Bitcoin Layer 2 Solution Stacks (STX) Brings Decentralized Applications And Smart-Contracts To Bitcoin

Layer 2 solutions were made to bring more features to its Layer 1 blockchain bringing also less fees and faster transactions, while consolidating its transactions on Layer 1 for better security.

Stacks is a layer 2 blockchain that has been developing for some time. It has been worked on since 2013 and suffered multiple upgrades untill arriving to the state that it's now.

Stacks is a blockchain that brings decentralized applications and smart-contracts to Bitcoin, settling all the transactions on Bitcoin's main chain. It's a blockchain that works on top of Bitcoin and enables all the features from web 3.0 to be integrated on Bitcoin.

How does Stacks work?

Stacks works by using the Proof of Transfer mechanism. The way Stacks is built allows it to always read the state of Bitcoin's blockchains, this is how Proof of Transfer is able to work. Stacks reads the transactions on Bitcoin's blockchain from miners who send their BTC to other Stacks network participants, after this, Stacks randomly selects a winner for the current block and rewards them with Stacks native token (STX). This provides a way to recycle Bitcoin's proof of work mechanism, by taking advantage of the already implemented system to reward blocks on Stacks blockchain.

Stacks also uses a mechanism called stacking that works as proof of stake does, by locking STX for a period of time to ensure the security of the blockchain. Like PoS Stacks rewards with some more STX tokens. Stacking can be done by using exchanges, liquidity pools or Stack native wallet.

Smart-contracts on Stacks work by using a programming language created only for Stacks that prioritizes security. These smart-contracts also have a preview function that enables executing them before deploying, which makes it easier to find bugs and security vulnerabilities.

Every transaction someone makes on Stacks is then written on Bitcoin's blockchain, living there forever and benefiting from Bitcoin's security.

Tnere are a lot of projects on Stacks including Decentralized Exchanges, bridges, NFT marketplaces, DAO's and many more.

Stacks enables all this functions and grants BTC programmability, one thing that Bitcoin doesn't have on its base layer.

Currently Stacks sits on rank 54 by market capitalization and is trading for 0,48$ per coin. It's currently trading at many major exchanges but still doesn't have the kind of adoption that other coins do.

Is Stacks the solution that will give Bitcoin this functionalities and follow Bitcoin's trading pattern? It sure has a lot of factors working in favour of them, but nothing in this market can be taken for granted, there are a lot of people that think that Bitcoin is good the way it is and adding these layers will only divert Bitcoin from its original path. Others seem to want everything built on top of Bitcoin, we will see where this leads us to.