decrypt.co
After facing multiple delays, Bitcoin layer-2 network Stacks moved forward with the first part of its highly anticipated Nakamoto upgrade this week. The upgrade is expected to decouple block production from the Bitcoin blockchain, enabling faster and more efficient processing.
The Nakamoto upgrade, partly rolled out in April, introduced mock-signing transactions using Stacks' proof-of-transfer (POX) consensus, where miners burn BTC to earn STX rewards. Activation was delayed for eight weeks to focus on security and code audits, but the full upgrade finally started rolling out last Wednesday. Once fully implemented, Stacks is expected confirm transactions dramatically faster than before.
With so much at stake and many builders on hiatus because of the upgrade, Stacks co-founder Muneeb Ali spoke with Decrypt on the upgrade, the factors contributing to the delay, the future potential of sBTC, and more.
“We can see the finish line now,” Ali said. “And obviously, some of the developers have been waiting for a while, so they're very excited about it.”
Ali explained that while the software is now available, it’ll take a few weeks for everyone to upgrade their systems. Then there will be a handoff after two weeks.
“There's a great process, we will have two weeks to upgrade their software, and then one thing we really want to test is a handoff of the signers,” Ali said. “We will start these two-week cycles for these rewards, and we wanna see a handoff happen between cycle 92 and 93.”
Stacks Nakamoto binary comes out tomorrow!
Network operators will have one stacking cycle (cycle 92) to upgrade. After a successful signer handoff from cycle 92 to cycle 93, core devs will pick a block number for rules to go live!
Bitcoin L2 getting a massive upgrade 🟧
— muneeb.btc (@muneeb) August 27, 2024
The Nakamoto upgrade, which began its activation phase on Wednesday, will separate Stacks' block production from the Bitcoin blockchain, resulting in a 120-fold increase in block production speed. As a result, confirmation times will shrink from Bitcoin’s typical 10-minute interval to just seconds.
“The best way that I would describe it is that the final software is now available, [and] the launch process is kicking off,” Ali said. “Everyone's upgrading now for the next two to three weeks, and then things will go live.”
It’s been a busy two months for the Stacks Foundation. In July, the SEC closed an investigation into Stacks and original developer Hiro Systems that had been ongoing since 2021. The investigation was initiated despite claims from Stacks network contributors that their token sale had been "SEC-qualified."
𝗡𝗘𝗪𝗦: SEC drops a three-year investigation into Stacks with no action.
Earlier this week, we received word from the SEC that after 3 years, they are terminating their investigation into the @Stacks blockchain (the protocol) and Hiro System (a company) with no action.
Stacks…
— muneeb.btc (@muneeb) July 12, 2024
Regarding the SEC's scrutiny, Ali said that the SEC had closely examined Stacks, asking numerous questions throughout the process, despite them not violating any regulations. Ultimately, the lawsuit was dropped, providing a significant boost to the project's credibility.
“Years later, it gives a very strong foundation for the project that everything is done properly,” Ali noted. “Many say that makes STX a clear commodity like Bitcoin.”
Now there's a next big step on the horizon for Stacks. If everything goes well with the Nakamoto upgrade, then sBTC or Stacks Bitcoin will closely follow, enabling new functionality on the scaling network.
“For sBTC, the mainnet must be live first—but if everything goes well, then the path will go smoothly,” Ali said. “So we just want the system to be live for a while, do more testing, and then launch.”
Following the Nakamoto upgrade, sBTC will act as a Bitcoin equivalent within the Stacks network, allowing smart contracts and decentralized applications (dapps) to run with the same level of security and transaction finality as Bitcoin.
This means that users will be able to move Bitcoin onto the Stacks network seamlessly. That should be a boon for developers that have been gradually expanding and enhancing the network for years.
“We are not throwing money at anything. There are no incentives for devs to come, so it's all organic. All the developers are building organically, all the users are organic,” he said. ”I think that really helps the product stand out—it's almost like a test of time. We’ve been consistently shipping very complicated systems.”
Building methodically and cautiously has provided them with a strong foundation, he added, ensuring that progress will most likely be enduring as the network gains more functionality.
“People might initially get hype about something, but few are able to deliver,” Ali said. “So it’s something I’m proud of.”
Edited by Ryan Ozawa