​Stacks blockchain project developers intend to implement smart contracts in Bitcoin

What’s new? Stacks blockchain project team has published a white paper showing how a new digital asset called Stacks bitcoin (sBTC) can be used to make bitcoin fully programmable. Unlike Ethereum or Solana networks, Bitcoin’s simpler scripting language limits what developers can do. Stacks wants to overcome these limitations by introducing a new digital asset pegged to BTC at a 1:1 ratio, which can be used to create smart contracts on the platform and can also be easily converted back to BTC.

Stacks’ plan

What else does the document say? The Bitcoin network is relatively slow by nature and does not provide the smart contracts needed to create complex applications, the document says. Therefore, faster, more complex applications must be created outside of the base layer.

The term “layers” is Stacks’ designation for any system outside the Bitcoin base layer, such as a sidechain, which is a secondary blockchain that interacts with the main one. In the whitepaper, Stacks acts as a bitcoin sidechain that operates on both sBTC and the project’s native tokens, STX.

The whitepaper claims that the bitcoin sidechain could unlock “hundreds of billions of dollars” in the decentralized finance (DeFi) sector on BTC. According to Stacks co-founder Muneeb Ali, the concept will be framed under Stacks Improvement Proposal (SIP) 21. “The vote went through and implementation has started,” Ali told CoinDesk. The release will take place in eight to nine months, he said.

Principle of sBTC. The current Stacks protocol uses a consensus mechanism called Proof-Of-Transfer, where anyone can mine or stake.

Miners are rewarded in STX for mining Stacks blocks. First, they must post bitcoin to receive mining privileges. This BTC is subsequently distributed as a reward to stackers who maintain a copy of the Stacks ledger. They must also lock STX for a certain period of time in order to receive the privileges.

In the proposed sBTC peg system, users send regular bitcoin to a wallet controlled by the stacking participants. This action releases an equivalent amount of sBTC that can be used in smart contracts on Stacks. To get their bitcoins back, users return the sBTC to the wallet. Stackers then sign off on these requests and return the equivalent amount of bitcoin to the users. This also prompts the Stacks protocol to burn the corresponding sBTC.

On December 20, Waves blockchain network founder Alexander Ivanov announced the launch of a new stablecoin after solving the problem with the depegging of Neutrino USD (USDN) from the dollar. He promised that the new asset will be more stable and will not lose parity to fiat currency.