Stacks (STX): what it is and how it works

Important: following the alignment with Regulation (EU) 2023/1114 (MiCAR), on Young Platform Stacks (STX) is currently available for selling only: it can no longer be bought or deposited. Selling remains possible with no deadlines.

What is Stacks (STX)

Stacks is the project that brought smart contracts and programmable applications to Bitcoin’s blockchain. Bitcoin, in fact, was created mainly as a store of value and a payment system and was not designed to host complex applications: Stacks adds this possibility by leveraging the security of the sector’s most solid network.

Thanks to Stacks it is possible to develop decentralised applications (dapps) and trade NFTs anchored to Bitcoin, effectively extending the functionality of the first crypto-asset in history.

How it works: Proof of Transfer

Stacks uses a particular consensus mechanism, called Proof of Transfer (PoX). Unlike Proof of Stake, validators do not lock their STX, but transfer Bitcoin to predetermined addresses to earn the right to produce blocks.

The information is anchored to Bitcoin’s blockchain, which acts as a security base and final “ledger”: in this way Stacks inherits much of Bitcoin’s solidity while having its own network.

“Stacking” and rewards

A distinctive feature is “Stacking” (not to be confused with traditional staking): STX holders can lock them to contribute to consensus and, in return, receive rewards in Bitcoin rather than in the native token.

These rewards too are variable and not guaranteed, and depend on the network’s activity and on the protocol’s parameters.

What to consider

Stacks is one of the main projects aiming to extend Bitcoin’s functionality beyond a mere store of value, a theme that has become increasingly central in the sector. Past performance is not a guarantee of future results.