The Bitcoin smart contract Stack is set to undergo a major upgrade, and the details of the related project are all here
What applications does Stack rely on to invigorate the market by building the Bitcoin on-chain ecological infrastructure?Author: Vanguard 0
As the price of Bitcoin continues to rise, breaking new highs for the year, global attention on the Bitcoin ecosystem has reached unprecedented levels. Data shows that the transaction volume on the Bitcoin network is increasing, with daily transaction counts setting historical records.
Bitcoin Ecosystem Data Growth Chart
In this environment, a core question has gradually emerged: how to build effective and practical application layers within the vast Bitcoin ecosystem? This question is not only the focus of technical developers and investors but also the key to breakthroughs sought by the entire industry. Among many answers, Stacks is undoubtedly one of the most promising and innovative projects.
As a smart contract layer running on the Bitcoin network, Stacks provides developers and users with a new platform that allows them to create and run applications and smart contracts using Bitcoin (BTC) as an asset or currency.
It is worth mentioning that Stacks is set to undergo a significant upgrade in the first quarter of 2024. This upgrade not only signifies a lower development threshold but also represents a significant enhancement in the overall network performance. It is anticipated that this upgrade will bring unprecedented development opportunities for Stacks and may even trigger a new wave of transformation in the entire Bitcoin ecosystem.
Understanding Stacks: Allowing Dapps and Smart Contracts to Use BTC as Their Asset, Settling Transactions on the Bitcoin Main Chain
Stacks, as an innovative Bitcoin smart contract layer, aims to achieve trustless use of smart contracts on the Bitcoin blockchain while using Bitcoin as an asset for transaction settlement. Stacks has some unique features in its design and operation that set it apart in the digital currency field.
First, Stacks has its own independent chain structure, compiler, and dedicated programming language—Clarity. This design allows Stacks to run in sync with the Bitcoin chain, essentially building a new chain that has an independent governance structure and transaction model. This independent yet closely connected relationship provides a solid foundation for the operation of Stacks.
Another key feature is that Stacks does not rely on traditional cross-chain bridges to bridge assets. Instead, it integrates with the Bitcoin main chain by submitting anchor transactions on the Bitcoin main chain. These anchor transactions include summaries of the block header information from the Stacks chain and some additional information, broadcasted to the Bitcoin network to ensure their immutability.
Stacks allows applications and smart contracts to use BTC as their asset or currency, settling their transactions on the Bitcoin main chain. This design greatly enhances the practicality of BTC, opening the door to smart contracts and application layers.
Regarding the consensus mechanism, Stacks adopts the PoX (Proof of Transfer) consensus algorithm. In this algorithm, miners and transaction validators are two distinct roles. Transaction validators need to stake STX tokens to mine BTC, while miners need to stake BTC on the Bitcoin main chain to mine STX. This unique consensus mechanism provides a novel and efficient driving force for the operation of Stacks.
Notably, Stacks is expected to undergo a major upgrade in the first quarter of 2024—the Nakamoto upgrade. This upgrade will have multiple impacts on Stacks, including achieving shared network security with BTC, launching sBTC, supporting BTC atomic swaps, accelerating block times, and supporting multiple programming languages. These improvements are expected to further enhance the practicality and appeal of Stacks.
The long-term value of Stacks relies on the growth of its ecosystem and the demand for Clarity smart contracts. With the arrival of the Nakamoto upgrade and the Bitcoin halving event, it is anticipated that Stacks will attract more attention, and its ecosystem is expected to develop further.
Next, we will detail several key projects within the Stacks ecosystem, further exploring the diversity and potential of this ecosystem.
Overview of Key Projects in the Stacks Ecosystem, Seizing Value Opportunities in the Bitcoin Ecosystem
Alex Labs: Capturing Nearly 85% of TVL in the Stacks Ecosystem
Alex Labs is an open-source platform dedicated to reshaping Bitcoin's role in the decentralized finance (DeFi) space. The core team behind this platform consists of industry veterans, including co-founders Dr. Chiente Hsu and Ms. Rachel Yu. Their goal is to introduce more DeFi functionalities and opportunities into the Bitcoin ecosystem through innovative approaches.
Currently, Alex has a total locked value (TVL) of $28 million in the Stacks ecosystem, accounting for nearly 85% of the TVL in the Stacks ecosystem. Additionally, its total trading volume has exceeded $337 million, with 26,631 active wallets, showcasing Alex's market acceptance and user activity.
Alex Labs' decentralized exchange (DEX) offers an automated market maker (AMM) and an off-chain order book, aimed at assisting other projects built on Stacks. The featured decentralized applications (dApps) on the Alex platform include:
SWAP (AMM DEX): A decentralized exchange that utilizes an automated market maker (AMM) for seamless asset exchanges within the Bitcoin ecosystem.
KICKSTART (Bitcoin Launchpad): An innovative platform dedicated to launching new projects, providing them with essential tools and visibility in the Bitcoin space.
TRADE (B20): A dynamic trading platform with an order book for BRC20 and SIP10 tokens, designed for precise trade execution and optimized price discovery.
CONNECT (Bridge): A powerful bridge service that seamlessly connects multiple blockchain networks, ensuring easy asset transfers and interoperability.
Alex also offers the Alex order book, which is still in the testnet phase, allowing users to enable leveraged trading on its DEX. This innovative attempt provides users with more flexibility and trading options.
$ALEX is the native token of Alex Labs, serving not only as a prerequisite for participating in the platform but also as a reward medium for providing liquidity and staking. Currently, the circulating market cap of $ALEX is nearly $50 million, demonstrating its strong influence in the market.
Additionally, $ALEX allows holders to vote on important matters such as the project's future development, staking policies, and reserve allocation.
Arkadiko: The Bitcoin Chain Version of MakerDAO
Arkadiko is the second-largest protocol by total locked value (TVL) in the Stacks ecosystem, positioned similarly to the renowned MakerDAO in the Ethereum ecosystem, focusing on stablecoin projects. The emergence of Arkadiko adds an important financial tool to the Stacks ecosystem, enabling users to utilize their digital assets more flexibly.
Through Arkadiko, users can use their native Stacks token $STX as collateral to mint Arkadiko's own stablecoin, USDA. This mechanism is similar to a mortgage, where users can lock their $STX to obtain a corresponding amount of USDA for various financial activities. The introduction of USDA not only provides Stacks users with a stable value storage and transaction medium but also increases liquidity within the ecosystem.
In addition to minting stablecoins, Arkadiko also supports swap and lending services. Users can quickly and directly exchange different digital assets through the swap feature. Meanwhile, the lending service allows users to borrow funds for investment or other financial needs.
Within the Arkadiko protocol, USDA can also be used to participate in so-called "Farm" activities. Users can stake their assets in the Farm to repay loans. The yields from this farm primarily come from participating in the Stacks consensus mechanism, known as Proof of Transfer (PoX). This way, users can maintain the liquidity of their assets while earning additional returns.
These features and characteristics of Arkadiko play an important role in the Stacks ecosystem, providing users with diversified financial services while enhancing the overall health and stability of the ecosystem. Its success is reflected not only in its ranking in TVL but also in the actual value and application breadth it brings to the Stacks ecosystem.
Zest: The First Native Lending Protocol Built on Bitcoin Through Stacks
The Zest protocol is the first native lending protocol built on Bitcoin through Stacks. It is currently in an early access phase.
The main feature of this protocol is that it allows users to become liquidity providers by generating Bitcoin yields through depositing assets into loan pools managed by professional teams. These loan pools primarily serve major institutions in the cryptocurrency industry, providing them with loan services. This model means that users can participate in the Bitcoin market through loan pools while providing funding support for the development of the cryptocurrency industry.
A key feature of the Zest protocol is its diversified investment strategy. Each loan pool provides loans to multiple borrowers, creating diverse investment opportunities for BTC liquidity providers. This strategy aims to diversify investment risks and enhance overall investment security.
It is important to note that as an emerging financial service, the Zest protocol is still evolving and improving. While it offers Bitcoin holders new opportunities to participate in the lending market, investors need to be aware of and assess the potential risks of such emerging markets. Over time, the Zest protocol may play a more significant role in the Stacks ecosystem, but its long-term impact and stability still require further observation.
Liquidium: Allowing Users to Use Native Ordinals to Borrow and Lend Native Bitcoin
Liquidium is a peer-to-peer lending protocol that enables users to borrow and lend native Bitcoin using native Ordinals as collateral, currently in a Closed Beta phase.
The core function of this protocol is to allow Ordinal owners to use their inscriptions (i.e., unique identifiers linked to specific Bitcoins) as collateral for borrowing Bitcoin. This feature not only allows users to obtain liquidity by using their Ordinals as collateral but also enables them to retain ownership and risk exposure to the original Ordinals. This mechanism ensures asset security while providing users with additional financial flexibility.
Liquidium operates entirely on the Bitcoin blockchain, aiming to provide a trust-minimized and non-custodial solution. This means that the entire lending process does not require the involvement of traditional intermediaries, thereby reducing transaction costs and complexity. The lending process is primarily facilitated through partially signed Bitcoin transactions (PSBT), and the results of the loans are verified by the DeepLake oracle. This approach ensures the transparency and security of transactions.
Conclusion: As a Major Upgrade Approaches, Stacks May Bring Significant Incremental Value to the Bitcoin Chain Ecosystem
We can see that Stacks is not just a simple Bitcoin smart contract layer; it is actually nurturing an increasingly rich and diverse ecosystem. Each project contributes uniquely to the ecosystem, whether by providing innovative financial services such as DeFi platforms and stablecoins or by developing new lending models and trading platforms. These projects continuously push the boundaries of Bitcoin and expand its application areas.
Through these projects, Stacks demonstrates that it can not only enhance the functionality of Bitcoin but also provide users and developers with a diverse and innovative platform. With Stacks set to undergo a significant upgrade in 2024, we have reason to believe that this ecosystem will continue to grow and develop, bringing more value and opportunities to the Bitcoin community.
