Can the Nakamoto Upgrade and sBTC Empower Stacks to Further Lead the Bitcoin Ecosystem?

By: blockbeats|2024/12/03 14:00:01

Bitcoin breaking $100,000 seems to be just around the corner, and the community is eagerly anticipating the development of the Bitcoin ecosystem.

Although the performance of related ecosystem tokens has not been dazzling, U.S. compliant trading platforms such as Coinbase and Kraken have recently issued cbBTC and KBTC respectively. Industry giants' exploration of the Bitcoin ecosystem has never stopped. Whether compared to other chains or its own nearly $2 trillion market capitalization, the Bitcoin ecosystem still has a long way to go but also holds tremendous development opportunities.

Can the Nakamoto Upgrade and sBTC Empower Stacks to Further Lead the Bitcoin Ecosystem?

Percentage of total TVL each chain holds, with the Bitcoin ecosystem accounting for only 3.4%

From a secondary market perspective, hot money in the market has always had the need for race rotation and switching from highs to lows. In the Bitcoin ecosystem, Stacks, as a leader in this field, has become the best representative of exploration in the Bitcoin ecosystem. Stacks has continuously built technology and ecosystem from scratch, which is particularly solid and impressive in the current market environment.

Recently, the Ripple and SEC case has come to a temporary conclusion, coupled with the resignation of the SEC chairman triggering a super bull market for XRP. Like Ripple, Stacks is also a compliant representative in the crypto industry. In July 2024, the U.S. Securities and Exchange Commission (SEC) terminated its investigation into Stacks and Hiro. Moreover, Stacks is the first token issuance project ever approved by the SEC.

Stacks' Technological Iteration Journey

The Smart Contract Dream on Bitcoin: From Blockstack to Stacks

Stacks' history can be traced back to Blockstack, founded by Muneeb Ali and Ryan Shea from Princeton in 2013. Blockstack, as the initial v1 version, aimed to create a decentralized Internet ecosystem, replacing traditional cloud computing with a distributed computing network. At that time, Blockstack had a large number of DApps.

By 2021, Blockstack's v2 version, now known as the Stacks mainnet, was officially launched. At this point, the team's goal underwent a significant transformation—from serving a decentralized Internet to empowering Bitcoin. Through the Stacks protocol, developers can build applications with smart contract functionality on the Bitcoin network without altering Bitcoin itself. Throughout this process, Stacks inevitably faced criticism from Bitcoin "maximalists," but Muneeb consistently and tirelessly conveyed the vision of Stacks to the community.

PoX and Clarity: Deeply Integrating Bitcoin with Stacks

The reason Stacks can securely integrate with Bitcoin is thanks to its innovative Proof of Transfer (PoX) consensus mechanism. At the core of the PoX mechanism is the idea of allowing miners to participate in Stacks block mining by transferring Bitcoin, rather than relying on competitive hash power expenditure. This way, Stacks not only inherits the security of the Bitcoin network but also makes Bitcoin holders direct participants in the ecosystem.

Compared to traditional Proof of Stake (PoS), the design philosophy of PoX is more in line with the decentralization spirit of Bitcoin. In a unique way, it transfers the value of Bitcoin to the Stacks ecosystem, creating a close economic bond between the two. For miners, the PoX mechanism provides a new way to capture value, and for developers, this deep integration also gives them greater confidence when implementing smart contracts on the Bitcoin network.

Alongside the launch of the Stacks mainnet came Clarity, a smart contract language designed specifically for Bitcoin. Clarity is a non-Turing complete language, meaning it focuses on implementing verifiable functions while avoiding the uncertainty of complex computations. When using Clarity, developers can preview the outcome of smart contracts in advance, greatly reducing the risk of unexpected behavior. Additionally, Clarity runs directly on the chain, avoiding vulnerabilities that traditional smart contract compilers may introduce. This language designed for Bitcoin lays the foundation for DeFi, NFTs, and other complex applications.

Nakamoto Upgrade: Faster, More Stable, More Secure

Just as there is no perfect code, Stacks also has room for improvement on its journey to expand Bitcoin.

The original design of Stacks tied block production to Bitcoin blocks, causing slow block production to result in high latency, where even microblocks could not completely solve the problem. Furthermore, the security of the Stacks network was not entirely tied to Bitcoin, as the cost of reorganizing the last N blocks of the Stacks blockchain was the cost of generating the next N + 1 Stacks blocks. This cost was lower compared to a 51% attack on Bitcoin.

Given this, in 2024, Stacks introduced the "Nakamoto Upgrade" and officially completed the upgrade on October 29th. The significance of this upgrade goes beyond technical optimization; it is a crucial step towards the prosperity of the Bitcoin ecosystem.

In the just-concluded month of November, the on-chain transaction volume of Stacks hit a recent high

Rapid Block Confirmation: Optimizing User Experience

The Nakamoto Upgrade introduces a rapid block confirmation mechanism, allowing users to achieve near real-time transaction confirmation on Stacks. Microblocks and Bitcoin anchor blocks will be eliminated, replaced by continuously produced Stacks blocks, enabling miners to produce multiple blocks during a Bitcoin block, significantly improving transaction speed.

The time required for a user-submitted transaction to be confirmed in a block is now reduced from 10 to 40 minutes to approximately 5 seconds, not only improving network efficiency but also opening the door to high-frequency trading and instant payment scenarios.

Bi-Directional Verification: Enhancing Security

Post-upgrade, Stacks has implemented a bi-directional verification mechanism, requiring miners to be active on both the Bitcoin and Stacks networks simultaneously. This design enhances network security while ensuring the collaborative relationship between the two chains. For attackers to manipulate Stacks data, they must control the consensus of the Bitcoin network concurrently, significantly raising the cost. This upgrade also addresses the MEV problem by modifying the cryptographic selection algorithm, ensuring Bitcoin miners cannot unfairly gain block rewards due to their advantage. It increases the cost for Bitcoin miners to participate in Stacks mining, requiring them to invest resources comparable to other miners.

sBTC and the Stacks Ecosystem: Unlocking Bitcoin's Potential

Following the Nakamoto Upgrade, sBTC, which is included in the 2023 release roadmap, is set to launch as planned. According to the latest updates, the sBTC testnet phase has been successfully completed, and the mainnet launch will follow a three-stage roadmap:

Phase 1 (expected launch on December 16, 2024): Introducing the feature for users to deposit BTC and mint sBTC, with early depositors eligible for participation in the sBTC reward program.

Phase 2 (expected launch 6-8 weeks after Phase 1, between February 1-15, 2025): Unlocking sBTC withdrawal functionality, allowing users to convert sBTC back to BTC.

Phase Three (Specific Time TBD): Open Signer Pool, gradually forming a fully decentralized, open, permissionless signer network.

sBTC Design and Operation Principles

The core of sBTC lies in its decentralized design, avoiding the trust risks of traditional centralized custody solutions. Through a Dynamic Signer Group, sBTC ensures the security and transparency of the exchange process between Bitcoin and sBTC. Users lock BTC on the Bitcoin network and can mint an equal amount of sBTC on the Stacks chain. When redemption is needed, users burn sBTC to release the corresponding amount of BTC. This process is entirely managed by smart contracts, ensuring the transparency and security of operations. sBTC has an Elite Signer Network, including industry leaders such as Blockdaemon, Kiln, Luganodes, Copper, Figment, and more.

sBTC Advantages and Innovations

sBTC's design incorporates multiple innovations, demonstrating significant advantages. Firstly, it employs a Dynamic Signer Group for management, completely avoiding the risks associated with traditional centralized custody solutions, aligning closely with Bitcoin's decentralized principles. Secondly, sBTC grants programmability to Bitcoin, enabling seamless interaction with smart contracts on Stacks. Additionally, all sBTC operations are carried out through Clarity smart contracts, ensuring users can transparently understand every process and state. This transparency not only reduces trust costs but also further enhances the security of operations, providing users with greater assurance.

sBTC's Impact on the Stacks Ecosystem

Recently, wBTC has faced community criticism, with BA Labs proposing in August to lower wBTC's liquidation threshold to 0% on Sky (formerly MakerDAO). However, after discussions with BitGo, the decision was made to indefinitely suspend this separation plan. Coinbase recently decided to delist wBTC. Perhaps influenced by the events mentioned above, wBTC's TVL has also dropped from 152,000 BTC in August to the current 136,000 BTC.

As mentioned earlier, sBTC's early stages include incentive plans. Perhaps sBTC can rely on internal and external efforts to not only fill the existing BTC market gap on-chain but also attract more native bitcoins to participate in the L2 and DeFi space, injecting strong vitality into the Stacks ecosystem. sBTC enables Bitcoin programmability, allowing it to engage in various DeFi applications, including decentralized lending, yield farming, and synthetic asset trading, greatly enriching the diversity of the Stacks ecosystem. Furthermore, sBTC provides developers with a fresh opportunity to build complex applications on the Bitcoin network, stimulating the emergence of more innovative ideas and further driving the rapid development of the Stacks ecosystem. Through sBTC, Bitcoin has successfully transformed from a single-value storage tool into a programmable asset.

Stacks Ecosystem New Developments

The world's leading Bitcoin ATM operator, Coinflip, has announced its integration with Stacks, planning to support sBTC to enhance Bitcoin's programmability and accessibility. sBTC will also land on Aptos Network and Solana to further strengthen Bitcoin's role in the evolving cross-chain DeFi ecosystem. Through Stacks' Best & Brightest event, Immunefi has announced a collaboration with Asymmetric Research and Bitcoin L2 Labs aimed at enhancing the security of sBTC through the upcoming "Attackathon" hackathon event, promoting seamless transfer of Bitcoin between the main chain and Stacks.

The Bitcoin accelerator Bitcoin Frontier Fund (BFF) has announced plans to invest in teams building projects utilizing sBTC. The Stacks on-chain lending protocol Zest also announced this year the completion of investments from participants such as Tim Draper, Binance Labs, Bitcoin Frontier Fund, and Flow Traders.

By 2024, the TVL of the Stacks ecosystem has also seen significant growth, mainly supported by the liquidity staking protocol StackingDAO, the DEX ALEX, and the lending platform Zest. In addition to the aforementioned prominent projects, the Stacks ecosystem also includes the overcollateralized stablecoin protocol Arkadiko, the domain platform .locker, the tool Console serving DAOs, the NFT platform Gamma, the Bitcoin-supporting payment system GoSats, and Skullcoin introducing On Chain Game to Stacks. Not only existing projects, but also in a recent Harvard hackathon hosted by EasyA in collaboration with Stacks, the number of Bitcoin-related projects reached a record high.

With the gradual rollout of sBTC, the Stacks ecosystem will see more innovation and development. In the future, Stacks plans to further optimize network performance, reduce transaction costs, increase throughput, attract more developers and users, and build a comprehensive Bitcoin smart contract ecosystem. Through collaborations with other blockchain networks, Stacks and sBTC are poised to be widely adopted globally, driving the prosperity of the Bitcoin ecosystem.

Editor's Note: Citrini7's cyberpunk-themed AI doomsday prophecy has sparked widespread discussion across the internet. However, this article presents a more pragmatic counter perspective. If Citrini envisions a digital tsunami instantly engulfing civilization, this author sees the resilient resistance of the human bureaucratic system, the profoundly flawed existing software ecosystem, and the long-overlooked cornerstone of heavy industry. This is a frontal clash between Silicon Valley fantasy and the iron law of reality, reminding us that the singularity may come, but it will never happen overnight.

The following is the original content:

Renowned market commentator Citrini7 recently published a captivating and widely circulated AI doomsday novel. While he acknowledges that the probability of some scenes occurring is extremely low, as someone who has witnessed multiple economic collapse prophecies, I want to challenge his views and present a more deterministic and optimistic future.

Never Underestimate "Institutional Inertia"

In 2007, people thought that against the backdrop of "peak oil," the United States' geopolitical status had come to an end; in 2008, they believed the dollar system was on the brink of collapse; in 2014, everyone thought AMD and NVIDIA were done for. Then ChatGPT emerged, and people thought Google was toast... Yet every time, existing institutions with deep-rooted inertia have proven to be far more resilient than onlookers imagined.

When Citrini talks about the fear of institutional turnover and rapid workforce displacement, he writes, "Even in fields we think rely on interpersonal relationships, cracks are showing. Take the real estate industry, where buyers have tolerated 5%-6% commissions for decades due to the information asymmetry between brokers and consumers..."

Seeing this, I couldn't help but chuckle. People have been proclaiming the "death of real estate agents" for 20 years now! This hardly requires any superintelligence; with Zillow, Redfin, or Opendoor, it's enough. But this example precisely proves the opposite of Citrini's view: although this workforce has long been deemed obsolete in the eyes of most, due to market inertia and regulatory capture, real estate agents' vitality is more tenacious than anyone's expectations a decade ago.

A few months ago, I just bought a house. The transaction process mandated that we hire a real estate agent, with lofty justifications. My buyer's agent made about $50,000 in this transaction, while his actual work — filling out forms and coordinating between multiple parties — amounted to no more than 10 hours, something I could have easily handled myself. The market will eventually move towards efficiency, providing fair pricing for labor, but this will be a long process.

I deeply understand the ways of inertia and change management: I once founded and sold a company whose core business was driving insurance brokerages from "manual service" to "software-driven." The iron rule I learned is: human societies in the real world are extremely complex, and things always take longer than you imagine — even when you account for this rule. This doesn't mean that the world won't undergo drastic changes, but rather that change will be more gradual, allowing us time to respond and adapt.

The Software Industry Has "Infinite Demand" for Labor

Recently, the software sector has seen a downturn as investors worry about the lack of moats in the backend systems of companies like Monday, Salesforce, Asana, making them easily replicable. Citrini and others believe that AI programming heralds the end of SaaS companies: one, products become homogenized, with zero profits, and two, jobs disappear.

But everyone overlooks one thing: the current state of these software products is simply terrible.

I'm qualified to say this because I've spent hundreds of thousands of dollars on Salesforce and Monday. Indeed, AI can enable competitors to replicate these products, but more importantly, AI can enable competitors to build better products. Stock price declines are not surprising: an industry relying on long-term lock-ins, lacking competitiveness, and filled with low-quality legacy incumbents is finally facing competition again.

From a broader perspective, almost all existing software is garbage, which is an undeniable fact. Every tool I've paid for is riddled with bugs; some software is so bad that I can't even pay for it (I've been unable to use Citibank's online transfer for the past three years); most web apps can't even get mobile and desktop responsiveness right; not a single product can fully deliver what you want. Silicon Valley darlings like Stripe and Linear only garner massive followings because they are not as disgustingly unusable as their competitors. If you ask a seasoned engineer, "Show me a truly perfect piece of software," all you'll get is prolonged silence and blank stares.

Here lies a profound truth: even as we approach a "software singularity," the human demand for software labor is nearly infinite. It's well known that the final few percentage points of perfection often require the most work. By this standard, almost every software product has at least a 100x improvement in complexity and features before reaching demand saturation.

I believe that most commentators who claim that the software industry is on the brink of extinction lack an intuitive understanding of software development. The software industry has been around for 50 years, and despite tremendous progress, it is always in a state of "not enough." As a programmer in 2020, my productivity matches that of hundreds of people in 1970, which is incredibly impressive leverage. However, there is still significant room for improvement. People underestimate the "Jevons Paradox": Efficiency improvements often lead to explosive growth in overall demand.

This does not mean that software engineering is an invincible job, but the industry's ability to absorb labor and its inertia far exceed imagination. The saturation process will be very slow, giving us enough time to adapt.

Redemption of "Reindustrialization"

Of course, labor reallocation is inevitable, such as in the driving sector. As Citrini pointed out, many white-collar jobs will experience disruptions. For positions like real estate brokers that have long lost tangible value and rely solely on momentum for income, AI may be the final straw.

But our lifesaver lies in the fact that the United States has almost infinite potential and demand for reindustrialization. You may have heard of "reshoring," but it goes far beyond that. We have essentially lost the ability to manufacture the core building blocks of modern life: batteries, motors, small-scale semiconductors—the entire electricity supply chain is almost entirely dependent on overseas sources. What if there is a military conflict? What's even worse, did you know that China produces 90% of the world's synthetic ammonia? Once the supply is cut off, we can't even produce fertilizer and will face famine.

As long as you look to the physical world, you will find endless job opportunities that will benefit the country, create employment, and build essential infrastructure, all of which can receive bipartisan political support.

We have seen the economic and political winds shifting in this direction—discussions on reshoring, deep tech, and "American vitality." My prediction is that when AI impacts the white-collar sector, the path of least political resistance will be to fund large-scale reindustrialization, absorbing labor through a "giant employment project." Fortunately, the physical world does not have a "singularity"; it is constrained by friction.

We will rebuild bridges and roads. People will find that seeing tangible labor results is more fulfilling than spinning in the digital abstract world. The Salesforce senior product manager who lost a $180,000 salary may find a new job at the "California Seawater Desalination Plant" to end the 25-year drought. These facilities not only need to be built but also pursued with excellence and require long-term maintenance. As long as we are willing, the "Jevons Paradox" also applies to the physical world.

Towards Abundance

The goal of large-scale industrial engineering is abundance. The United States will once again achieve self-sufficiency, enabling large-scale, low-cost production. Moving beyond material scarcity is crucial: in the long run, if we do indeed lose a significant portion of white-collar jobs to AI, we must be able to maintain a high quality of life for the public. And as AI drives profit margins to zero, consumer goods will become extremely affordable, automatically fulfilling this objective.

My view is that different sectors of the economy will "take off" at different speeds, and the transformation in almost all areas will be slower than Citrini anticipates. To be clear, I am extremely bullish on AI and foresee a day when my own labor will be obsolete. But this will take time, and time gives us the opportunity to devise sound strategies.

At this point, preventing the kind of market collapse Citrini imagines is actually not difficult. The U.S. government's performance during the pandemic has demonstrated its proactive and decisive crisis response. If necessary, massive stimulus policies will quickly intervene. Although I am somewhat displeased by its inefficiency, that is not the focus. The focus is on safeguarding material prosperity in people's lives—a universal well-being that gives legitimacy to a nation and upholds the social contract, rather than stubbornly adhering to past accounting metrics or economic dogma.

If we can maintain sharpness and responsiveness in this slow but sure technological transformation, we will eventually emerge unscathed.

Source: Original Post Link

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