Bitcoin is widely recognized as the most secure and resilient blockchain, but its base layer was intentionally designed to remain simple. That simplicity limits programmability, making it difficult to build complex applications directly on Bitcoin. Stacks (STX) exists to bridge that gap by extending Bitcoin with smart contracts and decentralized applications, while still relying on Bitcoin as the ultimate settlement and security layer.
Rather than competing with Bitcoin, Stacks is built around it. The network introduces programmability, DeFi, and digital assets in a way that remains verifiable on Bitcoin itself.
What Is Stacks?
Stacks is a Layer 2 blockchain that adds smart contract functionality to Bitcoin. It allows developers to build decentralized applications that can interact with Bitcoin’s state, while anchoring all Stacks activity to the Bitcoin blockchain.
The network achieves this through a unique consensus mechanism called Proof of Transfer and a native smart contract language called Clarity. Together with sBTC, a Bitcoin-backed asset on Stacks, the protocol enables Bitcoin to be used in DeFi, NFTs, and on-chain identity systems without changing Bitcoin’s core design.
How Stacks Connects to Bitcoin
Stacks does not replace Bitcoin’s Proof of Work or attempt to modify its base layer. Instead, it leverages Bitcoin as a final settlement layer by anchoring every Stacks block to a corresponding Bitcoin transaction. This means the history of the Stacks blockchain is cryptographically tied to Bitcoin itself.
Rewriting or censoring activity on Stacks would require reorganizing Bitcoin blocks, which allows Stacks to inherit Bitcoin’s security while operating as a programmable execution layer above it.
Proof of Transfer (PoX)
Proof of Transfer is the mechanism that secures the Stacks network. Instead of miners expending energy to compete, they commit Bitcoin to participate in block production. Miners transfer BTC to Stackers, who lock STX tokens to support consensus.
The more Bitcoin a miner commits, the higher the chance they have of producing the next Stacks block. In return, miners earn newly minted STX and transaction fees. Stackers, who help secure the network by locking STX, receive rewards paid in Bitcoin.
Because every Stacks block is recorded on Bitcoin, PoX allows Stacks to operate without introducing new energy-intensive mining while remaining tightly coupled to Bitcoin’s security model.
sBTC: Using Bitcoin in DeFi
sBTC is a 1:1 Bitcoin-backed asset that lives on the Stacks network. It enables BTC to be used directly in smart contracts, decentralized exchanges, lending protocols, and other on-chain applications.
To mint sBTC, users deposit BTC into a peg address on the Bitcoin blockchain. A decentralized set of signers verifies the deposit and mints an equal amount of sBTC on Stacks. When users want to exit, sBTC is burned on Stacks and the corresponding BTC is released back on Bitcoin.
This open two-way peg is designed to reduce counterparty risk by distributing control across multiple signers and on-chain logic, rather than relying on a single custodian.
Clarity Smart Contracts
Clarity is the smart contract language used by Stacks. Unlike many blockchain languages, Clarity is interpreted rather than compiled. This means contracts execute exactly as written and can be fully inspected before deployment.
Clarity was built to prioritize predictability and security. Developers and users can see how a contract will behave under all conditions, reducing the risk of hidden bugs or unintended logic. Because Stacks blocks are anchored to Bitcoin, Clarity contracts can also read Bitcoin state, such as verifying whether a specific Bitcoin transaction has occurred before executing a function.
This capability enables applications that respond directly to Bitcoin activity while running on the Stacks network.
Dual Stacking and Bitcoin Rewards
Stacks introduces a feature known as Dual stacking, which allows participants to earn rewards tied to Bitcoin. Users can lock BTC to mint sBTC and enroll it in stacking programs that distribute rewards in sBTC. By also locking STX, participants can increase their share of the rewards.
While assets are stacked, they remain usable across Stacks applications, meaning users can earn yield while still participating in DeFi. Rewards are distributed at the end of each cycle based on contribution and lock duration.
What Can Be Built on Stacks?
Stacks enables a growing range of Bitcoin-native applications. In decentralized finance, developers can build lending, trading, and yield protocols that use Bitcoin as collateral. NFTs can be created and managed using Clarity smart contracts, with ownership and activity anchored to Bitcoin.
The network also supports decentralized identity through systems like the Blockchain Naming System, which allows users to register human-readable names and link them to wallets, data, or applications without centralized control.
The Role of STX
STX is the native token of the Stacks ecosystem. It is used to pay transaction fees, incentivize miners, reward signers who secure cross-chain operations, and participate in stacking.
By locking STX, holders contribute to network consensus and earn Bitcoin rewards. This creates a direct economic link between Bitcoin and Stacks, aligning incentives across both networks.
Final Thoughts
Stacks expands what is possible with Bitcoin without altering its core principles. By anchoring smart contracts and decentralized applications to Bitcoin, it brings programmability, DeFi, and digital assets into the Bitcoin ecosystem while preserving its security and simplicity.
With features such as Proof of Transfer, Clarity, sBTC, and stacking rewards paid in Bitcoin, Stacks positions itself as a bridge between Bitcoin’s stability and the flexibility of modern blockchain applications.
