What is Stacks (STX)?

Stacks (STX) is a blockchain-based cryptocurrency that has been trending in the market for its unique approach to combining the functionality of Bitcoin and Ethereum. The STX token is built on the Stacks network, which is a layer-2 blockchain that leverages the security of the Bitcoin blockchain to enable smart contracts and decentralized apps (dApps), DeFi and NFTs. In this article, we will explore the Stacks ecosystem and its functionality.

How does the Stacks blockchain work?

The Stacks network is a Bitcoin layer for smart contracts and utilizes the Proof of Transfer (PoX) consensus mechanism and Clarity programming language. This mechanism allows miners to earn STX tokens by locking up BTC on the layer-1 blockchain (Bitcoin), which helps to increase the security of the Stacks blockchain.

The Stacks blockchain is designed to be transparent and provides real-time data on transactions, nodes, and other important metrics. It enables developers to create smart contracts, DeFi and dApps that are secure and decentralized, and allows for the creation and trading of digital assets, including NFTs.

Muneeb Ali, founder of Stacks (initially called Blockstack), released the original whitepaper, and has been a key figure in the development of the blockchain ecosystem ever since. The Stacks 2.0 upgrade was released in 2020, bringing several new features and improvements, including faster transaction speeds, lower transaction fees, and improved scalability. In 2023, the blockchain was upgraded to version 2.1. Stacks 2.1 provides various enhancements, such as enabling more efficient Bitcoin yield through Stacking, strengthening bridges to other networks, simplifying the methods for developers to connect and activate interactions between Stacks and Bitcoin, and establishing a foundation for Subnets to bring further speed and scalability to the network.

The STX cryptocurrency was distributed to the public via an SEC-qualified token offering in 2019. The Securities and Exchange Commission (SEC), is in charge of defining whether or not a digital asset is a security. As of May 2023, the Stacks network has a circulating supply of around 1.4 billion STX tokens, with a max supply of 2 billion tokens.

How does the Stacks token work?

In short, miners don't mine anything on the Stacks blockchain, instead, they swap already mined coins (BTC) off the Bitcoin blockchain and commit them for a chance to win STX.

Bitcoin is used by miners to mine newly minted Stacks, and Stacks holders can earn BTC by locking their STX. STX miners can engage in leader elections by sending transactions on the Bitcoin blockchain. A verifiable random function (VRF) then randomly chooses the leader of each round. The new leader then writes the new block on the Stacks chain.

STX miners receive newly minted STX in the form of transaction fees, and even the fees for Clarity contract execution are paid in STX. The BTC that miners bid for the election is sent to an address that corresponds to STX token holders participating in the consensus. As a result, the Bitcoin consumed during the mining process is used as a reward based on the Stacks holder's STX holdings.

The price of Stacks, like that of any other crypto asset, is subject to changes. The Stacks price has seen some volatility over the past few years, but even though it faces competition from other liquid ecosystems such as Ethereum (ETH) and Solana (SOL), the asset is valued by the market because of its unique connection to Bitcoin.

Cryptocurrency exchanges such as Binance and Coinbase will provide information on the cryptocurrency's current price in USD, current market cap, all-time-highs, 24-hour trading volumes and the history of STX price. Crypto exchanges or news sites also provide information regarding exchange rates between major fiat currencies and cryptocurrencies such as BTC, ETH, XRP and USDT.

Related articles: