🤔 What is Stacks?
Stacks is a smart contract blockchain that leverages Bitcoin blockchain for security.
💡 What role does STX token play ?
STX is used for:
- Gas fees: Users have to pay STX tokens as gas fees to include their transactions and run smart contracts on Stacks blockchain.
- Staking: SXT holders can stake their tokens to earn Bitcoin.
- Governance: The team has plans to hand over the governance of Stacks ecosystem to STX holders.
📝 Origin of Stacks
Muneeb Ali and Ryan Shea founded Blockstack (which later rebranded to Stacks) in 2013 at the Princeton Computer Science department.
The two led their new startup through the Y Combinator accelerator in the summer of 2014. Upon completion, the two raised a seed round led by Union Square Ventures (USV), with participation from Naval Ravikant, SV Angel, and others.
After launching a blockchain-based decentralized identity (DID) system in 2014, the team released the initial design for the then-Blockstack platform in 2015. They began R&D on its peer-to-peer communication and data storage system.
The R&D phase lasted through 2017 and concluded with Blockstack releasing an alpha version of its developer platform, which included a developer release of the Blockstack Browser and a decentralized storage system.
By the end of 2017, the company also secured two additional funding rounds.
Stacks released a testnet for its blockchain (dubbed the Stacks network) in Q2 ’18 and officially launched the Stacks v1 mainnet in October of the same year. This launch also distributed tokens to early investors and unlocked token transactions.
Blockstack PBC (now Hiro PBC) held the first token offering qualified by the SEC under Regulation A+ in Jan 2019. The two-month sale raised $15.5 million, distributing 74.3 million Stacks tokens to U.S. investors.
Stacks 2.0 was launched in Jan 2021. This upgrade introduced Clarity, a new smart contract language, and Proof of Transfer (PoX), a new mining mechanism that leverages the Bitcoin blockchain and allows users to earn BTC rewards.
🤖How does it work ?
Proof of transfer consensus mechanism
Proof-of-transfer (PoX) is an extension of the proof-of-burn mechanism. PoX uses the proof-of-work cryptocurrency of an established blockchain to secure a new blockchain.
However, unlike proof-of-burn, rather than burning the cryptocurrency, miners transfer the committed cryptocurrency to a Bitcoin address.
The Bitcoin transferred by miners is then used to provide Stacking rewards, paid in BTC to token holders for helping to ensure a stable network. Stacker do this by locking up their tokens for a certain time and signaling the canonical chain tip.
This allows network participants to secure the PoX cryptocurrency network and earn a reward in the base cryptocurrency.
Thus, proof-of-transfer blockchains are anchored on their chosen proof-of-work chain. Stacks uses Bitcoin as its anchor chain.
Apps built with the Stacks blockchain store off-chain data using a storage system called Gaia.
Whereas public transactional metadata is best stored on the Stacks blockchain, user application data can often be stored more efficiently and privately in Gaia storage.
The Stacks blockchain addresses performance problems using a layered approach. The base layer consists of the Stacks blockchain and the Blockchain Naming System (BNS).
The blockchain governs ownership of identities in the Stacks network. Identities can be names such as domain names, usernames, or application names.
When an identity is created, its creation is recorded in the Stacks blockchain. Identities make up the primary data stored in the Stacks blockchain. These identities correspond to routing data in the OSI stack. The routing data is stored in the Atlas Peer Network, the second layer.
Stacks uses the routing data to associate identities (domain names, user names, and application names) with a particular storage location in the final layer, the Gaia Storage System.
A Gaia Storage System consists of a hub service and storage resource on a cloud software provider. The storage provider can be any commercial provider such as Azure, DigitalOcean, Amazon EC2, and so forth.
The Stacks blockchain stores only identity data. Data created by the actions of an identity is stored in a Gaia Storage System.
🏛️ Governance model
At the moment, Hiro PBC (formerly Blockstack PBC) develops and releases new network software. The company hard forks the network annually to implement “protocol-breaking changes and upgrade the network.”
Hiro is working to transition to an on-chain voting strategy long term, which would empower users to determine the future direction of the protocol.
🤑 How much money does the project have for future development ?
- The team has raised around 109.16 million USD in various funding rounds.
- Team has access to 49.8% of the total STX supply, which can be used to fund future development.
😨 Risks and challenges
- Stacks team has developed new coding language – Clarity, which is different from the commonly used languages like Solidity for blockchain development.
- There are many smart-contract blockchains projects with much more backing and user adoption.
The Stacks v1 genesis block introduced 1.32 billion tokens when it went live in November 2018. The initial supply of 1.32 billion STX was allocated as follows:
- 8.34% was allocated to a Long-term treasury.
- 13.53% was distributed to the Founders.
- 8.23% was distributed to Equity Investors.
- 5.65% was reserved for Employee distribution.
- 29.93% was distributed to 2018 Token Sales participants.
- 9.09% was distributed to 2019 Token Sales participants.
- 3.03% was reserved for the Reg A App Mining. This program is meant to reward both application developers who create well-reviewed applications and the reviewers of those applications.
- 22.20% was allocated to a Short-Term Treasury. These tokens follow a two-year time lock starting on October 18, 2019.
These tokens will be released as follows:
Stacks revamped its economic policy in Oct. 2020, choosing to switch from an adaptive burn and mint mechanism to a more straightforward decreasing issuance model before reaching a plateau.
New token issuance is still frontloaded in the network’s early years, but issuance will undergo three halvings that will occur once every four years. The new release schedule is as follows:
- 1,000 STX per block for years one through four
- 500 STX per block for years five through nine
- 250 STX per block for years ten through fourteen
- 125 STX per block indefinitely