Stacks Ecosystem Development and Satoshi Nakamoto Upgrade Outlook

Since the proposal of the Stacks theory, a series of key developments have made its prospects clearer. The steady growth in demand for Bitcoin block space has further driven the demand for products built on Stacks. Stacks is building a platform to explore more complex and refined Bitcoin utilities, which is expected to transform into a true second-layer network for Bitcoin in the future. This vision is gradually being realized, and the development team plans to complete the Satoshi Nakamoto upgrade before the Bitcoin halving in April next year.

Despite a good development trend, the recent attention on Stacks has declined due to the market's focus on other more immediate factors. This presents us with a unique opportunity—while several key milestones are about to be achieved, the theoretical foundation of Stacks is strengthening, yet public attention has diminished.

The average gas fees on the Bitcoin network have surged 50 times this year, far exceeding Ethereum's 2-fold increase, highlighting the strong demand for block space in the Bitcoin sector. The ongoing development of Ordinals indicates that people want Bitcoin to be more than just a simple hold. Bitcoin's status as a global macro asset is being strengthened, and the market's demand for alternative stores of value is increasingly solidifying Bitcoin's dominance.

The increase in demand for Bitcoin mainly stems from its stability as a store of value and the regulatory clarity expected from the approval of the U.S. spot Bitcoin ETF. These external factors have collectively driven the demand for the Stacks product: an efficient, flexible, and secure Bitcoin-denominated environment for exploring complex applications and ultimately achieving a true Bitcoin layer two transformation.

At the same time, although the development of Satoshi Nakamoto's upgrade has consumed a lot of resources, Stacks has received less attention in the past few months. The development team has completed Mockamoto (simulated Satoshi Nakamoto), which will be used to implement the online functionality of Satoshi Nakamoto nodes and RPC endpoints. This is an important milestone that allows the team to launch the Satoshi Nakamoto mainnet as scheduled in April next year, in sync with the Bitcoin halving.

This upgrade will be one of the most critical among several important catalysts. Currently, the Stacks network is relatively cumbersome to use, with block times identical to Bitcoin's first layer, and it does not support bridging Bitcoin due to security issues. After the upgrade, Stacks will significantly speed up, reducing block times to 5 seconds, and will support sBTC—a safe and efficient packaged version of Bitcoin that is natively integrated with the Stacks consensus mechanism. Despite technical limitations, the Stacks ecosystem remains resilient, with several strong teams continuing to build. After the upgrade, Stacks will be fully secured by 100% of Bitcoin's hash rate, bringing it closer to a second-layer network for Bitcoin.

Several major events in the future will significantly increase the attention on STX. First, it is expected that the Bitcoin spot ETF will be approved in January next year, which will trigger widespread discussion and promotion by large financial institutions, potentially affecting STX and other Bitcoin derivatives. Second, Stacks is expanding its global influence through partnerships with Singapore's Spartan Group and South Korea's DeSpread, planning marketing activities in the first quarter of next year, focusing on South Korea, Singapore, Hong Kong, and Dubai. Third, Stacks will announce several key milestones before March next year, and it is expected to gain more attention soon. The second testnet is planned to launch before January next year. Finally, new Bitcoin Layer 1 tools such as BitVM will enable minimal trust transfer between Bitcoin Layer 1 and Layer 2, bringing Stacks closer to the true vision of Bitcoin Layer 2.

The relative valuation of STX against BTC and other first-layer/second-layer ecosystems has reached an impressive level. It is expected that by April next year, Stacks will likely complete the Satoshi Nakamoto upgrade, providing the first fully operational Bitcoin-priced ecosystem. Meanwhile, with the Bitcoin halving approaching, the Stacks ecosystem will be in the midst of marketing activities. This should provide a favorable environment for STX, narrowing its valuation gap with other assets. Currently, STX is trading at 0.15% of BTC's fully diluted market cap, while the total of Ethereum's second layer is 10% of ETH. Although there is a reasonable discount, the current gap indicates significant potential upside for STX.

After the upgrade of Satoshi Nakamoto, Stacks will be able to provide a high-performance Bitcoin-priced NFT market, suitable not only for Ordinals trading but also for a unique second-layer NFT series. Through the sBTC mechanism, Ordinals can be locked on the first layer of Bitcoin and then traded on the second layer of Stacks, achieving faster, lower-cost, and more flexible transactions. In addition, sBTC can also explore traditional DeFi applications, such as the lending service developed by the Zest team on Stacks. A token exchange market based on sBTC will also emerge, with ALEX laying the groundwork for this. These applications not only explore new features but also automatically generate yield, with the potential to gradually capture the market and create an innovative and practical ecosystem.