Unleash the Power of DeFi on Bitcoin

If you've been building on Ethereum and EVM-compatible chains and yet are intrigued by the potential of Bitcoin, this post is for you. We will talk about Stacks, a Bitcoin layer 2, and how it will unlock $500B+ of Bitcoin liquidity for everyday apps.

Since 2020’s DeFi Summer, we have seen an explosion of smart contract-enabled applications and user experiences—DEXs, AMMs, lending protocols, NFT marketplaces, and more—that now define Web3 and crypto.

However, Bitcoin has not seen this innovation because building on Bitcoin is hard. Bitcoin Script is an incredibly limited language. That makes Bitcoin very secure—great for a store of value and digital currency—but it comes at the cost of programmability. You can't build apps and smart contracts directly on Bitcoin, but that is changing.

We've seen a renewed interest in building on Bitcoin in the past year. From the ordinals protocol introducing Bitcoin-native NFTs to BRC-20 bringing fungible tokens, a wave of innovation is happening on the Bitcoin blockchain, and that doesn't even touch on the innovation happening on Bitcoin layers, ranging from rollups to sidechains to Lightning payment channels to Stacks, the largest Web3 project on Bitcoin. The Bitcoin Halving is just around April 2024, and there’s never been a better time to start building on Stacks.

Stacks: A Bitcoin Layer 2 Network

Stacks is a layer 2 network for Bitcoin with a unique consensus mechanism called Proof of Transfer, enabling it to settle on Bitcoin periodically. Stacks builds on Bitcoin’s security while allowing smart contracts to leverage the same. And coming in 2024, the ecosystem is working on a major upgrade that will bring sBTC, a decentralized, 1:1 Bitcoin-backed, and fully programmable BTC asset, to the ecosystem.

Stacks is a blockchain that extends the functionality of Bitcoin without modifying its core protocol. Satoshi Nakamoto once described this in a forum post: “a completely separate network and separate blockchain, yet shares computational power with Bitcoin,” increasing the total strength and capabilities of the Bitcoin network.

The Stacks Opportunity for Early Builders

Stacks has already brought the innovation of Web3, NFTs, and DeFi to Bitcoin by creating a smart contract layer 2. With the Stacks blockchain upgrade coinciding with the Bitcoin Halving in spring 2024, the Stacks network will soon have a decentralized, programmatic Bitcoin asset: sBTC. You will be able to do everything you can on Ethereum on the Stacks layer 2 with BTC.

Stacks features include:

Moving BTC in and out of the Stacks layer 2 in a decentralized way.
Unlocking BTC for billions of users that can’t use the Bitcoin layer 1.
BTC deployed into many DeFi applications that can’t use layer 1.

You can be one of the pioneers since it's still early—around 200 devs are building in Stacks today, a far cry from Ethereum’s 5,700. However, you're building on the strongest foundation in crypto: the most secure, largest, oldest, and decentralized blockchain that enables you to tap into over $500B of Bitcoin liquidity. This early stage presents a one-of-a-kind opportunity for developers.

Clarity: The Smart Contract Language for Stacks

Stacks uses the Clarity smart contract language to build the next generation of Bitcoin apps.

Clarity is a LISP-like language that gives Stacks developers a direct way to read and, with sBTC next year, write transactions to Bitcoin, unlocking countless additional use cases. It's predictable and secure, making it an ideal choice for high-stakes code where a single bug can cost users billions. Clarity is deterministic—you know where your code will terminate before you execute it, and you can statically analyze your work as you go.

In the diagram below, you can inspect the two languages executing the same functionality, a simple counter smart contract, side-by-side:

We compare the two languages more thoroughly on the Hiro blog.

Fear not if you aren’t keen on learning a new programming language. With the network’s next upgrade coming in 2024, Stacks allows devs to use other popular smart contract languages like Solidity and Rust alongside Clarity in the future.

The Future: sBTC

The next billion users need help to onboard onto Bitcoin currently. Fees are too high, blocktimes are too long, and BTC is not programmable. That’s why there have been many attempts at making a “wrapped Bitcoin” asset.

There is a long history of these wrapped Bitcoin assets. sBTC is different, leveraging Stacks’ unique design to create a decentralized, open-membership set of signers that power deposits and withdrawals of Bitcoin to the Stacks blockchain—instead of a closed-membership set of custodians like a single company or a handful of “bridge nodes”.

Read here about sBTC and how it fulfills its trust-minimized, decentralized promise of a programmatic Bitcoin asset.

Learn to build on Stacks with Clarity today!

Conclusion

Stacks represents a unique opportunity for DeFi and Web3 developers. It allows you to leverage the security and decentralization of Bitcoin while enjoying the flexibility and programmability of smart contracts on a Bitcoin layer 2 network.

With Stacks, you're not just building on any blockchain; you're building on Bitcoin, the most secure, largest, and decentralized entity in crypto. So why wait? Start building on Stacks today and be part of the future of DeFi.

Join the Stacks Discord and sign up for the Stacks DevNTell on December 15th—see you then!

Dev'n'Tell

We're also live on Dev'n'Tell, December 15th at 16:30 UTC!

So, sign up!