Welcome to the Stacking DAO Insider – your go-to source for all things Bitcoin, Stacks, and the future of DeFi!
As pioneers in the Stacks ecosystem, we’re thrilled to bring you exclusive insights, the latest updates, and expert analysis straight from the frontier of decentralized finance.
Whether you’re a seasoned stacker or just starting your journey, this newsletter is packed with everything you need to stay ahead in the world of crypto. Get ready to unlock new opportunities and elevate your DeFi game!
Stacking DAO is the leading liquid staking protocol on Stacks, allowing users to earn consensus rewards from stacking STX tokens while retaining liquidity by minting stSTX.
This enables users to participate in Stacks DeFi activities like trading, lending, or providing liquidity, maximizing yield opportunities while still securing the network.
Over the last two cycles, the yield for holding stSTX has averaged 9.45% APY, paid in additional STX tokens. Stack Today!
The Stacks Nakamoto upgrade brought significant advancements, including Bitcoin finality and faster block times, with new blocks now arriving every 28 seconds on average.
This breakthrough positioned the network for enhanced scalability and usability, but the journey to fully realizing Nakamoto’s potential is ongoing.
Developers, users, and builders alike have raised concerns about transaction latency, bandwidth, and inefficiencies, particularly when interacting with complex smart contracts.
To address these challenges, the Stacks network is gearing up for a major set of optimizations aimed at unlocking faster, smoother, and more predictable performance.
These updates are targeted for rollout by December 16, 2024, and promise to elevate the user and builder experience while staying true to Nakamoto’s decentralized principles.
Under the current Nakamoto design, miners operate within "tenures," which allocate a fixed budget for transactions and operations during a Bitcoin block.
Miners typically maximize profitability by front-loading this budget early in the tenure with high-fee transactions. While logical, this approach creates uneven block utilization, leading to:
Latency Issues: Transactions submitted later in the tenure often face delays, waiting for the next Bitcoin block to reset the budget.
Limited Bandwidth: Once the budget is consumed, the network is effectively underutilized for the remainder of the tenure.
Inconsistent User Experience: Faster block times don’t always translate to quicker transaction inclusion, frustrating users and developers.
These inefficiencies dampen the perceived benefits of faster blocks and hinder the network’s ability to scale dynamically under increasing demand.
To address bandwidth and latency challenges, the Stacks team is introducing Tenure Extend—a mechanism allowing miners to dynamically request additional budget within a tenure. Here’s how it works:
On-Demand Budget Increases: Once the budget is consumed or sufficient time has passed, miners can request an extension, enabling them to process more transactions without waiting for a Bitcoin block reset.
Improved Transaction Throughput: By enabling consistent budget availability, the network can process up to 5x more transactions within a tenure.
Faster Inclusion: Users will experience significantly reduced delays, with transactions included up to 5x faster.
This iterative process will begin with 10-minute extensions, progressively reducing to 1-2 minutes to balance throughput and network stability.
Even with Tenure Extend, miners must still manage their budgets effectively to prevent spikiness in transaction processing. A new approach will enforce balanced budget consumption across a tenure:
Exponential Budget Targets: Instead of consuming the majority of the budget upfront, miners will reserve portions for later blocks, ensuring consistent processing throughout the tenure.
Block 1: Use 50% of the budget.
Block 2: Use 75% (cumulatively).
Block 3: Use 87.5%, and so on.
Prioritizing High-Fee Transactions: This system allows miners to weigh the trade-offs between including high-fee transactions immediately or waiting for potentially higher-value transactions later.
For users, this means predictable, low-latency transaction inclusion, even during periods of high network activity.
In the current design, if a miner fails to produce a block during their tenure, the network must wait for the next Bitcoin block to resume operations, causing unnecessary delays. To mitigate this:
Fallback Mechanism: The previous miner will monitor tenure transitions and step in to continue block production if the next miner fails to mine.
Continuous Operation: This ensures uninterrupted block production, maintaining network reliability and minimizing user-facing latency.
These optimizations directly respond to feedback from developers and users who expected faster block times to translate into immediate reductions in transaction latency and higher bandwidth. The reality is that block time alone doesn’t solve the bottlenecks created by tenure-wide budget constraints.
By smoothing out transaction processing, introducing dynamic budget extensions, and ensuring consistent mining activity, the Stacks network will finally align performance with user expectations:
Enhanced User Experience: Transactions are less likely to be delayed due to early budget exhaustion.
Higher Throughput: The network can handle significantly more transactions within each tenure, supporting increased demand.
Efficient Resource Utilization: Every block within a tenure is effectively utilized, avoiding wasted capacity.
Some have suggested increasing the tenure budget as a quick fix. However, this approach has critical flaws:
Latency Remains High: Even with a higher budget, spikiness in consumption would persist, leaving users waiting for the next tenure cycle.
Consensus Complexity: Budget changes require extensive experimentation and testing to prevent network instability and ensure decentralization.
Hardware Limitations: Doubling the budget could require more powerful hardware, potentially excluding less-resourced participants from the network.
Instead, the proposed optimizations achieve the same—or better—results without introducing these risks, preserving Stacks’ decentralized ethos.
The Stacks team is committed to rolling out these updates by December 16, 2024. The milestones include:
Tenure Extend: Activating dynamic budget extensions for smoother and more consistent transaction processing.
Balanced Block Budget Utilization: Enforcing predictable spending across tenures to reduce latency.
Miner Reliability Fixes: Ensuring seamless mining transitions for uninterrupted block production.
Extensive testing and monitoring are already underway to ensure these changes deliver meaningful improvements without compromising network stability.
The Nakamoto upgrade laid the foundation for a faster and more secure Stacks network. These upcoming optimizations represent the next step in fulfilling its potential, ensuring the network can scale to meet the demands of its growing ecosystem.
By addressing bandwidth, latency, and miner reliability, the Stacks core development team is creating a network that delivers on its promise of seamless Bitcoin finality and enhanced DeFi capabilities.
On the latest episode of the Stacks DeFi Show, Stacking DAO core contributors Tycho and Philip discussed the latest Stacks DeFi product developments with Peter from Velar and Jakob from Hermetica. Click the link below to check out the episode!
Mint stSTX today and earn up to 10% yield on your STX: https://app.stackingdao.com/
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