![]() In a sense, Stacks’ consensus mechanism is mimicking Bitcoin’s Proof-of-Work mechanism. However, the probability of being chosen increases with the amount of bitcoin a miner transfers to the list of Bitcoin addresses. Whichever miners get to produce a block is ultimately decided by sortition. ![]() Only by transferring Bitcoin to a predetermined randomized list of Bitcoin addresses can blocks be produced within the Stacks blockchain. So, in Stacks’ case, miners that want to mine Stacks’ native coin (STX) and participate in consensus need to send a Bitcoin transaction (containing Bitcoin units) to predefined Bitcoin addresses. With Proof-of-Transfer, this mechanism is slightly amended: The cryptocurrency used is not burned (i.e., destroyed) but distributed to a set of participants that help secure the new chain. It is their way of proving that they have incurred costs for proposing new blocks. With Proof-of-Burn, miners that participate in the consensus algorithm burn a cryptocurrency of an already established blockchain (by sending it to a burn address). Proof-of-Transfer is an adaptation of Proof-of-Burn (PoB), which was originally proposed as a consensus mechanism for the Stacks blockchain. Via this consensus mechanism, Stacks is tethered to Bitcoin by settling all Stacks transactions on Bitcoin. The key concept behind Stacks and its relation to Bitcoin is its unique consensus mechanism called Proof-of-Transfer (PoX). Various projects nowadays claim that they are building on top of Bitcoin and they all seem to be doing it differently. This way, Stacks’ entire transaction and state history is unequivocally represented on the Bitcoin base layer. This transaction records the hash of a respective Stacks block and makes sure that the Stacks block is unambiguously anchored within a block on the Bitcoin blockchain. In order to create any Stacks block, a Bitcoin transaction has to be initiated on the Bitcoin blockchain itself. In more technical terms one could say: Stacks’ entire state settles on Bitcoin. The connection to Bitcoin is established as follows: The Stacks blockchain uses the Bitcoin base-layer blockchain as a reliable storage and broadcast medium, meaning that everything that happens on Stacks (the transaction history compiled in Stacks blocks) is recorded on Bitcoin itself. Contrary to different Bitcoin sidechains, Stack’s coin (STX) is not pegged to on-chain BTC. The project has its own nodes, its own network, its own miners as well as its own coin. ![]() While this goal might be similar to that of Bitcoin sidechains, drivechains, or second-layer solutions, being a layer-1 blockchain itself, Stacks has a unique way of achieving this. In contrast to commonly known smart-contract blockchains like Ethereum, Cardano, Solana, or Avalanche, Stacks is associated with the Bitcoin ecosystem because it aims to enhance Bitcoin’s capabilities by building on top of it. Stacks is a layer-1 blockchain that allows for the execution of smart contracts.
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