Stacks A Blockchain Project, Aims To Add Smart Contracts To Bitcoin

Dec. 30, 2022
Stacks A Blockchain Project, Aims To Add Smart Contracts To Bitcoin

The Stacks blockchain project has published a whitepaper outlining how a new currency dubbed “Stacks bitcoin” (sBTC) may be used to make Bitcoin completely programmable. Developers can only create a certain amount on the network. Additionally, Bitcoin has a less complex programming language than Ethereum or Solana.

Launching sBTC, a new digital asset derived from bitcoin, Stacks, an existing smart contract forum, hopes to overcome these limits. It can use to create smart contracts on Stacks and is easily convertible back to bitcoin. Additionally, it is pegged at 1:1 with BTC.

Per the white paper:

Allowing free Bitcoin movement under smart contracts would allow web3 to release hundreds of billions of dollars in passive BTC. It will allow for trustless transactions written onto the blockchain from such contracts.

The sBTC design can expand to an sBTC circulating supply of millions of dollars worth of BTC today. However, making it financially feasible, a billion dollars worth of sBTC may continue to flow in the future.

The Liveness Ratio, a customizable parameter relating to the economic quantity of STX capital lock, sets the upper limit for the supply of sBTC.

As additional BTC is made productive through contracts on the Stacks layer, the economy of BTC apps established through that layer will expand. 

Additionally, the restriction on the supply of circulating sBTC should rise over time. The sBTC concept does not include any trusted centralized or federated parties in the middle, such as custodians.

Design Details of sBTC

The basic Stacks layer fork mining is incentive-compatible with the sBTC system’s design. Additionally, to guarantee that going to attempt to maintain the peg rigorously will always be Stackers’ most beneficial course of action.

It has two operation modes, which are the Normal Mode and the Recovery Mode. In normal mode, users transfer bitcoin to a peg wallet on BTC network, which is run by a set amount of stackers.

Every time BTC is sent to this wallet (a peg-in operation). In addition, an equal number of sBTC are minted to an address of the sender’s choosing, maintaining a 1:1 peg. This wallet holds a 1:1 peg by minting an equal number of sBTC to a recipient address each time BTC is sent to it.

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In recovery mode, a portion of the PoX payments that the stackers would have received is instead used to satisfy unfulfilled peg-out requests. As a result, even if the stackers never go back online, all unfulfilled peg-out requests will ultimately be satisfied.

While considerably slower than Normal Mode, the design of Recovery Mode ensures that users’ BTC can be redeemed as long as Stacks layer remains alive and PoX mining continues.

When creating the Normal and Recovery modes, it is important to carefully review the incentives for stackers and users.

In the sBTC concept with PoX, stackers work openly to earn PoX rewards. For the time of each reward cycle, while their STX is frozen, it maintains a group BTC script or wallet. To fulfill requests for peg-out, utilize this wallet.

Ammar Raza

Associate editor
Skilled in crafting compelling content, with a deep enthusiasm for blockchain technology. I offer precise and easily comprehensible perspectives on cryptocurrencies, decentralized finance, and the ever-evolving landscape. Count on me as a reliable resource to remain informed about the latest advancements in the world of crypto.