An Explanation of Bitcoin L2 Stacks: Creating Smart Contracts on Bitcoin

Bitcoin L2 Stacks: Smart Contract Creation on Bitcoin

Stacks is an L2 solution for creating smart contracts and decentralized applications on Bitcoin. Cryptocurrency KOL Francesco introduces Stacks from perspectives such as its reasons for being built, features, and advantages.

The Bitcoin codebase is very limited. The operation of Bitcoin is fully in line with its expectations. The code is written to prioritize security, decentralization, and network settlement. Any additional features or characteristics introduced will undermine these functions. Stacks is an L2 built on top of Bitcoin to achieve scalability and new features: allowing everything that the limited Bitcoin codebase does not allow.

Stacks transactions will be secured by Bitcoin hash power and finality. sBTC: a decentralized non-custodial asset pegged 1:1 to Bitcoin, enables faster and cheaper execution of smart contracts as well as atomic swaps. Stacks provides faster and more scalable transactions. After the Nakamoto update, Stacks will be able to generate a block every 5 seconds between two Bitcoin blocks. Settlement will still occur through Bitcoin blocks and with faster confirmations.

Built on top of Bitcoin, Stacks can gain the following benefits: 1) Bitcoin finality and security: currently, it has a different security than Bitcoin, defined as “BTC capital spent by Stacks miners”. With an update, Stacks blocks will be protected by the Bitcoin blockchain (unlike merged mining) 2) Smart contracts triggered by Bitcoin transactions: Stacks nodes also run Bitcoin nodes as part of their consensus, so smart contracts can read Bitcoin states and be triggered by Bitcoin transactions. 3) Writing transactions on Bitcoin: atomic swaps allow dApps to deploy BTC directly from the Bitcoin chain, and users can exchange BTC and other assets on Stacks. 4) Settling in Bitcoin: all Stacks tx settle in Bitcoin. 5) Bitcoin liquidity: a large amount of liquidity is leveraged.


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