Between Ordinals, Rune, BitVM, and a resurgent developer ecosystem, the modern era of cryptocurrencies is marked by a return to the first and largest blockchain, Bitcoin.
While the hype around Bitcoin Layer 2, Rollup, and similar projects is recent, some initiatives have been building on Bitcoin for years. One of them is Stacks. Its native token STX has risen 70% in the past three months and is now a top 30 cryptocurrency by market capitalization.
On April 16th, coinciding with Bitcoin's halving, Stax is planning a long-awaited “Nakamoto” upgrade.
Andre Serrano, Director of Product and Growth at Stacks Foundation, said: Decryption.
Launched in October 2018, Stacks ties itself to Bitcoin by storing hashed copies of Stacks transaction blocks on Bitcoin's ledger. Also, those who have locked their STX within the network known as “stackers” will be rewarded with direct payments in his BTC, while “miners” who have sacrificed their BTC will be rewarded with new will be rewarded with his STX minted.
“Bitcoin yield has received very strong interest from the market, so it is definitely a unique differentiator.” [from other L2s]” Serrano added.
Stacks' most notable features include cheaper and faster transactions compared to regular Bitcoin transfers and access to “smart contracts” for building advanced applications such as decentralized finance. Masu.
However, there are also limitations. In its current form, stack transactions only reach full confirmation as fast as Bitcoin blocks are produced, which can take tens of minutes. Thankfully, with the release of Namamoto, we have advanced a solution that is expected to settle transactions within 5-10 seconds.
“We can do that by decoupling Stax blocks from Bitcoin blocks, allowing Stax miners to generate multiple blocks within a single tenure,” Serrano said. This upgrade also protects Stack's blockchain from “reorganization” by directly connecting Stack's fork operations to Bitcoin, making Stack's transactions as secure as Bitcoin transactions. .
Beyond speed and security, this upgrade brings multiple benefits to the broader ecosystem, including expanding the range of viable DeFi applications and increasing stacker yields.
“Native Bitcoin yields when participating in stacking are a bit subdued due to the following reasons: [Maximal Extractable Value] That's what we've seen,” explained Mitchell Cuevas, executive director of the Stax Foundation. “We also believe that mining will become easier and more profitable, so there will be more players competing for these blocks… We expect the APY to rise. I look forward to it.”
The next upgrade in the Stacks pipeline following nakamoto will introduce sBTC, a “minimal trust” way to bridge your BTC holdings to the Stacks blockchain.
Trustless Bitcoin bridges have long been considered one of the biggest keys to unlocking BTC's potential while remaining decentralized. So far, no perfect solution has been found, but Stacks says he is “getting pretty close.”
“This uses what is called a threshold signature scheme,” Serrano explained. Every two weeks, the Stacks network validator runs a “distributed key generation event” and receives a shard of the private key that controls the Layer 1 BTC bridged by the user.
Validators include all network users who have stacked STX tokens. These users will need to connect as validators after nakamoto goes live. 70% of these validators must approve BTC deposits and withdrawals.
“When sBTC launches, we expect 20 to 30 validators, but we think there is a path to scaling to dozens if not hundreds in the future. ” Serrano said.
He said Stax's bridge system is significantly different from bridges employed by legacy networks like Liquid and Rootstock, where the bridge system is managed by a federation, creating an underlying element of centralization on the blockchain. states.
There is currently a lot of excitement in the Bitcoin developer space about the possibility of a Bitcoin rollup powered by BitVM. This could significantly reduce the trust assumption required to bridge BTC to other chains. Although their limitations and trade-offs are still debated, the consensus is that they show great potential. A working bridge could be operational by early 2025.
“BitVM is very complementary to Stacks, and we are in direct contact with their team and trying to support what they are doing,” Cuevas said. “BitVM could become the core infrastructure of the Bitcoin ecosystem as we look to scale up around these layers.”
The Stacks Foundation has already allocated $500,000 for BitVM research and development and is recruiting for BitVM researchers.
Cuevas believes that the direction of BitVM and layered Bitcoin development is healthy and promising. Bitcoin developers can now look back at the mistakes of previous developers who built other protocols in more reckless ways.
“There are going to be a lot of options for things that are really important that people need a high degree of security and want peace of mind to end up hashing into Bitcoin,” Cuevas said.
“For us, it’s great that we’re no longer the only show in town.”
Edited by Ryan Ozawa.
