Stacks AMA Recap
CryptoDiffer team
Hello, everyone!
We are glad to meet here
Joe Bender, Developer Evangelist at Blockstack
Developer Evangelist at Blockstack, Joe Bender
Hey there, Everyone! So happy to be here!
CryptoDiffer team
The Stacks ecosystem is a collection of independent entities, developers, and community members working to build a user-owned internet on Bitcoin. The internet as we know it is broken. We’re working to build a better one and believe it will rise on blockchains, specifically Bitcoin. Stacks gives developers the tools to innovate and build value for users upon Bitcoin, the most secure and proven blockchain in the world, in ways previously not possible.
Joe grew up in Pittsburgh, Pennsylvania, receiving his Masters in Information Science from the University of Pittsburgh. After gaining an interest in blockchain technology and cryptocurrencies in 2016, he moved to New York City and joined ConsenSys to work on Ethereum. Joe joined Blockstack as a Developer Evangelist in April 2020, looking to spread awareness of the technology and empower developers to build powerful decentralized applications. His favorite thing about the blockchain ecosystem is the passionate, thriving community full of eclectic, ambitious thinkers.
CryptoDiffer team
Please tell us about the upcoming Stacks 2.0 Mainnet Launch
Developer Evangelist at Blockstack, Joe Bender
Absolutely! Thanks for the introduction.
Stacks 2.0 brings apps and smart contracts to Bitcoin. Our thesis is that successful experiments from various blockchains will eventually get created on Bitcoin. The network effects of Bitcoin mean that smart contracts around Bitcoin have access to more crypto capital and benefit from higher security. We believe that Bitcoin can be the foundation for a better user-owned internet much like TCP/IP for the traditional internet.
Union Square Ventures, a top US fund that was an early investor in Twitter, Coinbase, Twilio etc, published their thesis for Stacks 2.0. It discusses how building smart contracts and apps on Bitcoin can be a model for future growth. USV said that “we are excited to support the launch of Stacks 2.0 through participating in the consensus algorithm.”
CryptoDiffer team
Could you please give us a brief introduction of Stacks
Developer Evangelist at Blockstack, Joe Bender
Yup! There are two fundamental challenges to building apps and smart contracts on Bitcoin:
1) Scalability: The base Bitcoin blockchain has a limited capacity for transactions.
2) Secure contracts: The Bitcoin blockchain has a limited scripting language and does not allow general smart contracts. This design choice ensures security at the base layer.
The Stacks blockchain addresses the limitations of scalability and secure smart contracts and enables apps and smart contracts for Bitcoin. We do this through a unique consensus algorithm that runs between two blockchains. The Bitcoin blockchain functions as the settlement layer and source of truth while smart contracts execute on the Stacks chain. Enabling scalable smart contracts directly on Bitcoin has been a long-standing bottleneck, and the Stacks blockchain unlocks that functionality. We enable this without modifying Bitcoin, a critical design requirement for enabling such apps and smart contracts.
CryptoDiffer team
What’s the current development status of Stacks 2.0?
Developer Evangelist at Blockstack, Joe Bender
We announced last December 15, 2020 that Stacks 2.0 is now feature complete. The first GitHub code commit that started the Rust implementation of Stacks 2.0 was in Nov 2018. Over the last 2 years, just the stacks-blockchain code repo saw 646k additions and 372k deletions over 5K+ commits. It’s an important landmark for our community. Cheers to all the hard work by Hiro PBC and Stacks Foundation engineers and open source contributors!!
You can see more details about this “Code complete” in Diwaker Gupta, Hiro’s Head of Engineering Blog: https://blog.blockstack.org/stacks-2-0-is-feature-complete/
Do note that further testing and any bug fixes can result in code updates on GitHub. “Feature completion/freeze” means all functionality is implemented and now just further testing will happen
CryptoDiffer team
Could you please introduce a PoX to our community?
Developer Evangelist at Blockstack, Joe Bender
Proof of Transfer (PoX) is the first consensus algorithm between two blockchains. Specifically we present an implementation of PoX by using Bitcoin as the base chain and Stacks as the connected chain. In PoX, leader election happens on the Bitcoin blockchain. Instead of burning electricity on proof of work, PoX reuses already minted bitcoins as “proof of computation” and miners represent their cost of mining in bitcoins directly.
Proof-of-Transfer itself can be broken down into two main pieces: Mining and Stacking. Instead of consuming electricity all over again, miners forward BTC to the network for the chance to lead a block and mine Stacks tokens (STX). This also means mining is accessible and feasible to anyone with BTC. Stacking then makes up the other half of the mechanism where the protocol redistributes the BTC committed by miners to qualified STX holders.
For STX Mining, STX miners bid for becoming the leader of the next round. The protocol selects the winning miner (i.e., the leader) of a round using a verifiable random function (VRF). The leader writes the new block of the Stacks blockchain and mints the rewards: newly minted Stacks for the block, fees for smart contracts and transactions.
STX holders can participate in consensus and earn BTC rewards by participating in Stacking. To participate, users lock their STX for a reward cycle (approx two weeks), run or support a full node, and send useful information on the network as STX transactions. STX holders who actively participate in Stacking earn the Bitcoin rewards of that cycle. Unlike proof of stake, there is no risk of slashing (economic penalties by protocol) for STX holders.
CryptoDiffer team
What to expect on Stacks 2.0 Mainnet Launch?
Developer Evangelist at Blockstack, Joe Bender
The Stacks 2.0 launch, currently anticipated on Jan 14th 2021, is closer to the launch of a whole new project than an upgrade from Stacks 1.0. Stacks 2.0 is our master design and solves two long-standing problems with Bitcoin (a) scalability of transactions and (b) enabling smart contracts without modifying the main Bitcoin blockchain itself.
Stacks 2.0 enables a new way for users to earn Bitcoin by actively participating in consensus. Our work can make Bitcoin more valuable by turning passive Bitcoin capital into actively deployed capital and bringing more apps and smart contracts to the Bitcoin ecosystem.
CryptoDiffer team
The SEC lawsuit against Ripple is a hot topic right now, lots of people have pointed to STX as THE counter example to demonstrate how important it is to abide by regulations and the law, can you talk about the thinking behind the choice to go down the compliance route when no one else chose to do so?
Developer Evangelist at Blockstack, Joe Bender
A few years ago there were arguments in the crypto industry that SEC regulations may not apply to crypto assets which felt strange to me. We did our own research and concluded that there is a way to be able to comply to regulations. We did the first-ever SEC qualified offering in the US. See this link:
https://www.wsj.com/articles/sec-clears-blockstack-to-hold-first-regulated-token-offering-11562794848
Since then we’ve worked on a framework to transition to non-security status in the US. See this recent Reuters story:https://twitter.com/muneeb/status/1335972550560669698?s=20 in many ways, yes this is the exact opposite approach to Ripple.
We do our own research and take the hard but right paths. That shows not just in compliance with regulators but our design of Clarity language for smart contracts and scalability in harmony with Bitcoin. We generally optimize everything for the long-term instead of taking shortcuts.
CryptoDiffer team
When we could check SEC’s conclusion and opinion about the Summary of a legal memorandum?
Developer Evangelist at Blockstack, Joe Bender
There is no formal approval from the SEC for this. Blockstack PBC (now Hiro PBC) plans to file an exit report with the SEC for our Reg A reporting requirements which basically that we file a report with the SEC that says that our company no longer has any reporting requirements given STX is a non-security now.
CryptoDiffer team
I know Stacks brings DeFi to Bitcoin – how does this compare to DeFi on Ethereum?
Developer Evangelist at Blockstack, Joe Bender
“Bitcoin is the crypto asset it seems that many people want to hold, and we’ve seen more Wall Street and institutional investors entering the space. We believe the native connection created between Stacks 2.0 and Bitcoin can unlock (a) a Bitcoin-based crypto economy and (b) a crypto web directly on the secure foundation of Bitcoin. We believe this convergence will carve out space for BTC to become a new source of liquidity and the default reserve asset for DeFi.
By enabling users to earn bitcoin and developers to extend Bitcoin without modifying it, we unlock the potential of the $400B capital and 130 exahashes per second (security) already on Bitcoin. When developers combine PoX with the Clarity smart contract language developed jointly by Blockstack and Algorand, they can build complex financial products that are powered by and anchored to Bitcoin, while avoiding a reliance on non proof-of-work systems like Polkadot, Tezos, or ETH 2.0.”
A simple way to think about it is this: People are trying to bring BTC to Ethereum (e.g. WBTC with ~800M market cap) whereas we’re going the other direction, bringing Ethereum-like functionality to Bitcoin in a more secure, scalable way. With Stacks, we can take Bitcoin from passive to active capital.
CryptoDiffer team
If people do not want to part ways with Bitcoin in a bull market, what happens if there are not enough miners on the Stacks blockchain?
Developer Evangelist at Blockstack, Joe Bender
The launch of Stacks 2.0 mainnet requires adoption by at least 20 independent miners. The miners need to register themselves in the .miner namespace and follow other steps. With the start of mining, 1000 STX per block will be released as newly minted STX (as incentive for
STX miners to package/write new STX blocks). The start of mining may be thought of as a small new decentralized exchange coming online in the ecosystem. Roughly 150K STX per day will be “traded” through mining in the BTC/STX on-chain pair. Like other blockchains, miners
will only mine new blocks if it is profitable for them to do so. For Stacks 2.0, this is expected to mean that miners can get cheaper STX through the BTC/STX mining pair exchange as compared to other exchanges that currently support BTC/STX pairs (like Binance).
CryptoDiffer team
How many miners Stacks have now? And I concerned about a lack of miners when BTC is high-valued like these days.
Developer Evangelist at Blockstack, Joe Bender
Our testnet has 700+ miners on it already! The launch of Stacks 2.0 mainnet requires adoption by at least 20 independent miners. The miners need to register themselves in the .miner namespace and follow other steps. With the start of mining, 1000 STX per block will be released as newly minted STX (as incentive for STX miners to package/write new STX blocks). So these miners are doing the work to get a chance of getting the newly minted STX.
CryptoDiffer team
Awesome, a lot of updates to come out!
Thank you for great answers!
I think it is time to start community questions round!
Cryptodiffer Community
How has ” ALGORAND ” contributed to the development of BLOCKSTACK ?
Developer Evangelist at Blockstack, Joe Bender
Algorand’s involvement has been extremely valuable! ICYMI, a while ago Blockstack and Algorand jointly announced an independent open-source project to support a first-of-its-kind smart contract language, Clarity. Teams run by Blockstack Founder Dr. Muneeb Ali, a Princeton Ph.D in computer science, and Algorand Founder Dr. Silvio Micali, a computer science professor at MIT, will collaborate on Clarity design and development.
To date, this is the first time two leading cryptocurrency projects have come together to release an alternative smart contract language that is purpose-built for the needs of developers working on high-stakes transactions in the hundreds of millions of dollars, which require more predictability and reliability than current solutions. It was a no-brainer to combine our communities strength to get more eyes on the Clarity language, and more builders pushing the limits of what is possible with it. Algorand is helping make Clarity contracts as robust and secure as possible, while also putting a focus on interoperability. It’s been super insightful to have two separate developer communities tinkering with the same language.
Cryptodiffer Community
Bitcoin is minimal by design and is meant to not change, so how can Stacks 2.0 adapt this blockchain to any new feature to survive in the competitive and ever changing Cryptospace?
Developer Evangelist at Blockstack, Joe Bender
Bitcoin is the original innovation that started the entire crypto industry. It has some of the most sophisticated core developers. There are many projects that are reckless and don’t understand why Bitcoin developers make certain design decisions and they wrongly thing that Bitcoin’s limited scripting language or smaller blocksize are technical disadvantages. These are actually very sophisticated technical decisions that will ensure stability and durability for Bitcoin while other potential competitors fumble. There already is hashpower consolidation for Bitcoin and there might be more consolidation in the future. After 10+ years of production it’s quite clear that we have a winner for the reserve cryptocurrency and settlement layer for the entire crypto industry and it’s Bitcoin. No other system even comes close. So with that in mind, we want to further expand the Bitcoin ecosystem and innovate around the Bitcoin ecosystem for Web 3 and smart contracts instead of starting separate competing networks.
Our proof of transfer consensus mechanism extends the security of existing PoW chains like Bitcoin, and allows a new network to anchor to an existing PoW network. In the case of Blockstack, this gives the Stacks network similar security properties to Bitcoin from Day 1, while still allowing us to offer developer tools like Smart Contracts, without modifying BTC’s protocol.
Cryptodiffer Community
Blockstack had the first token offer approved by the United States Securities and SEC Regulation A +, What benefits did this bring to the development of the project?
Developer Evangelist at Blockstack, Joe Bender
Yes, that’s right. In fact, in July of 2019, the US Securities and Exchange Commission approved the application of the Reg A+ clause to the block stack to attract investments of up to 28 million dollars.
Blockstack has always taken a careful, well-researched approach to everything, including the R&D and technology but also regulations. We did the first-ever SEC qualified offering, and recent trouble of projects with the SEC (for example Telegram) is an example of why a careful approach is important. Same is true for the technology where we’ve taken a careful well-researched approach vs more experimental designs that may not work.
It helps with transparency and removing information asymmetery between general public and internal project. Also, SEC enforcements can be very problematic for projects (e.g., what we saw with Telegram and others). So doing things in a regulated way can be a healthier long-term strategy.
Cryptodiffer Community
Q1. Sometimes last year, a meme coin named Yam finance put up an unaudited insecured smart contract which made there investors loose a lot of money. What makes Stacks more secure and trusted compared to other blockchains?
Q2. What mechanism have you put in place to help prevent Blockstack from 51% attack?
Developer Evangelist at Blockstack, Joe Bender
The Clarity language is predictable and uses precise and unambiguous syntax that allows developers to calculate exactly how their contracts will be executed. It is also secure by allowing users to supply their own conditions for transactions that ensure that a contract may never unexpectedly transfer a token owned by a user. Finally, Clarity is not compiled. Contracts written in Clarity are broadcasted on the blockchain exactly as they are written by developers. This ensures that the code developers wrote, analyzed, and tested, is exactly what gets executed.
In this way, Clarity has some built in safe guards that would completely prevent some of the highest profile vulnerabilities of the last few years (The DAO, Parity Multisig Exploit, YAM, etc.)
Cryptodiffer Community
Can you share $ STX opinion on DeFi ? What steps are already being taken towards the future progress of $ STX ?
Developer Evangelist at Blockstack, Joe Bender
In my opinion, the explosion of DeFi in the last year or two has been spectacular to see. People finally putting their crypto to work! At Stacks, we love the cryptoeconomic magic that goes on behind the scenes in DeFi, and are trying to bring that to the Bitcoin ecosystem.
First, I’d almost say that the Stacking process is a sort of DeFi in and of itself! The fact that you can lock up $STX, and receive a base currency like Bitcoin in return, is a pretty cool cryptoeconomic mechanism. Second, the Clarity smart contract language is going to open up a whole world of dApps in the Blockstack ecosystem. Stacks 2.0 is the blueprint for building exciting things on Bitcoin. A trustless token exchange? Minting digital collectibles? Facilitating property rental? It’s all enabled with Clarity. To answer your question, DeFi is awesome, and it’s on Stacks 2.0 😀
Developer Evangelist at Blockstack, Joe Bender
Wow! blown away by the phenomenal questions from the chat!
Cryptodiffer TEAM
Thank you for you answers, it was an insighfull session
Thank you everyone who participated, great questions as always!
