Bitcoin scaling solution: Stacks

1. Summary

Bitcoin is the most secure and durable blockchain, but it also faces scalability and functionality challenges. Bitcoin's design is minimalistic and designed to stay the same. Stacks is an open-source platform built on top of Bitcoin that enhances the functionality of Bitcoin by introducing smart contracts and decentralized applications (DApps). Stacks is a blockchain solution that leverages the security and consensus mechanisms of Bitcoin while providing high-throughput and low-latency transactions. Stacks also implements a trustless two-way bitcoin anchor mechanism, allowing bitcoin to circulate and be used freely on the Stacks layer. Stacks also uses the Clarity language, a secure, decidable smart contract language that can respond to Bitcoin transactions and access Bitcoin state. This article will describe the main innovations and advantages of Stacks, and how it provides a fully programmable asset layer for Bitcoin.

**02.**Introduction

Bitcoin was the first successful cryptocurrency that created a decentralized, immutable, and censorship-resistant web of value. Bitcoin is uniquely secure and stable because it has the largest computing power and the most widely distributed nodes.

However, Bitcoin also has some limitations, such as slow transaction speed, high transaction fees, and single function. These limitations hinder the application of Bitcoin in more scenarios, such as smart contracts, decentralized finance (DeFi), non-fungible tokens (NFT), etc.

To solve these problems, many projects try to build more functional and efficient blockchain platforms on top of or outside of Bitcoin. However, these projects often need to sacrifice some level of security or decentralization, or need to rely on third-party services or intermediaries to achieve interoperability with Bitcoin. None of these solutions can fully utilize the advantages of Bitcoin itself, nor can it guarantee the trust and autonomy of users and developers.

Stacks is a blockchain platform unlike other projects, which aims to be a scaling solution for Bitcoin. Stacks is not trying to replace or change Bitcoin, but adds the ability of smart contracts and DApps on top of Bitcoin, making Bitcoin a fully programmable asset. Stacks utilizes the security and consensus mechanism of Bitcoin itself, while providing a high-throughput and low-latency transaction experience. Stacks also implements a trustless two-way bitcoin anchor mechanism, allowing bitcoin to circulate and be used freely on the Stacks layer. In addition, Stacks uses the Clarity language, a secure, decidable smart contract language that can respond to Bitcoin transactions and access Bitcoin state.

This article will describe the main innovations and advantages of Stacks, and how it provides a fully programmable asset layer for Bitcoin.

**03.**Main innovations of Stacks

Stacks is a blockchain solution that leverages the security and consensus mechanisms of Bitcoin while providing a high-throughput and low-latency transaction experience.

The main innovations and advantages of Stacks can be summed up in the following six letters:

S - Secured by the full computing power of Bitcoin (Bitcoin finality).

T - Trustless Bitcoin peg; writes to Bitcoin.

A – Atomic bitcoin swaps and assets owned by bitcoin addresses.

C – The Clarity language for secure, decidable smart contracts.

K – Knowledge of the full state of Bitcoin; read from Bitcoin.

S – Scalable, fast transactions, eventually settled on Bitcoin.

Below we describe each of these innovations and benefits one by one.

**04.**S – Secured by the full hashrate of Bitcoin (finality)

Instead of building an independent blockchain network outside of Bitcoin, Stacks directly utilizes the security and consensus mechanism of Bitcoin itself.

Stacks uses a technology called consensus bridge, which maps events that occur on the Bitcoin blockchain to the Stacks blockchain, enabling interoperability between the two blockchains.

Specifically, Stacks uses a consensus algorithm called proof-of-transfer (PoX), which allows Stacks nodes to participate in the consensus process of the Stacks blockchain by sending transactions to the Bitcoin blockchain. These transactions contain the voting information of the Stacks node for the next Stacks block, as well as the reward information used to motivate other nodes to participate in the consensus process. In this way, Stacks nodes can use the Bitcoin blockchain as a non-tamperable, irreversible, and unpredictable random number generator to reach a consensus on the next Stacks block.

This consensus bridging technology allows the Stacks blockchain to inherit the security and finality of the Bitcoin blockchain. Any malicious node that wants to attack or tamper with the Stacks blockchain must attack or tamper with the Bitcoin blockchain at the same time, which is very difficult or even impossible in practice. Therefore, the Stacks blockchain can be considered to be secured by the full computing power of Bitcoin. This also means that any event that occurs on the Stacks blockchain can be considered to have the same finality as Bitcoin. In other words, once a Stacks transaction is confirmed, it cannot be rolled back or undone unless the corresponding Bitcoin transaction is rolled back or undone at the same time.

**05.**T – Trustless Bitcoin Pegging Mechanism

Stacks not only uses Bitcoin as its own security layer and consensus layer, but also implements a trustless two-way Bitcoin anchoring mechanism, so that Bitcoin can be freely circulated and used on the Stacks layer. This anchoring mechanism is called stacked bitcoin (sBTC). The realization of sBTC exchange is based on the interoperability between Stacks and Bitcoin, as well as the smart contract logic on the Stacks layer. Atomic Bitcoin swaps can provide users with greater efficiency and security, as well as more choice and flexibility.

Assets owned by Bitcoin addresses refer to assets issued or transferred on the Stacks layer, whose ownership is determined by Bitcoin addresses rather than Stacks addresses. This means that users can use their existing addresses and private keys on the Bitcoin layer to manage their own assets on the Stacks layer without creating or importing new addresses or private keys. This way, users can enjoy the security and privacy of the Bitcoin layer, while also having access to the functionality and variety of the Stacks layer. The realization of assets owned by Bitcoin addresses is based on the address mapping between Stacks and Bitcoin, as well as the smart contract logic on the Stacks layer. Assets owned by Bitcoin addresses can provide users with greater convenience and compatibility, as well as more trust and autonomy.

**06.**C – Clarity language, safe and decidable

The ability of Stacks to support smart contracts and DApps is implemented through a smart contract language called Clarity. Clarity is a language specially designed for blockchain, which has the following characteristics:

It is an interpreted language, that is, it does not need to be compiled into bytecode or virtual machine code, but is executed directly on the blockchain. This avoids bugs or bugs introduced by the compiler, and overhead or uncertainty introduced by the virtual machine.

It is a decidable language, that is, it can be executed deterministically within a limited time and space, and its execution result and consumed resources can be calculated in advance. This avoids issues like infinite loops or deadlocks, as well as provides a more accurate and fair fee model.

It is a non-Turing-complete language, i.e. it does not support all possible computations, but only some limited and necessary ones. This avoids problems such as complexity or unpredictability, and provides greater security and reliability.

It is a transparent language, that is, it allows users and developers to clearly see the logic and status of smart contracts, and can verify or analyze them. This avoids issues of concealment or deception, as well as providing more trust and autonomy.

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programming environment, thereby protecting the interests and rights of users and developers. The Clarity language also enables smart contracts to respond to Bitcoin transactions and access Bitcoin state, enabling interoperability and synergy with Bitcoin.

**07.**K – Knowledge of the Complete State of Bitcoin

Stacks can not only write information to Bitcoin, but also read information from Bitcoin. This is because Stacks can track and store the complete state of Bitcoin, including Bitcoin block headers, transactions, addresses, balances, and more. In this way, Stacks can use Bitcoin as a non-tamperable, irreversible, and unpredictable data source to achieve more advanced functions, such as cross-chain contracts, oracles, privacy protection, etc.

Stacks' knowledge of the full state of Bitcoin is achieved through a technology called a blockchain adapter. The Blockchain Adapter is a service voluntarily participated by Stacks nodes, which can obtain and verify events occurring on the Bitcoin blockchain from the Bitcoin network, and forward them to other nodes on the Stacks network. Participants of the blockchain adapter can receive a certain percentage of Stacks Token (STX) rewards by providing valuable information to the Stacks network. The operation logic of the blockchain adapter is completely transparent and verifiable, so users do not need to trust any third party or intermediary to read information from Bitcoin.

**08.**S – Scalable, Fast Transactions, Final Settlement

Stacks not only utilizes Bitcoin as its own security layer and consensus layer, but also provides a scalable and fast transaction experience. Stacks uses a technology called microblocks, which allow large numbers of transactions to be quickly confirmed and broadcast between two Bitcoin blocks. A microblock is a lightweight block structure that only contains transaction data, not consensus data. Microblocks are generated by a node known as the leader, and are validated and forwarded by other nodes. Leader nodes are selected through a component of the Stacks consensus algorithm called the sorting service. The ordering service is a voluntary service for Stacks nodes to order transactions based on transaction fees and other factors and package them into microblocks.

Participants can earn a percentage of Stacks Token (STX) rewards by providing valuable services to the Stacks network. The operating logic of the ordering service is completely transparent and verifiable, so users do not need to trust any third party or intermediary for transaction ordering and packaging.

**09.**Major Upgrade

Stacks is about to release a major upgrade called the Nakamoto release, which will further enhance the functionality and performance of Stacks as a Bitcoin layer. The Nakamoto version was proposed by a team called the sBTC working group, which is composed of Stacks core developers, Princeton computer scientists, Hiro, Trust Machines, Stacks founder Muneeb Ali, Stacks Foundation, individual experts, etc. The team has released two related white papers, introducing the design and implementation details of the sBTC and Nakamoto versions, respectively.

Key features of the Nakamoto release include:

• Implement a trustless two-way bitcoin anchor mechanism, called stacked bitcoin (sBTC), so that bitcoin can be freely circulated and used on the Stacks layer, and can also write information to the bitcoin layer. sBTC is a token pegged one-to-one with native Bitcoin (BTC), which can interact with smart contracts and DApps on the Stacks layer. The anchoring mechanism of sBTC is implemented through a component in the Stacks consensus algorithm, called the anchor pool. The anchor pool is a smart contract voluntarily participated by Stacks nodes, which can receive and send Bitcoin, and issue or destroy sBTC according to the proof of Bitcoin transactions.
• The technology that realizes transactions protected by Bitcoin finality and quickly confirms and broadcasts a large number of transactions between two Bitcoin blocks is called microblocks (microblocks). Micro-block technology enables Stacks to quickly confirm and broadcast a large number of transactions between two Bitcoin blocks, thereby improving transaction throughput and reducing transaction latency. Transactions in microblocks can be confirmed quickly, but they are not yet finalized because they have not yet been written to the Bitcoin blockchain.
• In order to achieve final settlement, Stacks also uses a technology called anchor block, which can package a series of micro blocks into a complete block and write it on the Bitcoin blockchain. Anchor blocks are generated by a node called a committer, and are verified and forwarded by other nodes. Committer nodes are selected through another component of the Stacks consensus algorithm, called the committing service. The submission service is a service voluntarily participated by Stacks nodes, which can screen micro-blocks according to the quality of micro-blocks and other factors, and package them into anchor blocks. The technology of anchoring blocks allows Stacks to package a series of micro-blocks into a complete block and write it on the Bitcoin blockchain, thus realizing the final settlement of the transaction.

**10.**Conclusion

W3C DAO believes that Stacks has development prospects and potential, because it is an open source platform built on top of Bitcoin, which enhances the functions of Bitcoin by introducing smart contracts and DApps. Stacks utilizes the security and consensus mechanism of Bitcoin itself, while providing a high-throughput and low-latency transaction experience. Stacks also implements a trustless two-way bitcoin anchor mechanism, allowing bitcoin to circulate and be used freely on the Stacks layer.

Stacks also employs the Clarity language, a secure, decidable, non-Turing-complete, transparent smart contract language that can respond to Bitcoin transactions and access Bitcoin state. In addition, Stacks provides Bitcoin with a fully programmable asset layer, enabling Bitcoin to realize its value and potential in more scenarios. Not only that, Stacks also provides users and developers with a safe, efficient, flexible, and transparent blockchain platform, allowing them to enjoy the advantages of Bitcoin while also having access to more functions and diversity.