In May Figment hosted the “Staking on Stacks” webinar. This brought together notable figures in the blockchain space to discuss the latest developments in the Stacks ecosystem and their implications for Bitcoin. The panelists included Chief Product Officer and Co-Founder, Andrew Cronk and Protocol Opportunities Lead, Drake Breeding, who sat down with Stacks Investor Relations Lead, Kyle Ellicott, and Co-Creator, Muneeb Ali, for an in-depth look at the L2 Bitcoin protocol Stacks.
Key Topics and Highlights
Introduction to Stacks and Stacking
Muneeb Ali began the discussion with an overview of Stacks, describing the network as a Bitcoin Layer 2 (L2) solution that will enhance Bitcoin’s scalability by enabling faster and cheaper transactions. Muneeb went on to explain the concept of stacking, where participants use the STX token to secure the L2 network and, in return, earn Bitcoin (BTC) as rewards. He emphasized the unique aspect of earning BTC through stacking, setting it apart from other staking mechanisms in the crypto industry.
You earn BTC by locking STX and performing work for the network, which is a unique proposition in the crypto industry.
The Role of Miners and Signers
Andrew raised an important question about the distinct roles of miners and signers within the Stacks ecosystem, asking how they function and what sets them apart. Muneeb Ali provided a detailed explanation to clarify these roles. Muneeb clarified that miners operate at the L1 level, proposing new blocks and bidding in BTC, which then appears as rewards for stackers. Signers, on the other hand, validate these blocks, ensuring their correctness and processing BTC withdrawals from L2 to L1.
Muneeb elaborated on the difference between typical Proof-of-Stake networks and the Stacks network. Unlike Ethereum or Solana, which are independent ecosystems with their own native assets, Stacks is built on top of Bitcoin and aims to reuse Bitcoin’s security to secure the L2. This unique approach is facilitated by the Proof-of-Transfer mechanism, which leverages Bitcoin’s digital energy to secure the Stacks network.
Miners and signers play crucial roles in maintaining the network's integrity, with miners bidding in BTC and signers validating blocks and processing BTC withdrawals.
The Nakamoto Upgrade
The conversation changed gears to the much-anticipated Nakamoto upgrade. Muneeb explained that this upgrade represents a significant milestone for the Stacks ecosystem, promising a 100x improvement in speed and other critical enhancements. He detailed how this upgrade would improve user experience (UX) while maintaining high-security standards by leveraging Bitcoin’s hash rate. The Nakamoto upgrade, he noted, would allow for faster transactions and increased network capacity, addressing previous UX challenges.
The Nakamoto upgrade is a massive improvement, offering faster, cheaper transactions with enhanced security through Bitcoin's hash power.
Muneeb also highlighted that the upgrade would enable applications to perform more efficiently on the network, fostering greater adoption and activity. This would lead to a positive economic dynamic, where increased network usage would result in higher BTC yields for participants.
The Future of Bitcoin L2
The panelists then moved on to discuss the future of Bitcoin L2 solutions. Muneeb and Kyle both expressed optimism about the potential for new applications, particularly in Bitcoin DeFi and gaming. They highlighted the importance of making BTC programmable and accessible for various use cases. Kyle mentioned that the emergence of Bitcoin-backed stablecoins and native Bitcoin yields would be significant developments post-Nakamoto.
Kyle emphasized the importance of unlocking Bitcoin liquidity, noting that the ability to move Bitcoin seamlessly from L1 to L2 would open up numerous opportunities for innovation. He pointed out that the trillions of dollars worth of Bitcoin held globally could be utilized in new ways, driving the growth of Bitcoin DeFi and other applications.
With the Nakamoto upgrade and the rise of Bitcoin DeFi, we're unlocking new possibilities for BTC, making it more versatile and valuable.
User Experience and Accessibility
Kyle provided insights into the user experience of stacking, emphasizing the ease of use and accessibility for novice and experienced participants. He described the simple process of setting up a wallet, acquiring STX, and starting to stack, with options for both hands-on and automated participation. Kyle highlighted that users could participate in stacking through various wallets and exchanges, making it convenient for anyone interested in earning BTC rewards.
The stacking process is straightforward, with user-friendly wallets and options for set-it-and-forget-it participation.
Kyle also mentioned the introduction of liquid stacking, which allows participants to enter and exit stacking cycles flexibly. This innovation provides more control and convenience for users, further enhancing the stacking experience.
Figment’s Role in the Bitcoin Ecosystem
Finally, Andrew Cronk discussed Figment’s decision to support Stacks and how a staking company like Figment fits into the Bitcoin ecosystem. He outlined Figment’s goal is to increase the value of blockchain transactions and support high-quality blocks that people are willing to pay for, thus creating real value. Andrew emphasized that supporting Bitcoin-related projects aligns with Figment’s mission to drive the adoption of blockchain technology and enhance its utility.
Our mission at Figment is to support high-quality, valuable blockchain transactions, and Stacks offers a unique opportunity to bring this to Bitcoin.
Andrew elaborated on the importance of moving towards a model where blockchain revenues are derived from transaction fees rather than inflation. He expressed how Bitcoin L2 solutions like Stacks can create a sustainable economic model driven by transaction fees, adding significant value to the ecosystem.
Conclusion
The “Staking on Stacks” webinar provided a comprehensive overview of the exciting developments in the Stacks ecosystem. The discussions highlighted the significant strides undertaken to integrate Bitcoin more deeply into the blockchain landscape, offering new opportunities for scalability, programmability, and economic growth. As the Stacks ecosystem continues to evolve, it promises to play a crucial role in the future of Bitcoin and the broader blockchain industry.
We encourage you to watch the webinar recording to gain further insights and see the full discussion below.
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The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, tax, or investment advice. Figment undertakes no obligation to update the information herein.
