“The big news was smart contracts deployed was up over 60% QoQ. The number of contracts deployed is a great signal of development and the use of smart contracts on Stacks.” – Messari, State of Stacks Q3 report.
Here’s the rest of what’s happened in Stacks in October. 👇
TL;DR
- Do you have a Zest for life or yield? Now you can have both
- What’s up with ALEX, DeFi on Stacks
- Q4 OKR goals for the Stacks Foundation; where is this heading?
- Checking in on metrics. Ok, but remember there are bears afoot
Zest Test
The Zest testnet went live in late October. Zest is the first protocol allowing for on-chain, decentralized institutional borrowing/lending on Bitcoin.
Most Bitcoin remains locked in cold storage as an unproductive asset. Bitcoiners understand that trusting a centralized third party for yield is not worth the risk of losing such a valuable asset. Until now, those wishing to earn a yield on their Bitcoin faced custody and counterparty risk.
With Zest, users can lend BTC to earn a yield on their BTC or borrow BTC through underwritten undercollateralized loans – all while interacting directly with the Bitcoin blockchain. Zest allows Bitcoin holders to experience true DeFi functionality that until now has only existed on other networks like Ethereum and Solana.
Here’s how it works:
- Liquidity providers (Bitcoin owners) send BTC to a Hash Timelock Contract on the Bitcoin blockchain
- Borrowers drawdown borrowed BTC to their Bitcoin address
- Liquidity providers earn rewards
Check out the architecture of the protocol 👇
Simple, right? Well, at least it seems that way for liquidity providers. And the bottom line is there soon will be a decentralized, on-chain, trustless way to earn a yield on existing bitcoin. Current estimates are in the 4-6% APY range. 👀
For institutions that desire additional liquidity, there is a new pool of Bitcoin funds about to be unlocked and available.
So if your institution is seeking some zesty Bitcoin liquidity or you are looking to trustlessly unleash some of your Bitcoin on a very very short leash, have a conversation with Zest over email, Twitter, or Discord.
DeFi on Stacks: ALEX
ALEX is a full-service DeFi protocol on Stacks that launched one year ago. In this short time span, ALEX has become a leader in the Stacks ecosystem, securing the top spot as the largest DeFi protocol. Alex serves as a token Launchpad, decentralized exchange (DEX), and lending platform with the ability to use leverage.
Most recently, it launched an Order Book on testnet. This will be a separate trading platform called STXDX.
Finally, ALEX announced Bridge, a testnet connecting USDC on ETH to xUSD (wrapped USDC) on Stacks, thereby providing another way for USDC to move across chains and provide additional liquidity to the Stacks ecosystem. USDC has a market cap of over $48 billion and Bridge facilitates onboarding the liquidity existing on Ethereum to Stacks through an intuitive user interface.
We wrote about Arkadiko, another Stacks lending, minting, stacking, and token swapping DeFi protocol last month.🫡
The Stacks Foundation Q4 OKRs
Here are the top Q4 priorities, many of which are already well in motion:
- Successfully roll out Stacks 2.1, which will bring a host of improvements to the network, through communication, partnership updates, core development, and SIP governance.
- Address critical needs in the ecosystem through coordinating Working Groups focused on speed and capacity improvements and building deeper connections and capabilities related to Bitcoin.
- Onboard more blockchain developers across the ecosystem and support a steady stream of talent to support community growth.
- Improve infrastructure around the protocol, including better blockchain incident communication, developer documentation, and items like bridges that provide new capabilities to builders and users.
The Stacks Foundation is incredibly transparent and provides excellent information for those seeking to assess the goals and progress of the Stacks protocol. For more detailed information and a window into the future (every investor’s goal), head here.
More Metrics
Bear and sideways markets give investors the breathing room to research and think about protocols and their projects. As quoted at the top of this post, one metric is the number of smart contracts deployed. And for Stacks, that’s the good news.
Not surprisingly, parallel to the slowing of traditional and crypto markets, Stacks has seen a slowdown in certain other activities as well. See some 2022 data by Messari below.
As authors Sean Butterfield and Helen Huang summarized the data, “Overall network usage was down, consistent with the broader market.”
They also provided a concise summary of the Stacks roadmap:
“Stacks main priorities include successfully rolling out Stacks 2.1, addressing the critical needs in the ecosystem, onboarding more developers, and improving the infrastructure around Stacks. In addition, a focused effort on SIP proposals and subnet preparation is also a large priority.
The development and objectives established at the [recent] Ecosystem Offsite will remain intact moving forward. The protocol aims to increase the number of developers, community leaders, and decentralized applications by approximately 30% in Q4.
Stacks is setting an ambitious goal for July 2023 to have applications built on its infrastructure to collectively hold a valuation exceeding Stacks’ market capitalization or 3% of Bitcoin’s. The careful rollout of Stacks 2.1 and the strategic objectives outlined above help lay the foundation to achieve this vision.”
There is tremendous protocol activity. With Stacks 2.1 on the horizon, DLCs, Zest, Bridges, DeFI projects, NFTs through Gamma, NeoSwap parties, and more, Stacks continues to mature and draw more and more developers and founders who are looking to build on a protocol than inherits the security and decentralization from the most secure blockchain in existence — Bitcoin.
George Peacock is a Stacks’ enthusiast, slowly recovering from FinTech and TradFi. He’s the co-author of “The 3 simple rules of investing” and the standup half of the Cocktails & Comedy show. Follow him on Twitter to keep up with Stacks. 💜
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