Stacks (STX) is a layer built on top of the Bitcoin blockchain, designed to expand the functionality of Bitcoin by enabling smart contracts and decentralized applications (dApps). It aims to make Bitcoin more than just a passive asset by unlocking its potential for use in sophisticated applications. Stacks uses a consensus mechanism known as Proof of Transfer (PoX), which allows it to connect with the Bitcoin blockchain, thereby benefiting from Bitcoin's robust security. The Stacks layer is designed to be scalable, enabling transactions that settle on Bitcoin. It uses the Clarity programming language, which is designed for safety and predictability, allowing developers to know with certainty what a contract will do before it executes.

Stacks operates by using the Bitcoin blockchain as its base layer. It introduces its own consensus model, known as Proof of Transfer (PoX), which allows users to transfer the base currency (BTC) to mine STX. This mining mechanism effectively bootstraps the security of the Stacks blockchain using BTC. All transactions on the Stacks layer are automatically hashed and settled on the Bitcoin blockchain, providing an additional layer of security. Stacks also uses the Clarity programming language for smart contracts, which is designed for safety and predictability. This allows developers to know with certainty what a contract will do before it executes.

Stacks aims to unlock the potential of Bitcoin for use in a variety of applications. It enables the creation of smart contracts and decentralized applications (dApps) that can use Bitcoin as an asset and settle transactions on the Bitcoin blockchain. Potential use cases include decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and more. For instance, developers can build applications that require fully-expressive smart contracts, high performance, or greater privacy. Stacks also enables atomic BTC swaps and assets owned by BTC addresses, further expanding the potential use cases for Bitcoin.

The Stacks project was initiated in 2017 by Muneeb Ali, who had just completed his PhD. His thesis laid the groundwork for the Stacks layer for Bitcoin. The original whitepaper was released the same year, and the project gathered substantial support. Prior to this, the early team had been building protocols and apps on Bitcoin before they began working on Stacks. In 2019, Stacks conducted the first-ever SEC qualified token offering for the general public, including the US. From 2018 to 2020, the team focused on building out the Stacks infrastructure, which is a programming layer for Bitcoin. The Stacks cryptocurrency has a predefined supply that is set to reach approximately 1,818 million STX.

Clarity is a smart contract language designed for the Stacks blockchain, which aims to optimize predictability and security. Unlike other smart contract languages, Clarity is decidable, meaning you can know with certainty from the code itself what the program will do. This feature strives to eliminate common pitfalls and vulnerabilities in smart contract engineering. Clarity is interpreted, not compiled, which means the code is committed to the blockchain exactly as written, aiming to maintain transparency and reduce the risk of compiler-induced vulnerabilities. Clarity disallows reentrancy, guards against overflow and underflows, and supports custom tokens. It permits post conditions to be attached to transactions to assert the chain state has changed in a certain way once the transaction has completed. Clarity's design strives to provide a transparent environment for developers to build robust smart contracts on the Stacks blockchain.

Stacks uses the Bitcoin base-layer blockchain as a consistent storage and broadcast medium, recording all Stacks transactions on Bitcoin. This is achieved through a unique consensus mechanism called Proof-of-Transfer (PoX). In PoX, Stacks miners bid Bitcoin to propose new blocks, and the Bitcoin is then transferred to a set of participants that participate in the operation of the new chain, known as Stacks stakers. This process anchors the Stacks blockchain to the Bitcoin blockchain, ensuring that every Stacks block is unambiguously recorded within a block on the Bitcoin blockchain. This way, Stacks' entire transaction and state history is unequivocally represented on the Bitcoin base layer, with the intention of improving its security.

STX has a role in enabling smart contracts and facilitating transactions within the network. It is used to pay for transaction fees and deploying smart contracts. STX holders may engage in the network's consensus mechanism, a process termed "stacking". This involves the temporary allocation of their STX tokens to support network security. As a result, they may receive non-monetary rewards. This approach seeks to offer improvements within the Bitcoin blockchain and aims to provide users with non-financial incentives, contributing to the Stacks ecosystem's aspirations for growth and security.

Yes, developers have the ability to construct decentralized applications (DApps) on the Stacks blockchain. Stacks employs a consensus mechanism known as Proof of Transfer (PoX), which connects the Stacks blockchain with Bitcoin's blockchain, providing developers the opportunity to create DApps that interact with Bitcoin's network. Developers have the option to utilize the Clarity programming language, a decidable language developed by Stacks, for writing smart contracts for their DApps. Stacks also provides a variety of developer tools and resources, including a knowledge base, learning resources, and a developer newsletter, to assist developers in building DApps on its platform.

Stacks seeks to offer a new perspective on the concept of digital identity by leveraging blockchain technology to create a decentralized identity system. This system is designed to give users more control over their personal data and reduce reliance on centralized databases. In the Stacks identity system, a user's digital identity is more than just a profile; it's a set of attributes that uniquely identify a user online. This identity is secured by the Stacks blockchain, with the intention of making it immutable and verifiable. The system uses a unique identifier known as a Decentralized Identifier (DID), which includes public key information, verification information, and service endpoints. This DID is stored in an identity wallet, which the user can use to grant or revoke access to their identification information. This approach to identity management seeks to enhance user privacy, reduce vulnerability to data misuse, and provide a method of authentication.

Stacks has established several partnerships and collaborations within the blockchain industry. One collaboration is with ALEX, a project that aspires to build a DeFi hub for the Stacks ecosystem. ALEX strives to deliver a range of DeFi products, including borrowing and lending Bitcoin, an advanced decentralized exchange, derivative products for shorting and leverage, yield farming, and a launchpad. Another collaboration is with CityCoins, a project that facilitates cities in token creation. CityCoins and ALEX have collaborated to introduce DeFi applications to regional cryptocurrencies. Stacks has also partnered with Arkadiko, a protocol that allows Stacks users to utilize their assets as collateral to mint the project’s stablecoin USDA. Other collaborations include Sigle, a blogging platform running on top of Stacks, Stackswap, a decentralized exchange that launched on Stacks, and Zion, a new network built directly on the Lightning Network and hence on Bitcoin. These partnerships and collaborations are part of Stacks' efforts to foster a diverse and robust ecosystem on its platform.

Yes, users can participate in Stacks governance. The Stacks ecosystem has a formal process for making blockchain-level decisions known as the Stacks Improvement Proposal or "SIP" process. This process is both rigorous and accessible. It involves several stages of editing and review of proposals, but also allows any community member to participate in blockchain decisions by either attending weekly SIP calls, which are typically open to the public, or engaging in SIP discussions on Github. The Stacks ecosystem extends beyond its blockchain. It is a broad community of builders who are regularly involved in decision-making about how to refine Stacks. Working groups, for instance, do not follow a standard decision-making process, and yet they often make decisions that may influence the ecosystem. The Stacks Foundation aims to refine these informal processes to enhance Stacks governance.