The content you provided is:Original author: Hal Press

Since we proposed the Stacks thesis, there have been several key developments that have made this theory more clear. We will elaborate on this in detail later, but from a high-level perspective, the demand for Bitcoin block-space has become more stable, which will further increase the demand for products built on Stacks. We are confident that Stacks is creating a platform that will be used to explore more complex and sophisticated practical tools priced in Bitcoin, with the ultimate goal of transforming it into a true Bitcoin Layer 2 (L2) when technological conditions permit in the future. This vision has gradually made progress, and the Stacks development team plans to complete the Nakamoto upgrade before the Bitcoin halving event in April next year.

Despite these exciting developments, the recent attention on Stacks has decreased due to other more immediate catalysts in the market. This provides us with a unique opportunity - as we approach several key milestones, the theoretical strength of Stacks has increased while public attention has decreased.

The average gas fee of the Bitcoin network has skyrocketed 50 times this year (compared to Ethereum's 2 times), indicating a strong demand for block space in the Bitcoin field. The continued development of Ordinals further demonstrates people's desire to use Bitcoin for more than just holding it. The status of Bitcoin assets as a global macro asset has been strengthened, and the demand for alternative store of value (SOV) is increasing, thus Bitcoin's dominant position is on the rise.

People's demand for Bitcoin is mainly due to its stable price performance as a store of value, as well as the wider regulatory clarity expected from the approval of the US spot Bitcoin exchange-traded fund (BTC ETF). The combination of all these external forces increases the demand for the products being built by Stacks: an efficient, flexible, and secure BTC-denominated environment for exploring more complex BTC applications and completing the transformation of the true Bitcoin Layer 2 (L2).

The Recovery of BRC-20 and Ordinals Trading

The growth of BTC market capitalization ratio.

Meanwhile, despite Nakamoto's development absorbing all of Stacks' resources, Stacks has largely been overlooked in the past few months. The Stacks development team has now completed Mockamoto, which will be used to enable the onlineization of Nakamoto nodes and RPC endpoints. Undeniably, this is a very critical milestone, which will enable the Stacks team to launch the Nakamoto mainnet as planned in April next year, and plan to coincide with the Bitcoin halving.

In our view, this upgrade will be the most important catalyst among several notable ones. Currently, the Stacks network is somewhat cumbersome to use because its block time is the same as BTC Layer 1 (L1), and it does not support bridging with BTC due to security issues. However, after the upgrade, Stacks will significantly speed up, with block time reduced to 5 seconds (currently about 10 to 30 minutes), and will support sBTC, a secure and efficient wrapped Bitcoin version that is naturally integrated with the Stacks consensus mechanism. Despite current technical limitations, the Stacks ecosystem has maintained resilience, with several strong and expanding teams building in this area. Once the network is substantially upgraded with Satoshi's upgrade and sBTC, this will be a future development that we are very much looking forward to seeing. After this upgrade, Stacks will be fully secured by Bitcoin's 100% hash rate, making it closer to Bitcoin Layer 2 (L2).

Stacks Ecosystem Overview

We firmly believe that several major events that are about to happen will greatly attract people's attention to STX. First, we predict that the approval of Bitcoin spot ETF in January next year will cause extensive discussions centered around Bitcoin and overwhelming advertising campaigns from many super-large financial institutions around the world. These promotional efforts will directly impact the development of BTC and may even affect other Bitcoin derivative products, such as STX (the native cryptocurrency of the Stacks blockchain). Secondly, Stacks is expanding its global footprint through recent partnerships with Spartan Group in Singapore and DeSpread in South Korea. They will launch marketing activities in the first quarter of next year to increase people's awareness of Bitcoin L2, with a focus on the regions of South Korea, Singapore, Hong Kong, and Dubai. Thirdly, Stacks will announce several key milestones before the upgrade to the Satoshi upgrade in March next year, which is expected to attract more attention in the coming weeks. The second testnet upgrade is expected to be launched before January next year. Finally, new Bitcoin L1 tools, such as BitVM, can achieve minimal trust transfer between Bitcoin L1 and L2, bringing Stacks closer to the vision of becoming a true Bitcoin L2. Previously, this kind of support for Bitcoin L1 required changes to Bitcoin L1 (which was difficult to achieve), but with BitVM, changes to Bitcoin L1 are no longer necessary.

Satoshi Nakamoto Upgrade Milestone

STX and BTC, as well as their relative valuations with other Layer 1/Layer 2 (L1/L2) ecosystems, have now reached impressive levels. It is expected that by April next year, Stacks will likely have completed the final Satoshi upgrade, enabling it to offer the first fully operational BTC-priced ecosystem. At the same time, we will be approaching the BTC halving, while the Stacks ecosystem will be in the middle of its marketing campaign. This should provide a favorable environment for STX to narrow its valuation discount relative to these other assets. The current trading price of STX is 0.15% of BTC's fully diluted market value (FDV), while the total trading price of Ethereum L2 is 10% of ETH's FDV. Although the discount is reasonable, the current size of the discount shows STX's unlimited potential for upward movement as it greatly improves its capabilities through the Satoshi upgrade and gradually becomes a true BTC Layer 2 (L2) over time.

STX vs BTC vs L1/L2 Ratio

Let's imagine what specific applications Stacks can achieve, which is undoubtedly a challenging question. However, there are a few areas we are particularly excited about. Of course, before discussing specific cases in detail, some key factors need to be emphasized. Although these applications may also be implemented in other forms, they are not widely used yet. We believe that once these applications can be implemented on Stacks, there are many reasons that will make them more successful. First is the community factor - Stacks has a strong community centered around Bitcoin, and these users are accustomed to using Bitcoin for various experiments, otherwise they would not become Stacks users at all. This is in stark contrast to products like wBTC, which exist on Ethereum but belong to the Ethereum community. Second is the incentive mechanism - the organizational structure of the Stacks ecosystem is planning to launch a series of initial incentives to attract Bitcoin users. One proposal is to provide automated returns for all Bitcoin transferred to Stacks, which is enough to provide a 2-3% yield for the initial $100 million total locked value (TVL). Finally, with the implementation of the Satoshi upgrade, Stacks will not only be able to process block transactions on Bitcoin, but will also upgrade to 100% Bitcoin reorganization resistance, and plan to eventually transform into a true Bitcoin second layer when technically feasible, providing additional motivation for Bitcoin community members to explore applications within the Stacks ecosystem.

After Satoshi Nakamoto's upgrade, once the fast block and sBTC functions are implemented, Stacks will be able to provide a high-performance Bitcoin-denominated NFT market. This can not only be used for more efficient Ordinals transactions, but also includes its unique L2 NFT series. Moreover, through the sBTC mechanism, we can lock Ordinals on the Bitcoin L1 and then trade on Stacks' L2, which is not only faster and cheaper, but also more flexible. In addition, using sBTC, we can also explore more traditional decentralized finance (DeFi) applications, such as lending - the Zest team has already started developing in this area on Stacks. Other sub-token exchange markets based on sBTC will also be launched, and ALEX has already laid the foundation for this. These different applications can not only explore new functions, but also generate revenue automatically. It can be foreseen that such products and services will gradually occupy the market and provide us with an innovative and practical ecosystem.

This article is from a submission and does not represent the views of BlockBeats.