The Rise of the BTC Ecosystem and the Evolution of Stacks

In the current cryptocurrency bear market cycle, we have witnessed the rise of the BTC ecosystem. Although some staunch supporters of BTC as a store of value are cautious about this, exploration of the BTC ecosystem has been ongoing. This exploration mainly stems from two needs: first, to unlock the profit opportunities of BTC asset value; second, to address the future mining subsidy issues of BTC, which involves ensuring the sustainability of the overall network security. Without the development of the BTC ecosystem, addressing these issues in the future will face significant challenges.

In the exploration of BTC L2, Stacks, as one of the earliest projects to enter this field, attempts to provide opportunities for ecosystems like DeFi to operate on the BTC network through its L2 solutions. The development of Stacks can be roughly divided into two stages: the sidechain era and the L2 era.

Sidechain Era

In 2018, Stacks launched its mainnet. In 2019, it introduced the Clarity smart contract development language and applied to regulators for a compliant token issuance, which was a very rare practice at the time. This move allowed Stacks to gain more exploration time under regulatory policies, enabling it to continue developing through long market cycles.

The initial technical mechanism of Stacks is similar to that of BTC sidechains, but it has its unique features. It integrates with the Bitcoin network through an anchoring transaction mechanism, broadcasting block header information from the Stacks chain to the BTC network.

Stacks employs a mechanism called PoX (Proof of Transfer), which is somewhat similar to the PoS staking system. Participants are divided into two categories: miners and signature validators. Miners need to engage in BTC chain transactions to gain the opportunity to write new blocks on the Stacks chain. Signature validators are responsible for verifying the validity of new blocks.

The interaction between Stacks and the BTC L1 layer is achieved through the "chain anchoring" mechanism, which binds information on the Stacks chain to the BTC L1. Each Stacks block contains hash values pointing to the previous Stacks block and the previous Bitcoin block, aiming to ensure that all state changes occurring in the Stacks network can be verified on the BTC L1 network.

L2 Era

Stacks 2.0 marks the project's entry into the Bitcoin L2 era, primarily including the Nakamoto upgrade and the launch of sBTC. The Nakamoto upgrade technically brings Stacks into the BTC L2 layer era, aiming to address issues such as security and performance; while the launch of sBTC prepares for the practical implementation of its L2 ecosystem.

The Nakamoto upgrade is an important milestone in the history of Stacks' development, marking its evolution towards a true L2. After the upgrade, Stacks aims to position itself as a layer of the Bitcoin network, integrating more closely into the Bitcoin network and becoming a more deeply integrated part of the Bitcoin ecosystem.

The most critical feature of L2 is the shared security of L1, and the Nakamoto upgrade is precisely working towards this direction. Through this upgrade, Stacks aims to become a more indispensable part of the Bitcoin network and ecosystem, providing new possibilities for the expansion and development of the BTC ecosystem.