Original author:muneeb.btc, Founder of Stacks
Original compilation: Deep Chao TechFlow
Bitcoin L2s and Ordinals are gaining traction, and many new users have recently discovered Stacks, a quick guide for new users.
Stacks focuses on unlocking the Bitcoin economy, imagining a system similar to Solana, but using BTC as the asset.
Project History: The Stacks mainnet was launched in early 2021, using a consensus mechanism powered by Bitcoin. The project is undergoing a major upgrade called Stacks Nakamoto, bringing it closer to Bitcoin L2 (more details below). The builders in the Stacks ecosystem are BTC believers and want to build everything with BTC as an asset.
There are three main reasons why Bitcoin Layer 2 is important:
1) Bitcoin L1 cannot scale to a billion users. We saw that BTC L1 has high fees, with fees increasing 100x, making it difficult for an average user to pay $40 in fees for a $100 BTC transaction. Fees on L2 are much cheaper and they increase Bitcoin’s effective bandwidth. L2 is like building a new highway next to a congested highway.
2) Bitcoin L2 allows developers to build any application with BTC that they can build with Ethereum or Solana. Looking at the various non-BTC ecosystems, its clear that there are use cases that have clear product-market fit, such as being able to collateralize ETH or SOL to obtain stablecoin loans, or having a native DEX to trade ETH/SOL. Bringing proven use cases to BTC is obviously desirable.
3) Bitcoin L2 makes L1 tools such as DLC (Discrete Logarithmic Contract) more useful. Users can participate in certain Stacks contracts through DLC without requiring BTC to leave the L1 chain, for example, participating in liquidity pools without requiring BTC to leave L1. (BTC will only move to L2 when a user is liquidated.)
Roadmap for 2024: Stacks is a very decentralized ecosystem. Working groups in the open source ecosystem have summarized some highlights for expectations in the first half of 2024, including:
1) The Stacks Nakamoto upgrade is planned to be launched before the Bitcoin halving. This will bring fast (5 seconds) block speeds to Stacks, a significant improvement over the 10-30 minute block speeds currently tied to Bitcoin L1, and improve the security (reorganization resistance) of Stacks to Bitcoin 100% of the hash rate.
2) sBTC may be released as the second hard fork after the Bitcoin halving, making BTC on L2 possible. sBTC is unique in that it is secured at the consensus level. There are proposals to use it directly as Gas on Stacks. Additionally, the open network of sBTC signers will likely be the largest and most decentralized set of signers at the launch of Bitcoin L2/Anchor (current estimates based on signer pool performance and signer interest).
3) Stacks supports WASM. Ongoing WASM work not only accelerates the execution of Clarity (security language) contracts, but also opens the door to support other languages such as Rust.