SVET Reports
Introduction to Blockstack (Stacks)
What is Stacks
Stacks is defined as "an open-source network of decentralized applications and smart contracts built on Bitcoin". Its consensus mechanism is called Proof of Transfer, and it uses this to link its blockchain to Bitcoin. This literally means Bitcoin is used as a security settlement layer for all known smart contracts of the network. It is important to note that Bitcoin has low scalability, and has no smart contracts.
The connection between Stacks and Bitcoin is meant to increase the consensus mechanism to enable Smart Contracts and other technologies to exist on top of Bitcoin. It seeks to come out with a user-owned internet to ensure that ownership of identity, data, and wealth is commanded. Stacks is made up of six distributed system PhDs, two scientists with presidential career awards, over 1500 research citations among others. It is also backed by several high-profile investors including Winklevoss Capital.
Brief History of Stacks
In 2013, Muneeb Ali and Ryan Shea started blockstack as a Ph.D. project in the computer science department of the University of Princeton. In 2014, the project was incubated by Y-Combinator after it had become a startup. Led by Union Square Ventures (USV), they raised $76 million in a funding round which was participated in by SV Angel, Naval Ravikant, etc. In 2015, the first design of the Blockstack project platform was launched. R&D was later introduced on its peer-to-peer communication and data storage system. In 2017, the company also secured another funding round through Series A. This was led by USV, and participated in by the likes of Lux Capital, etc. It released the testnet of its blockchain called Stacks network in the second quarter of 2018. Later that same year, Stacks v1 mainnet was launched. In other to qualify for
Reg A exemption, Hiro PBC, previously called Blockstack PBC launched its first token offering.
In 2020, it changed the company's name to Hiro PBC and subjected the Blockstack network and application ecosystem to a full rebrand to the Stacks Ecosystem. Its focus was then shifted to building developers' tools for the network.
Why We Need Stacks
The Bitcoin protocol and decentralized network have since its inception in 2009 done perfectly well when measured with its objective. As a currency, it was meant to provide complete ownership and transactions that eliminate intermediaries or third parties. Also, Bitcoin was meant to not be subjected to corruption. Beyond doubt, it has come a long way to execute all these missions, however, it has failed to be relevant in the current era of Smart Contracts. For example, the Bitcoin protocol is not flexible in terms of programmability, and this is where Stacks comes in.
Stacks takes advantage of the security of Bitcoin and ensures that its applications use Bitcoin's state regardless of being a separate blockchain. In other words, Its Proof of Transfer recycles Bitcoin's Proof of Work to achieve great scalability. Not just that, it also improves Bitcoin's decentralization without any outside impact. The uniqueness of Stacks lies in its ability to provide grounds for users to earn Bitcoin without directly participating in Bitcoin mining or any scheme. It is important to note that this is the first of its kind to earn Bitcoin while locking tokens from another blockchain. Stacks is needed because it offers users a combined feature from two separate blockchains.
Top 20 Popular Dapps on Stacks
There are a rising number of Decentralized Applications (Dapps) coming on Stacks, and below are the top 20 (most popular).
1. Plan B
2. Moon
3. Ryder
4. Friedger's Pool
5. Arkadiko
6. Hey Layer
7. Gosats
8. Pravica
9. Boom
10. Stackswap
11. Sigle
12. Syvita Mining
13. CityCoins
14. Eggschain
15. Jolocom
16. Xverse
17. STX NFT
18. Alex
19. Byzantion
20. BlockSurvey
How Stacks Works
It is important to note that blockchain chooses different block leaders for every block through consensus protocol. This can be achieved through Proof of Work or Proof of Stake. Concentrating on Stacks 2.0, it operates on a modified version of Proof of Burn. In this case, nodes must rely on resources represented by crypto assets.
Stacks 2.0 is built with Bitcoin as the crypto asset. This means Bitcoin is transferred to STX stakers instead of being burnt. The operation of Stacks bases its interaction on two parties - miners and stackers and is regulated by the Proof of Transfer. Unlike other networks, miners exchange some of the already mined Bitcoins and commit it for an opportunity to earn STX tokens. The other party also stakes STX tokens to receive Bitcoins from the nodes.
The protocol at one end focuses on those who are willing to decentralize Bitcoin distributions, and on another end focuses on those who are willing to lose their Bitcoins. In cases where there are few STX stakes, the Bitcoin transfer reward will go back to the bidders. Its mining is also governed by rules. Each block mined on the Stacks blockchain is designed to ensure that identity and transactional metadata are stored. This is very useful in the interaction with all the applications in the Stacks ecosystem. It is worth noting when Stacks' IDs or wallet balances are subjected to change, they can also be verified using the Bitcoin blockchain.
Criticism of Stacks
Despite the interesting merits of Stacks, some experts have raised a little concern about its limitations. It is said that the technology used in sharing encrypted data is quite strange. It is said to be very difficult to write Blockstack-based applications that share data among users. Its other limitation is centered around its encryption keys. It is also said to have a bad history of users being able to keep private keys safe. A typical example can be said of private key systems like the Bitcoin wallet. Users mostly lose the device containing these keys or are subjected to malware that steals them.
Future of Stacks
The ecosystem on top of the stacks' chain is just starting and adoption doesn't seem to be effective anytime soon. However, improvement in scalability is in the pipeline, and hundreds of projects are being built on Stacks. The future of Stacks seems pretty much exciting and its adoption could hit a different level once all these projects are rolled out.