What is Stacks (STX)?
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.
What is Proof of Transfer (PoX) and Stacking?
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 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.
What are the considerations of participating in Stacking?
Users should be aware of the following:
Rewards in BTC: Rewards received from STX Stacking are from a finite external source. Delegators lock STX and earn rewards in BTC. The source of these rewards come from Stacks miners, who deposit BTC to mine new Stacks blocks. Users who participate in STX Stacking should be comfortable in being exposed to the inherent risks of both STX and BTC.
Rewards Rate Uncertainty: Bitcoin rewards that Stackers earn is determined by a combination of the BTC being committed by miners and the number of STX tokens that are locked up in the network. Therefore, it is highly dependent on the on-chain activity, which can cause a difference in the estimated reward rate presented and the actual rewards received during the lockup period. Please also note that the rewards rates shown are based on the estimated reward from validators excluding fees charged by Crypto.com and are not final. The actual rewards rate may differ, is not guaranteed, and is subject to change depending on the applicable blockchain network activity, which may fluctuate.
Liquidity Risk: Although there is no concept of slashing in STX Stacking, if validators do not perform their duties as signers, the delegated tokens cannot be unlocked and delegators do not receive BTC rewards. Users should take note of the risk of the token lock-up due to signer non-performance, potentially causing a delay in getting your STX tokens back.
Technical Risk: There are technical risks associated with participating in Stacking, including risks associated with error or security failures – including smart contract failure, hacks, network critical delays, or exploits – which may or may not be related to blockchain protocols. This may result in a loss of data or access to your Stacked STX.
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.
How to Participate Stacking via the Crypto.com App
Crypto.com currently supports STX Stacking through our Staking feature in the Crypto.com App.
To participate,
Go to Earn on the App Home, click “Staking” on the “Browse Products”
Find STX in the staking token list and click on the list
Input amount of STX and confirm
The following are the key information regarding STX Staking on Crypto.com:
Virtual Asset | Minimum Staking Amount (Minimum Decimal Precision) | Estimated Activation Period | Estimated Time to Receive First Reward* | Reward Credited | Rewards Crediting Destination** | Estimated Unbonding Period |
Stacks (STX) | 1.00E-06 | 20 days
| 37 days
| BTC | Available Balance
| 20 days
|
*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.
What rewards can I get?
You can expect bitcoin (BTC) reward payouts.
Who Can participate?
All verified Crypto.com App users who are not citizens or residents of the following jurisdictions are eligible to use the Staking feature:
The United States of America and its territories
Canada
Hong Kong SAR
Seychelles
South Korea
Singapore
Thailand
What are the fees charged by Crypto.com?
A flat service fee of 20% charged by Crypto.com will be deducted from your STX Stacking rewards.