Muneeb Ali, co-founder and CEO of Stacks and Hiro, spoke during the second day of UDC 2021, a blockchain conference hosted by Dunamu (the company that operates the Upbit exchange).
Stacks is an open-source network of decentralized apps and smart contracts that connect to the Bitcoin blockchain, essentially making Bitcoin programmable.
The network's native token is Stacks (STX), which can be stored in the Hiros wallet service.
Stacks' consensus mechanism called proof of transfer (PoX). Users commit their STX to be locked in the network. Such users are called Stackers. The protocol sends Stackers rewards in Bitcoin (committed by miners) every time a new block is mined.
"Stacks allows people to earn Bitcoin rewards without using energy-intensive mining rigs," Ali said.
"Stacks' advantage is that it adds smart contracts to Bitcoin, arguably the most decentralized cryptocurrency, thereby enabling it with the same powers as Ethereum."
Ali thinks that adding smart contracts to Bitcoin will enable it to further evolve.
"Before Stacks, Bitcoin's status was stuck in 'digital gold,'" he said.
"Enabling smart contracts allows for Bitcoin-based DeFi and NFT projects."
Ali discussed the advantages of Bitcoin-based dapps and DeFi. Currently, many DeFi projects offer loans with Wrapped Bitcoin as collateral, because they're not directly connected to the Bitcoin blockchain.
According to Ali, a DeFi protocol that directly uses Bitcoin as collateral would change the game because it takes out the process of acquiring Wrapped Bitcoin, thereby ensuring more decentralization and increasing security.
But the more decentralized a network becomes, the slower it becomes. Speed comes at the cost of less decentralization.
"We need to face this problem honestly," Ali said. Our network is a little slower because it guarantees the decentralization of the main chain, but we're working on solutions for increasing speed."
UDC 2021 articles are sponsored by Upbit.
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