What is Stacks ($STX)?

If Bitcoin is going to be the leading blockchain ecosystem of the future, it will need the support of a Layer 2.

That Layer 2 is the one and only Stacks network, striving to make $BTC the primary currency of the decentralized future!

What is Stacks ($STX)?

Stacks is a Layer 2 network that uses a unique consensus mechanism called Proof-of-Transfer (PoT) and has opened the Bitcoin blockchain to the boundless world of smart contracts and decentralized applications. The question is, how does it work and why do we need Stacks?

How Does Stacks ($STX) Work?

Although Bitcoin is known to be the most secure Layer 1 in existence, it does have some downfalls such as being extremely slow and expensive. For the world to adopt Bitcoin, we’re going to need the support of the Stacks Layer 2 network to combat the speed and costs of the Layer 1.

In layman’s terms, Stacks is a layer built on top of Bitcoin to enable dApps and smart contracts to use $BTC as an asset. Stacks adopts the solid security of the Bitcoin Layer 1 blockchain but provides a cheaper and faster experience for native $BTC transactions.

Proof-of-Transfer (PoT) is the consensus mechanism used by Stacks to connect and interlink between Bitcoin and its Proof-of-Work consensus mechanism. This allows Stacks to fully benefit from the Bitcoin mainnet and also opens the door to a unique feature called Stacking.

Stacking

Stacking is distinctive to PoT and allows users to lock up the native token $STX to help secure the network’s consensus and security. For each transaction that takes place on the network, users who Stack (stake) $STX will be rewarded with a share of that transaction fee in $BTC, creating a fully rewarding ecosystem.

sBTC

Although $STX is the primary token of the ecosystem, Stacks has now implemented a new token within the ecosystem known as $sBTC that comes with their big Nakamoto upgrade. $sBTC is backed 1:1 with $BTC and will enable developers to move $sBTC back and forth from the Bitcoin Layer 1, while also giving devs the power to create smart contracts and dApps!

Stacks Ecosystem

Bitcoin’s world of DeFi is open and it’s home to the Stacks ecosystem, comprised of 18 dApps ranging from DEXs to borrowing and lending protocols and much more. If you’re looking to put your $BTC to work, the Stacks ecosystem could be a great place to start…

Conclusion

At the time of writing, $STX is currently trading at $1.62 with a market cap of $2.37B, ranking it the 38th largest crypto by market cap. Very recently in April 2024, $STX achieved an ATH of $3.84 and could very well break this again once we enter the bull run.

As Bitcoin becomes a DeFi hotspot, $BTC and $STX could very well pump hand in hand and achieve unimaginable heights. With trillions of dollars about to flood into the market, how much will the Bitcoin ecosystem rake in?

Only time will tell…