The cryptocurrency ecosystem has skilled a major decade, quickly remodeling itself from a thought experiment to a value-driven universe of various services and, by extension, rising from a distinct segment market to one of the influential trendy technological infrastructures. Cryptocurrency’s enlargement has been fueled by its skill to unravel many issues, together with corruption, lack of monetary inclusion, and high-cost banking transactions.
This fast progress has created some issues with scalability as a result of as extra folks enter this new market, it turns into more durable for everybody to have their transactions processed rapidly sufficient. This results in increased transaction charges and may even result in slower transaction occasions attributable to community congestion.
Present layer-1 blockchains are outlined by extra constrained efficiency, particularly the accompanying transactions per second (TPS) limitations. As an example, Bitcoin presents round 7 TPS, whereas Ethereum delivers between 15 to 30 TPS. Within the context of legacy cost networks, Visa posits that its personal personal processing community can deal with upwards of 65,000 transactions per second, outpacing the most well-liked blockchains by a large margin.
This successfully implies that legacy blockchain networks are pretty restricted and accordingly can’t deal with a big inflow of customers and transaction-intensive protocols. Whereas a number of layer-2 scaling options designed to enhance these figures have been launched for Ethereum, the comparable quantity of layer-1 options are extraordinarily restricted.
Nevertheless, earlier than launching into why a layer-1 solution can tackle the scalability constraints imposed by the Bitcoin community, it’s very important to understand the core capabilities and variations between layer-1 blockchains and layer-2 scaling options.
The Many Layers Of Blockchain
Layer-1 refers back to the base community and its underlying infrastructure inside a particular blockchain ecosystem. For instance, Bitcoin, Binance Sensible Chain, and Ethereum are all examples of layer-1 blockchains. Layer-1 scaling options, by extension, are designed to enhance the transaction pace and different options of the bottom protocol. Nonetheless, bettering the scalability of layer-1 chains is extraordinarily tough, as seen within the historic circumstances of Bitcoin and Ethereum.
To deal with this problem, builders created quite a few layer-2 scaling options designed to lift transaction throughput and cut back charges, all whereas being much less taxing on the principle, underlying blockchain. These layer-2 options, constructed on prime of layer-1 blockchains, depend on the layer-1 chain to realize consensus and ship the required safety.
Successfully, layer-2 scaling options are designed to extend blockchain efficiency with out tampering with any of the core options of the layer-1 blockchain. For instance, these can take the type of cost protocols just like the Lightning Community for Bitcoin or sensible contract scaling by way of Arbitrum for Ethereum.
Whereas there are a number of layer-1 blockchains, Bitcoin stays probably the most affected by scalability points, particularly as a result of group’s intense efforts to protect and prioritize safety above all else. On prime of it, the underlying community doesn’t help sensible contracts, additional limiting the community from increasing into decentralized finance (DeFi), play-to-earn (P2E) gaming, and different flourishing sub-sectors inside the crypto ecosystem like non-fungible tokens (NFTs).
That is the place Stacks emerges because the game-changer for Bitcoin. Whereas layer-2 scaling options like RSK, Lightning Community, and Portal have every unlocked new functionalities for the Bitcoin community, Ethereum, by comparability, employs a mess of layer-2 scaling options, which has enabled it to dominate the DeFi and NFT markets.
A Promising Layer-1 Resolution For The Bitcoin Community
Not like the array of layer-2 options or sidechains, Stacks gives a consensus algorithm between two unbiased blockchains, thus leveraging the safety and capital of Bitcoin for decentralized apps (dApps) and sensible contracts.
To extend the capabilities of the Bitcoin community, Stacks introduces a brand new consensus mechanism known as Proof of Switch (PoX). Stacks additionally makes use of Readability, a brand new sensible contract programming language designed for safety and predictability. With its consensus mechanism and layer-1 blockchain expertise, Stacks delivers sensible contract performance and better transactional demand whereas making use of Bitcoin’s confirmed safety and stability.
With Stacks, DeFi and NFT primitives have been unlocked on the Bitcoin blockchain. Ethereum, however, remains to be struggling to roll out the Ethereum 2.0 improve designed to maneuver the community to proof-of-stake and deal with its long-running scalability issues.
Whereas the tip aim is so as to add scalability to Bitcoin – fairly just like that of different current sidechains or layer-2 scaling options, Stacks takes a singular strategy to perform this very feat. The platform options its personal nodes, community, token, and miners. In distinction to different Bitcoin sidechains, Stack’s coin (STX) just isn’t pegged to BTC. As a substitute, it makes use of Bitcoin’s base-layer to report all transactions compiled inside its blocks.
Taken collectively, this enables Stacks to demonstrably increase transaction throughput all whereas dependably leveraging the Bitcoin core community’s confirmed capabilities for consensus and safety to natively ship added performance, like help for dApps, DeFi, NFTs, and way more.