STX is the native token of the Stacks network, which aims to enable DeFi, NFTs, apps, and smart contracts for Bitcoin. STX is used to pay transaction fees and can be locked directly on the network to earn BTC rewards.
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A brief history
The Stacks project (originally Blockstack) was initially founded by Muneeb Ali and Ryan Shea in 2017. In 2018, Blockstack transformed into Stacks by successfully launching the Stacks 1.0 blockchain. In early 2021, a successful hard fork happened and the mainnet of Stacks 2.0 went live. One of the main innovations of the Stack platform is the Stacking mechanism. The stacking mechanism rewards STX token holders for participating in the Stacks blockchain’s consensus process, called Proof of Transfer (PoX). Proof-of-Transfer consensus method is Stacks key relation to Bitcoin. Via this consensus mechanism, Stacks is tethered to Bitcoin by settling all Stacks transactions on Bitcoin.
STX in practice
STX holders who participate in Stacking are called Stackers. Every time a new block is mined on the Stacks blockchain, the protocol sends BTC committed by miners to Stackers as a reward for adding value to the network. To participate, holders need a dynamic minimum amount of STX which is an estimated 100,000k STX upon mainnet (though this amount can fluctuate). Those who don’t possess the minimum can still participate in Stacking by pooling their holdings with others for joint participation. All eligible Stackers are rewarded with BTC approximately once per Stacking cycle (approximately 7 days). Holders can also use the Stacks Earning Model to estimate potential BTC rewards from participating in Stacking.