Triaconta Weekly #261

The following topics will be addressed in this weekly:

  • Bundle performance
  • Winners & Losers
  • What is Stacks ?

Bundle performance
Inflation in the US is down a little again. At 4%, it is still double the target rate. As expected by 90+% of investors, the Fed is not going to raise interest rates this time and the Bitcoin price initially hovered around $26,000 on that. Then came the explanation that there was no reversal (to falling interest rates) but only a pause on possibly two more hikes this year. The European Central Bank (ECB) also raised interest rates to their highest level since 2001. This led to a big drop in prices in the crypto market.

Confidence in crypto itself is undiminished but the turmoil caused by SEC enforcement actions is leading to falling prices and a decline of crypto on exchanges. Bitcoin holdings on exchanges dropped to their lowest point in five years. Meanwhile, BlackRock, the world’s largest asset manager, has filed a registration statement with the US Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) on Bitcoin, noting Coinbase, sued by the same SEC, as custodian and price provider.

Big3:
1 Month: -2.14% | 7D: -8.59% | 24H: +1.27%

Top30:
1 Month: -20.51% | 7D: -15.22% | 24H: +1.22%

Penny:
1 Month: -24.13% | 7D: -17.21% | 24H: +0.55%

DeFi:
1 Month: -22.94% | 7D: -17.27% | 24H: +3.94%

Winners & Losers
A surprising plus for Maker(+4%) in a very bad week for crypto investors in which Bitcoin (-4%) even briefly fell below $25,000. Historically low prices meanwhile for EOS (-31%) and Top30 tokens ApeCoin (-29%), Flow (-28%) and Polygon (-26%).

What is Stacks ?

Stacks finally enables smart contracts and decentralised applications on the Bitcoin blockchain. There are apps for financial services, decentralised CVs used by decentralised employment agencies and all kinds of web3 projects for communities and social media. Stacks has been part of the DeFi bundle since its last revision.

Who is Stacks ?
Stacks originally started in 2013 as a project of the Princeton Department of Computer Science to build a better internet with users as owners. Eventually, they turned to blockchain technology to do so. Meanwhile, Stacks is being developed by Hiro Systems PBC (formerly Blockstack) with a global team consisting of people from MIT, Princeton and Stanford under the supervision of the Stacks Open Internet foundation.

Is Stacks a security ?
Blockstack was the first company, which got permission from the SEC to do an IPO with a security token and raise $23 million. However, since Stacks 2.0 in November 2021, Hiro Systems no longer calls the STX token a security, but a decentralised utility token.

Why Stacks ?
Bitcoin DeFi is potentially the largest market given Bitcoin’s nearly $1 trillion market capitalisation. However, despite the increasing ownership of Bitcoin by companies and institutions, the Bitcoin blockchain has not been as attractive to DeFi as, say, Ethereum. Through separate blockchains, packaged BTC does get limited use in DeFi as a temporary solution. You then give your Bitcoin under management to another blockchain and it gives you back a special token which you can only use there – and thus only with permission from that blockchain. Not free, not open, so not really following the Bitcoin philosophy.

Stacks changes this. Stacks is uniquely positioned to enable real Bitcoin DeFi. Stacks applications do work with real Bitcoins and thus use Bitcoin’s security and settlement safeguards. The Stacks chain is not a layer 2 blockchain on Bitcoin but has tied its own network to the Bitcoin network via the Proof of Transfer (PoX) consensus mechanism. It simply means that all Stacks transactions are recorded on the Bitcoin blockchain. This is done without changing anything on the Bitcoin blockchain but does mean that to change the history of Stacks, the Bitcoin blockchain would have to be changed. Stacks thus offers the unparalleled security of Bitcoin combined with all kinds of new applications.

How does Stacks work ?
Stacks programming language Clarity can read the Bitcoin blockchain and react to any change in it. This allows applications on Stacks to work directly with the actual Bitcoin blockchain as they should: decentralised and open to all. Stacks also introduces microblocks that are confirmed within seconds, enabling fast and cheap Bitcoin transactions. Every time a new Bitcoin block is created, all Stacks microblocks are also settled on Bitcoin.

Future of Stacks ?
In terms of price, it is very easy that as Bitcoin goes…. Stacks goes with it. The extent to which this happens depends mainly on the volume on Stacks. On 24 May 2023, STX only reached the milestone of $10 billion in total trading volume and is thus really just getting started. DeFi does about $2.7 billion trading per day and so the wait is on killer apps on Stacks with millions of users like a UniSwap. Those who need to provide that are the developers, and let Stacks be one of the biggest and fastest-growing Web3 projects on Bitcoin. We are still at the beginning of what can and will be built on Bitcoin, and with every new project launched, the value of Bitcoin grows… and of Stacks.

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