Stacks is a Bitcoin layer for smart contracts. It enables smart contracts and decentralised applications to use bitcoin as an asset in a trust-minimised way and settle transactions on the Bitcoin blockchain. Bitcoin layers extend the functionality and improve the performance of Bitcoin without changing its Layer-1 protocol.

By building on Bitcon, transactions that happen on the Stacks layer are secured by the entire hash power of Bitcoin. The Stacks layer aims to delivery application users fast transactions with Bitcoin finality.

The native tokens of Stacks, Stacks (STX) tokens, enable smart contracts and apps for Bitcoin and allow holders to earn BTC by 'Stacking'. Stacks are used as fuel for smart contract execution, transaction processing, and digital asset registrations on the Stacks layer.

Learn more about the STX token and read the whitepaper here.

Proof of Transfer (PoX) is the consensus mechanism that connects Bitcoin and Stacks. Proof of Transfer (PoX) is an extension of the Proof of Burn (PoB) mechanism. In PoB, miners compete by ‘burning’, or destroying.

PoX uses the Proof-of-Work (PoW) cryptocurrency of an established blockchain to secure a new blockchain. However, unlike PoB, rather than burning the cryptocurrency, miners transfer the committed cryptocurrency to other participants in the network.

Proof of Transfer also enables Stacking, which allows holders of the STX token to lock their Stacks to help secure the network and validate transactions, earning them a share of the BTC that miners spend to mine new Stacks blocks.

For Stacks, this means that miners contribute BTC in order to mine new Stacks blocks. If they successfully validate transactions and mine new Stacks blocks, their BTC will be distributed to participants of Stacks who have locked up Stacks tokens.

Conceptually, Stacking is similar to On-chain Staking in that Stacking allows network participants to secure the network by locking up their tokens and earn rewards in the process. However, it is important to note that Stacks is not a Proof of Stake network. Please perform your own research before Stacking. Read more on PoX here and Stacking here.

Users should be aware of the following:

The factors listed above are non-exhaustive. As with all new concepts and innovations in the blockchain space, there may be more potential risks. These include smart contract risks, concentration risk, and other unanticipated risks.

Please conduct your own due diligence and consult your advisors before making any decision, including whether to participate in STX Stacking and related transactions.

Crypto.com currently supports STX Stacking through our On-chain Staking service offering.

*Your staked virtual assets will start earning rewards after the activation time and post processing with the validator. Please note that you may not receive rewards if you choose to unstake your virtual assets early or if the rewards fall below the minimum decimal precision set out in the table above. Please also note that the receipt of your first reward may take longer than the estimated reward frequency after you have staked due to various factors, such as protocol activation time and performance of third party node validators. The timeline may also be subject to change depending on the applicable blockchain’s network activity.

**For supported blockchain protocols that offer compounded rewards, your rewards will be disbursed to your Staked Balance. For protocols that do not offer compounded rewards, your rewards will be sent to your Wallet, where it can be withdrawn.

You can expect bitcoin (BTC) reward payouts.

Crypto.com Exchange users from the following locations and all sanctioned nations are prohibited from participating in STX Stacking***.

STX Stacking is not permitted in jurisdictions that impose regulatory restrictions on BTC.

***Crypto.com reserves the sole discretion to amend or update this list at any time

A flat service fee of 20% charged by Crypto.com will be deducted from your STX Stacking rewards.