faster transactions, programmability, and novel features such as the [sBTC](https://iq.wiki/wiki/sbtc) two-way peg. The protocol was co-founded by [Muneeb Ali](https://iq.wiki/wiki/muneeb-ali) and [Ryan Shea](https://iq.wiki/wiki/ryan-shea) in 2013. [\[1\]](#cite-id-uwee9k118jd) ## Overview Stacks is a [layer-2](https://iq.wiki/wiki/layer-2) [blockchain](https://iq.wiki/wiki/blockchain) that extends [Bitcoin’s](https://iq.wiki/wiki/bitcoin) capabilities by enabling [smart contracts](https://iq.wiki/wiki/smart-contract), fast transactions, and digital assets without altering the [Bitcoin](https://iq.wiki/wiki/bitcoin) base layer. It leverages [Bitcoin’s](https://iq.wiki/wiki/bitcoin-btc) security through its block production mechanism, Proof of Transfer (PoX), in which miners spend [BTC](https://iq.wiki/wiki/bitcoin-btc) to [mine](https://iq.wiki/wiki/mining) Stacks blocks, anchoring the chain to [Bitcoin](https://iq.wiki/wiki/bitcoin) and ensuring the irreversibility of Stacks transactions. The platform uses Clarity, a purpose-built [smart contract](https://iq.wiki/wiki/smart-contract) language, which allows developers to safely create contracts that can reference [Bitcoin’s](https://iq.wiki/wiki/bitcoin) state, enabling operations such as atomic swaps and conditional asset transfers. A key component is [sBTC](https://iq.wiki/wiki/sbtc), a decentralized two-way peg that represents [Bitcoin](https://iq.wiki/wiki/bitcoin) on Stacks, allowing [BTC](https://iq.wiki/wiki/bitcoin-btc) to be used within [smart contracts](https://iq.wiki/wiki/smart-contract) and converted back to [Bitcoin](https://iq.wiki/wiki/bitcoin-btc) without relying on centralized custodians. Together, these features provide a scalable, secure, and trust-minimized environment for building [Bitcoin](https://iq.wiki/wiki/bitcoin)-integrated applications and programmable digital assets. [\[6\]](#cite-id-zca7i3ucxr) [YOUTUBE@VID](https://youtube.com/watch?v=S3-fpTUawbk) ## Architecture ### Proof of Transfer (PoX) Proof of Transfer (PoX) is the block production mechanism used by Stacks, designed to anchor a new [blockchain](https://iq.wiki/wiki/blockchain) to the security of an existing [proof-of-work](https://iq.wiki/wiki/proof-of-work-pow) chain—in this case, [Bitcoin](https://iq.wiki/wiki/bitcoin)—without modifying [Bitcoin](https://iq.wiki/wiki/bitcoin) itself. PoX is an evolution of proof-of-burn: instead of destroying [cryptocurrency](https://iq.wiki/wiki/cryptocurrency), miners transfer [BTC](https://iq.wiki/wiki/bitcoin-btc) to network participants (Stackers) as part of the [mining](https://iq.wiki/wiki/mining) process, securing the Stacks network while earning [BTC](https://iq.wiki/wiki/bitcoin-btc) rewards. By recording a hash of each Stacks block in [Bitcoin](https://iq.wiki/wiki/bitcoin) transactions, the history of Stacks is cryptographically anchored to [Bitcoin](https://iq.wiki/wiki/bitcoin), inheriting its security and finality. This integration allows [Stacks](https://iq.wiki/wiki/stacks) blocks to reference [Bitcoin](https://iq.wiki/wiki/bitcoin) state directly, enabling Clarity [smart contracts](https://iq.wiki/wiki/smart-contract) to react to or verify [Bitcoin](https://iq.wiki/wiki/bitcoin) transactions. The mechanism also ensures that miners must build on the latest Stacks blocks, preventing independent forks and leveraging [Bitcoin’s](https://iq.wiki/wiki/bitcoin) hashrate to secure consensus. Through PoX, Stacks can unlock [Bitcoin’s](https://iq.wiki/wiki/bitcoin) capital for [decentralized applications](https://iq.wiki/wiki/decentralized-application), enabling a programmable economy while using [Bitcoin](https://iq.wiki/wiki/bitcoin) as a base layer for value and settlement. [\[13\]](#cite-id-7vSRBbFPd3uvRZsV) #### Stacking Stacking is a mechanism on the Stacks [blockchain](https://iq.wiki/wiki/blockchain) that allows STX token holders to lock their tokens and participate in network consensus as signers, earning [Bitcoin](https://iq.wiki/wiki/bitcoin) as rewards. Unlike traditional [staking](https://iq.wiki/wiki/staking) in [PoS](https://iq.wiki/wiki/proof-of-stake) networks, stacking generates yield in [BTC](https://iq.wiki/wiki/bitcoin-btc) rather than the locked token, requires no slashing, and uses the PoX (Proof of Transfer) [consensus mechanism](https://iq.wiki/wiki/consensus-mechanism). STX tokens remain in the holder’s wallet while locked, becoming temporarily unspendable until the end of the lockup period. Stacking operates in roughly two-week reward cycles with a preparation phase for selecting stackers and a reward phase for distributing [BTC](https://iq.wiki/wiki/bitcoin-btc) payouts. Participants can stack solo—run their own signer and meet the minimum STX requirements—or delegate stacking to a pool operator, who handles the signer responsibilities. All stackers must register block-signing keys to ensure signatures can be validated and stacking integrates with the PoX protocol. [\[14\]](#cite-id-nCa1zGvSXXkzrxxv) #### Dual Stacking Dual Stacking is a mechanism on the Stacks network that allows [Bitcoin](https://iq.wiki/wiki/bitcoin) holders to earn [Bitcoin](https://iq.wiki/wiki/bitcoin)-denominated rewards in [sBTC](https://iq.wiki/wiki/sbtc) by pairing their [BTC](https://iq.wiki/wiki/bitcoin-btc) with STX tokens and optionally deploying [sBTC](https://iq.wiki/wiki/sbtc) into [DeFi](https://iq.wiki/wiki/defi). Unlike other [blockchains](https://iq.wiki/wiki/blockchain) that pay rewards in their native token, Stacks uses Proof of Transfer (PoX) to enable real [Bitcoin](https://iq.wiki/wiki/bitcoin) rewards. Participants receive a baseline [BTC](https://iq.wiki/wiki/bitcoin-btc) reward for the [sBTC](https://iq.wiki/wiki/sbtc) enrolled in Dual Stacking. They can earn additional rewards based on their STX-to-[sBTC](https://iq.wiki/wiki/sbtc) ratio, which follows a square-root curve to provide diminishing returns, and through deploying [sBTC](https://iq.wiki/wiki/sbtc) in [DeFi](https://iq.wiki/wiki/defi), which offers a 10× reward multiplier. The reward system is designed to prevent manipulation by setting the maximum STX/[BTC](https://iq.wiki/wiki/bitcoin-btc) ratio at the 95th percentile of user ratios, ensuring broad participation and fairness while continuing to provide standard STX stacking rewards. [\[15\]](#cite-id-HzQqD5HbLqxSxalj) [\[16\]](#cite-id-1Aq8vrWJOSSUT4yS) ### Clarity Clarity is a decidable, interpreted [smart contract](https://iq.wiki/wiki/smart-contract) language designed for the Stacks [blockchain](https://iq.wiki/wiki/blockchain), prioritizing predictability, security, and transparency. Unlike compiled languages, Clarity code is executed exactly as written, making it human-readable and verifiable, and its decidable nature ensures all programs halt in a finite number of steps. The language prevents common vulnerabilities such as reentrancy, overflows, and underflows, and enforces explicit handling of return values to avoid silent failures. Clarity supports built-in creation and management of fungible and [non-fungible tokens](https://iq.wiki/wiki/non-fungible-token-nft), with post conditions to enforce transactional outcomes. It favors composition over trait inheritance, simplifying contract structure and interoperability. Additionally, Clarity contracts can access [Bitcoin’s](https://iq.wiki/wiki/bitcoin) base chain, enabling smart contracts to react to [Bitcoin](https://iq.wiki/wiki/bitcoin) transactions and verify cryptographic signatures, integrating [Bitcoin](https://iq.wiki/wiki/bitcoin) as a foundational layer for secure, programmable applications. [\[7\]](#cite-id-nzjaed2ugdi) [\[17\]](#cite-id-C7bvhQF0jf7VkoS8) ### sBTC ​[sBTC](https://iq.wiki/wiki/sbtc) is a SIP-010 fungible token on the Stacks [blockchain](https://iq.wiki/wiki/blockchain) that represents [Bitcoin](https://iq.wiki/wiki/bitcoin) at a fixed 1:1 ratio and can be converted back to [BTC](https://iq.wiki/wiki/bitcoin-btc) on the [Bitcoin](https://iq.wiki/wiki/bitcoin) [blockchain](https://iq.wiki/wiki/blockchain). It functions as a two-way peg that allows [Bitcoin](https://iq.wiki/wiki/bitcoin) to be used within [Stacks](https://iq.wiki/wiki/stacks) [smart contracts](https://iq.wiki/wiki/smart-contract) while remaining backed by [BTC](https://iq.wiki/wiki/bitcoin-btc) held in a single [Bitcoin](https://iq.wiki/wiki/bitcoin) [UTXO](https://iq.wiki/wiki/unspent-transaction-output-utxo) secured by a multi-signature Taproot address. This [UTXO](https://iq.wiki/wiki/unspent-transaction-output-utxo) is managed by a decentralized set of [sBTC](https://iq.wiki/wiki/sbtc) signers, who are responsible for signing peg operations, maintaining custody of the locked [BTC](https://iq.wiki/wiki/bitcoin-btc), and interacting with [sBTC](https://iq.wiki/wiki/sbtc) [smart contracts](https://iq.wiki/wiki/smart-contract), with signer membership and key rotation governed collectively. Deposits and withdrawals between [BTC](https://iq.wiki/wiki/bitcoin-btc) and [sBTC](https://iq.wiki/wiki/sbtc) occur within a defined number of [Bitcoin](https://iq.wiki/wiki/bitcoin) blocks. An external service, the Emily API, coordinates communication between users, signers, and contracts to facilitate bridge operations. Through this structure, [sBTC](https://iq.wiki/wiki/sbtc) enables [Bitcoin](https://iq.wiki/wiki/bitcoin) to interact with [smart contract](https://iq.wiki/wiki/smart-contract) applications on Stacks without requiring [BTC](https://iq.wiki/wiki/bitcoin-btc) to be sold or custodied by a centralized intermediary. [\[18\]](#cite-id-wq1aoRcYZ68CPgX9) ## STX STX is the native token of the Stacks network, serving as an infrastructure token that facilitates [transaction fees](https://iq.wiki/wiki/transaction-fee), network security, and governance. It is used to pay for [transaction fees](https://iq.wiki/wiki/transaction-fee) on the network, reward miners for verifying transactions, participate in governance through voting, and support the Proof of Transfer (PoX) [consensus](https://iq.wiki/wiki/consensus-mechanism) by locking (or “stacking”) STX to earn [Bitcoin](https://iq.wiki/wiki/bitcoin) rewards. Within the Stacks ecosystem, STX can also be utilized in [decentralized applications](https://iq.wiki/wiki/decentralized-application), including [DeFi](https://iq.wiki/wiki/defi) platforms, [NFT](https://iq.wiki/wiki/non-fungible-token-nft) marketplaces, and name registrars, providing both utility and incentives for network participation. [\[19\]](#cite-id-JpcWlbTpkYU5DPOr) [\[20\]](#cite-id-OA0d6ArLJsyxcW05)