Enabling sBTC as a gas asset on Stacks

Core Blockchain
#1

I’m writing this post to make the case to enable sBTC as a gas asset with the Stacks ‘Nakamoto’ upgrade, and invite members of the Stacks community to take part in the discussion.

The Business Development (BD) Working Group found that there is a strong case to be made for sBTC as gas. Specifically, that almost all users want to use “sBTC as gas” and sBTC as gas would serve that purpose and strengthen Stacks’ position as a Bitcoin L2. At the same time, the technical work that’s required to enable sBTC as gas is relatively trivial. And finally, there is minimal concern that sBTC as gas would detract value from STX. Let me break down these points one by one.

Firstly, almost all users want to use sBTC as gas.

We can consider the wallet and DEX teams as the most end user-facing teams in our ecosystem. Both Leather and Xverse, as well as ALEX are figuring out solutions to how they could allow users to use sBTC as gas if STX would remain the only gas asset enabled on the Stacks layer. So, for end users this is already going to happen. Some of the avenues they are exploring are sponsoring Stacks layer transaction STX gas fees while deducting an equivalent in sBTC balance from the user’s account, free sBTC<>STX swaps to pay for gas under the hood, and more. These solutions are clunky, could lead to edge cases, and are technically complex ways to solve for allowing users to pay gas in sBTC. Support at mining level can make this experience easier for users and developers.

Additionally, the sBTC BD working group has found significant traction from exchanges who would be looking to support “BTC withdrawals over L2” i.e., sBTC withdrawals for their users. Most exchanges already have similar solutions in place for withdrawing ETH on L2 or other chains (multi chain support for assets). Now that Bitcoin L1 fees are reaching similar levels to Ethereum L1 regularly, BTC withdrawals onto the Stacks L2 are becoming a serious option to consider. However, it’s crucial to our exchange partners that their users can move around BTC without needing to buy STX.

The technical work to implement sBTC as gas asset is minimal. The current gas asset of the Stacks network (STX) is a SIP-10 token. sBTC is also a SIP-10 token. Allowing another SIP-10 as gas would be trivial to implement. The BD working group confirmed this with Jude Nelson, Research Scientist at the Stacks Foundation and long-time Core Contributor, whose comments we welcome below. STX as gas could remain for backwards compatibility, which is similar to how OP is used as optional gas asset on Optimism (concurrently to ETH as the default gas asset).

Most importantly, sBTC as gas would strengthen Stacks’ position as a Bitcoin L2. A common criticism of Stacks as a Bitcoin L2 is that fees on the network are paid in STX. People often make a similar point about Polygoin as an Ethereum sidechain instead of a true Ethereum L2, since MATIC is it’s gas asset (whereas ETH is the gas asset on ‘true Ethereum L2s’ like Arbitrum and Optimism). Making sBTC a gas asset on the Stacks network, would cement Stacks as a Bitcoin L2 in the current race to claim leadership over this new category.

Finally, there is minimal concern that sBTC as gas would take away value from STX. It’s tempting to think that STX value accrual happens because users need to buy STX to pay for fees on the network, but this isn’t the common value accrual mechanism for L2 tokens. If we look at our L2 peers on Ethereum, we see that ARB isn’t used as gas on Arbitrum ($10bn FDV) and OP is used as an optional gas asset on Optimism similar to this proposal ($7bn FDV). With STX at $~1bn FDV we shouldn’t be too worried about losing out on value accrual mechanisms by enabling sBTC as gas. Besides, the common value accrual system for L2s is that token holders receive transaction fees for validating the network. On Stacks, the transaction fee revenue flows to STX stakers by Stacks miners increasing their BTC bids when their revenue increases (when network usage goes higher). The 4000 Stacking slots is the scarce thing about the Stacks network, and the only way to access them is by holding STX. The more gas is paid on the network (in whichever token), the more valuable these stacking slots will be (and thereby STX). STX will continue to work as a gas asset for those who want to use it that way, but it wouldn’t be surprising if a lot of new users simply use sBTC as gas.

I look forward to peer reviews to this idea below. If this makes sense, this post & discussion could form the basis for a SIP. I’d also like to invite you to a special edition of the weekly SIP call I’m helping host on Friday, December 8 to discuss further!

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#2

This idea has come up in a number of conversations I’ve been a part of over the last few months and really appreciate you kicking off a proper structured discussion of it @Tycho.

Overall I’m very bullish on this idea, focused on the improved user experience it provides - users will basically all have sBTC for the apps they’re interacting with and so reducing the need for them to directly touch STX in those instances will make the entire process much simpler (while also mirroring their experience on the Bitcoin L1 of paying for transactions in BTC).

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#3

@Tycho - awesome job breaking this down, thank you! Makes all the sense in the world and removes a ton of friction from the UX. I’m 100% on board here :muscle:

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Stacks Snacks - Weekly Ecosystem News and Updates (Thread)
#4

Thanks, Tycho! I strongly agree with this proposal. A key principle in building sBTC is to make the user experience as easy and native as possible. By requiring Bitcoiners who peg in BTC to also obtain an additional gas asset adds a material amount of friction to the system. As you point out, this feature is commonly requested by startups building on Stacks/sBTC for this very reason.

This approach strengthens Stacks position as a Bitcoin L2 and the increased network activity that results should accrue value to all STX holders.

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#5

I recall saying that it would be possible to modify the system to allow a contract-call transaction to atomically trade some number of caller-owned fungible tokens (the Clarity type, not limited to SIP-010) for STX in order to pay the transaction fee, where the STX and the exchange rate would come from the target contract itself. It would also be possible for the transaction sponsorship system to enable the sender to atomically trade a fungible token for STX at a sponsor-specified exchange rate, thereby allowing the sender to send any transaction type they wanted with whatever fungible token they could find a willing sponsor to accept.

But, there’s no world in which STX stops being the only gas token, for at least two reasons that come to mind right now. I’m sure there are others:

  • Miners shouldn’t be receiving any tokens besides STX in their block reward. To do otherwise is to create warped incentives for miners to only accept sBTC-paid transactions, since it lowers their own cost of mining (which would drive the price of STX down, and destroy any incentive for Stackers to faithfully maintain the sBTC peg).
  • Miners need to be able to rank transactions by fee/compute, and that requires paying fees in currencies for which their STX-equivalent value is known (which the above changes would facilitate, but an sBTC-native gas token would not).

we shouldn’t be too worried about losing out on value accrual mechanisms by enabling sBTC as gas

Basically, the thing to be leery of is to ensure that any change to the gas economy doesn’t cause STX to lose demand, because that would kill sBTC. No other L2 has anything remotely equivalent to Stacking or sBTC, and moreover, the research on the L2 incentive space is not that well fleshed out (I’d argue it isn’t even that well fleshed-out for L1). I’ll stop worrying about this once we see a compelling proof that STX demand does not diminish with the above changes, assuming that the incentives of miners and Stackers remain the same before and after the change.

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#6

I would like to hear more about how it’s technically easy to implement this change, as that seems counter-intuitive to me. I completely understand the reasoning behind this proposal, I just also can imagine many reasons why such a change would be very complex - both in implementation and also in understanding how it changes security and miner behavior. Granted, I’m not a core dev.

One thing about the Optimism comparison is that OP isn’t (at least currently) an element in keeping the Optimism chain secure. Stacks has different security mechanisms that rely much more strongly on STX.

I’d suggest that the sponsored transaction route, while inferior in some ways, would be a good way to prove out the demand for this without the difficulty of implementing this at the core layer. I could imagine a few ways to do it that would make the process relatively seamless. For example, a browser extension can intercept transactions before hitting the wallet, and that extension could re-write the transaction request to handle the sponsorship and any sBTC exchange/transfer details.

Using sponsored transactions also means that Lightning could be used, which is a different avenue for a BTC-native experience.

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#7

How does it lower cost of mining? A block reward is a block reward regardless of BTC as gas or STX as gas. Trying to understand the reasoning here. Probably best to think of block rewards as:

USD value of STX coinbase + USD value of gas fees

The aggregate USD value of gas fees of a given block doesn’t change based on what the user decided to pay gas in.

This seems like a solvable thing and not some fundamentally unsolvable technical issue.

In general, I’d try to listen to input coming from real world data and exchanges – it’s extremely valuable input from actual users of the (future) system.

(I’ll likely add more comment on @Tycho’s post later but wanted to comment on Jude’s main point.)

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#8

First, I just want to add an unstated qualifier – I think making it so users can pay transaction fees in different tokens is a good idea that’s worth pursuing. My main quibble is in how that gets translated into block rewards.

Let’s assume that miners fund their mining solely by selling a portion of their block rewards for BTC. If they have a choice between selling STX and sBTC (or any other token), they’ll sell the token that has the highest return for BTC (if such a choice exists). If they can get more BTC by selling sBTC than selling the BTC-equivalent amount of STX, then they’ll have a preference for mining transactions which pay in sBTC. This is equivalent of lowering the cost of mining relative to to status quo of receiving only STX. It’s also equivalent to saying that STX-paying users would have to pay more STX to receive the same consideration by miners, since they have to “make up” for the miners’ lost revenue of accepting and selling STX relative to sBTC. For users, this lowers the demand of STX relative to sBTC because paying with sBTC is cheaper – the extra cost that miners pay to convert STX to BTC relative to sBTC to BTC would forwarded to users in the form of higher STX transaction fees, which makes STX a less-desirable gas asset.

This is why I think it’s imperative that STX remains the only native gas asset (EDIT: or, barring that, the gas asset that is most efficiently converted to BTC). We want miners to get paid the same regardless of what token(s) the user uses to pay in order to ensure that no particular payment option gets preferential treatment, since that could have negative price impacts on STX (with cascading impacts on sBTC).

Yes, it is :+1: Never meant to suggest otherwise. The solution is to require that sBTC be converted to STX first, so that the miners get paid in STX.

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#9

This assumption is not correct. This is not how miners think about mining (we have direct experience mining and did such calculations directly and also know other miners).

When we mined, we allocated a USD budget for 6 months for mining, and we wanted to make a profit over the USD budget over a long (6 month) timeline. We’d trade STX/BTC independent of the mining process, meaning if in some weeks the markets happen to be trading well for STX, we’d sell some STX. We’re certainly 100% not making these decision at a per block or per transaction level.

This assumption is also incorrect (or rather a far reaching statement with zero data to back it). If anything the price volatility between WBTC/BTC trade is very low and STX/BTC trade is higher, which suggests that miners will have more flexibility if they get STX. They get more choice freedom: if they don’t want to take price risk, they immediately sell STX. If they want to take price risk then they keep STX. Keeping sBTC doesn’t give them this flexibility, sBTC will always trade like BTC (plus minus short delta, like a USDC trading against USDT). Practically speaking, both sBTC or STX conversion to BTC will incur roughly the same fee on CEX/DEX and a miner will just use the conversion method most convenient to them. STX is the better supported asset (more exchange support), not sBTC. If anything initially it’d be harder to sell sBTC and as exchange and DEX support for it increases then the two will be roughly the same. Price differences likely won’t matter as miners can sell immediately if they don’t want to take price risk.

There is no evidence or even logic to this. First, as discussed above, miners don’t operate on a per block basis. We have direct evidence of this where at least us and some other miners did STX/BTC conversions only periodically when mining (most profitable for us). Second, the trading fee for both sBTC/BTC and STX/BTC would be the same on exchanges (also discussed above). Why would STX/BTC trading fee be higher? Or are you assuming people can’t sell their STX immediately? Miners can easily sell on a CEX as soon as a reward is confirmed by keeping some buffer STX. They don’t need to move the same STX to an exchange to sell. Miners dedicate some fixed capital to mining and have to setup such selling loops to mine anyway.

I’m sorry Jude, these are just far reaching conclusions and the framework simply doesn’t add up. I appreciate the “adversarial thinking” approach here but it needs to be grounded in reality. If anything there is evidence that miners might treat STX as the preferable asset to hold longer and get more of it. The trading market is already treating STX has a higher beta Bitcoin bet (see this thesis from an independent fund).

I’d try to focus here on real-world, practical challenges that are concrete and communicated to the WG by real users e.g., from an integration perspective it’s much easier for an exchange to simply pay gas fee in sBTC. That practical advantage can result in “BTC on L2 withdraws” at major exchanges all over the world (WG has real data from exchanges showing interest). Or the exchanges may decide to not do the integration because the “forced conversion of STX to BTC” meant that now the exchange had to go and source STX for their users first (they wouldn’t do the integration). Similar complications at wallets as well.

#10

First, I never said anywhere that they sell STX per block. I just assumed (perhaps wrongly) that they sell STX in order to cover the expense of mining. While that may be an incorrect assumption, I definitely never assumed that they sell per block (the Foundation doesn’t do this either).

Second, even if that assumption is incorrect, it would still the case that in this proposal miners would be receiving both sBTC and STX as their block reward, right? If so, then that doesn’t affect my conclusion. If it was the case (or even just the belief) that token A would appreciate more than token B, then surely miners would favor transaction fees paid in token A in order to maximize their own profits, right? Therein lies my concern – that this new reward regime creates weird incentives that may not be compatible with honest mining behavior or sBTC safety, and could have downstream effects that are detrimental to the system’s health.

The only assumption in the text you quoted is that when miners have a choice, they would seek to acquire the most of the asset which gives them the best bang for their buck. This would be true even if they didn’t sell any STX to fund mining, right?

How is that a “far-reaching statement with zero data to back it?” The opposite of this would be to claim that miners are deliberately leaving money on the table. Do you have data to show that this is happening?

The CEX, DEX, or OTC fee to sell STX for BTC (or whatever asset) is not zero. Also, the fee to convert sBTC to BTC is not zero, and it’s always possible to convert sBTC to BTC because it’s natively supported by the blockchain (so even if no exchanges buy sBTC, miners can always convert it to BTC and sell that instead). All I’m saying is that if the total latter sell fee(s) is lower than the former sell fee(s) – a condition that could very well come to pass – then profit-maximizing miners would prefer to mine transactions with sBTC fees over those with STX fees.

I’m glad that there’s some evidence of this. What I need to see at a minimum to be convinced that paying miners with other assets than STX is viable is that STX is always preferred over other assets, even in bear markets. A simple but ham-fisted way to achieve this is to ensure that miners can only be paid in STX, but as you can see in my “EDIT” above, I think this can be refined into ensuring that miners will always see a more favorable STX/USD per compute to OTHER_ASSET/USD per compute.

As I said earlier, I’m 100% onboard with making it so that users can pay with any token the system supports (including but not limited to sBTC). In fact, I was onboard with it all the way back in 2019, before Stacks 2.0 existed. There are many ways to achieve this; I have only listed two that I think can work, and am open to others. I’d love to live in a world where users, exchanges, and wallets can seamlessly pay for transactions with any assets they have, and I think this is achievable.

The only concern I have raised has to do with how miners are compensated, since that has cascading effects on the system’s safety and liveness. The high-level point I’m trying to get across is that simply paying miners with tokens besides STX could cause problems, and more work is needed to show that it won’t. I think this is also achievable; it just might require that some internal conversion (invisible to transaction senders) happens as part of transaction-processing.

Also, it’s insufficient to just point to other unrelated L2s which haven’t failed yet and conclude that nothing bad will happen to Stacks if we did this, since as @hank points out, Stacks is governed by different incentives than Ethereum L2s. They’re not comparable.

The reason I keep coming back to ensuring that STX is the most preferred asset for miners to acquire from block-mining is because it creates a demand floor for STX (via a fee market). This is important because the price of STX is intrinsically tied to PoX rewards, which is the incentive we give to Stackers to lock up their STX, confirm blocks, and handle the sBTC wallet. If the expected PoX income isn’t high enough to make it worth Stackers’ whiles to do all this, then less capital will get locked up, and the price to attack the system will get lower. An attacker only needs to acquire >30% of the reward slots to cause real havoc – for example, they could stall the chain for the duration of the reward cycle.

It gives me a lot of anxiety to consider ideas which could reduce demand for STX, given how central the value of STX is to the system’s continued safety and liveness.

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#11

You are missing the point. This is irrelevant to the miners. There is a negligible cost of converting STX/BTC almost instantly. A $1000 trade on Binance will cost a miner $0.8 today. And this trading fee is not only negligible (plays no role in making financial decisions) but it would certainly be the same for sBTC and STX, as for sBTC to be successful it needs to be supported on major exchanges.

If miners want to keep STX on their books, they’d buy that STX if you give them BTC.
If the miners want to keep BTC on their books, they’d buy that BTC by selling the STX you give them.
They will make that independent decision, regardless of what assets you give them.

Users (or you or I) can in no shape or form influence what asset the miners want to keep or what type of transactions they will prefer to mine. Miners in all likelihood will mine the tx that pays them more USD value per block.

This is a HUGE stretch with no evidence whatsoever. Like saying (a) might cause (b) which might cause (c) and then the universe will collapse. Our collective energies are really better spent else where vs trying to dig further in this hole.

I repeat, the miners look at the USD value of the block. Any asset you give them can be exchanged negligibly for another asset that they want to keep. One miner might want to keep their funds in USDT and convert to BTC as they mine, the other might prefer to keep their funds in BTC. I literally know of mining operations who for their own reasons would pick their preferred asset to keep funds in and will go in and out of BTC as they like.

No, they will collect the most fees. And then convert whatever asset you give them to the preferred asset that they want to keep on their books. The asset used for paying the fee doesn’t have enough delta here to play any MEV games which is really what you seem to be worried about.

There is no money on the table to leave. If I get STX and want BTC, I pay the $0.8 cents to convert it and vice versa. This is not MEV. Any basic crypto user knows how to convert these assets efficiently.

So what? It’s also always possible to convert STX to BTC. If STX gets delisted from all exchanges on the planet then there are much bigger practical problems to worry about than this weird fee thing.

There is literally zero chance of this. Crypto trading markets are very efficient and they have consistent fees. So let’s leave this worry behind please. (If you want, I can point you to endless data that shows how trading fees for various assets on exchanges are consistent. No one pays more fees based on what asset they trade. Fees vary based on which exchange you use, not assets. And successful assets get listed on all major exchanges, like STX already has.)

No there is no such need. STX doesn’t need to be always preferred. The whole point here is that it doesn’t matter what asset you get, given negligible cost to convert it to the asset you want and equivalence of fees for converting those assets.

There is no such need whatsoever. None of this makes any difference to the STX price whatsoever. To put things in perspective, there was $681M of STX trading over the last 24 hours and only a few thousand at best STX used as gas over last 24 hours. Tiny market of gas vs gigantic market of trading. And it is impossible to predict if a miner will sell STX or hold it (depends on whatever they want to do). It’s impossible to predict if you give them BTC would they buy STX? Or if you give them STX would they buy something else like USDT for their books? None of this is a topic that needs to be addressed here. It’s simply irrelevant to the design.

No it does not. It has zero impact given the facts above. In fact, the above statements read like raising false alarms on trivial things and can cause needless trouble for community members and on-lookers. I’m sure your intention is not to needlessly scare them. It’s OK that you got overly alarmed. I hope my clarifications helped. Now let’s please move on from this discussion, as both you and I have more important things to do :smile:

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#12

Where does the demand for STX come from in a world where no one has to use it for transaction fees? I agree that gas fee volumes are small relative to trades. However, gas fees are payment for actually using the network, whereas trading volume is driven by…what fundamentals, exactly?

The answer could be that it fundamentally comes from stacking, which offers a floor APY for locking STX. But if the vast majority of users don’t even acquire STX (no user-side demand for it), then wouldn’t this diminish the APY for stacking over time? Wouldn’t this also make discount-mining more likely, since miners have less of a market to sell STX to?

You don’t have to answer this now or anytime soon, but it does need a rigorous answer.

I’ll drop this until the Economics CAB has had a chance to weigh in.

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#13

The demand for STX primarily comes from stacking. This is true today with data to back. Even in bear market the locked STX stayed high. People who owned STX have rotated (some on-chain data to support this) but new owners of STX also want to lock and earn BTC. Gas has always been and will likely remain to be a small factor for demand for at least years to come.

The demand for STX goes up when the effective BTC yield goes up, say with more traffic on network. My argument here is that paying fees in STX or BTC has almost no impact. STX gas fees are sell pressure but they still drive up BTC rewards to stackers/signers (in proxy as miners need to bid higher). BTC gas fees don’t impact STX sell pressure from gas fees but have the exact same impact on higher BTC rewards for stackers/signers (in proxy as miners need to bid higher).

Appreciate, pausing the chat for later. Input from economic working group makes a lot of sense here.

To address your main concern, you could theoretically add a 1% (or whatever other number) discount on the effective fee structure so that miners always get “less sBTC” than market price of sBTC. You can use the on-chain oracle for STX/BTC price feed and adjust it by 1% in favor of STX. Which would ensure with significant probability that STX fees will always be preferred by miners (because the sBTC price rate is worse than market when calculated as gas fee). However, this can add needless complications and have unintended side effects. My argument is that even such a tweak on design that can “guarantee miners always prefer STX for gas” is not needed as a free market solution is better; let the free markets determine how people use STX or BTC fees. If people like paying fees in STX they can continue to do so. Some people don’t want to spend BTC and are in the “I want to save BTC and not spend it”. So they get that option while some people don’t want to purchase another asset and simplest to just use BTC, so they get that option as well.

To be clear, if the primary driver of value accrual to STX was use of STX as gas than I’d be having a much different argument/stance here. The primary value accrual of STX is the exclusive use of STX for signer incentives by locking STX. Everything else can be done with BTC. That is the one thing BTC can’t do i.e., secure the BTC peg itself. And we have market data that the stacking system is the thing with clear product-market fit today.

Further, if gas fees on the network go up (regardless of STX or BTC or a hypothetical USDT as gas fees) the value accrual to STX goes up (through stacking and BTC yield going up, as miner bids go up).

That has strong incentive alignment. STX does only the things that BTC cannot do. But Stacks works as a “true Bitcoin L2” where everything that can be done with BTC is allowed to be done in BTC. Millions of users want to see a system like this, where they can use their BTC for everything. So you expand the target market a lot by building something a lot of real-users are asking for.

Hope this made sense and apologies for grumpy messages late at night. Very long day for me. As I’m sure it was for you as well. Hectic but exciting times for our ecosystem! :rocket:

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#14

Thanks for putting this forward @Tycho.

I’ve very much mixed on this suggestion but overall think for the foreseeable future the only gas option should be STX (with auto-conversion handled at the wallet level)

Couple reasons for this:

  • Coming after the recent discussion about emissions and the halving. There is alot of unknowns around PoX, stacking and mining centralization. Changing another variable in this mix doesn’t sound wise with the amount of things currently in play.

  • Maintaining STX as the main gas asset at the protocol level does give an additional fee floor for the STX price. Which is key to long-term viability of sBTC and the network.

  • The cost to auto-convert these tokens and make the UX seamless is easy today. ALEX has a good pool and BitFlow is coming soon with another option. Xverse, Leather, and any additional wallet can abstract this UX issue away with fees that are negligible.

On the pro side. I agree stacking is the single biggest driver of STX price stability. I also agree removing the need for a conversion in the wallet and allowing a BTC derivative as a gas token is a better UX experience for anyone who uses the network.

This should be something we discuss after Nakamoto and after some of the concerns of mining centralization have started to look positive.

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#15

Very supportive of this idea as well.

If this is technically feasible and there is still some way for STX to increase in value as the activity on the chain increases, this is obviously the preferred path from a UX perspective.

#16

I think this points needs more elaboration. It’s not just about better UX but reducing overhead at exchanges/wallets. If sBTC is not directly accepted by miners then the exchanges need to work on the complexity of acquiring/managing STX to use as fee (even for sponsored transactions). Anything that increases complexity makes integration a uphill battle vs saying “just use sBTC for fee directly”.

To be the best Bitcoin L2, I’d encourage taking a product first lens. What is the right product to ship? There are < 1M unique STX addresses and 50M unique BTC addresses (18M monthly active BTC addresses). If you enable these 10s of millions of BTC holders to permissionlessly use Stacks L2 (without acquiring any other asset) then that is huge win for Stacks.

BTC as gas is also a real differentiator for Stacks in the market. How many other networks do this? Would Solana ever do it? Would Ethereum? No. It signals the Bitcoin alignment to the world. It says that this project is being built by people who want to create a BTC economy and enable as much use of BTC as possible. STX will continue to have it’s unique use: things that BTC absolutely cannot do. Those are two things:

(a) STX as coinbase incentive for miners/sequencers. BTC can never do this because you can’t print BTC out of thin air. Only a separate asset like STX can serve this need for miner/sequencer incentives for coinbase (newly minted) rewards.

(b) STX as locked capital to participate in signing sBTC peg. BTC can never be used for this purpose because this locked capital is needed to bring BTC to L2 in the first place.

(c) STX for voting on SIP process. Only people who have “skin in the game” for this project should be able to vote and only STX serves that purpose.

For gas payments, as we’ve discussed, both STX and BTC can serve that purpose. And it’s largely functionally equivalent. Miners need to sell (at some cadence) to cover their costs and they’ll sell whatever asset they received and then keep their preferred asset (say USDC) on their books for on-going capital needs.

Zooming out a bit: building the right product, building a system that instinctively feels like a Bitcoin L2 to new users is extremely important. Having a product that can easily be integrated by exchanges/wallets all over the world is important. These things will determine the success/failure of the project more than other factors, in my opinion.

I see this point. I have a different view here. Stacks Nakamoto is a radically new system. It’s the biggest thing this project has ever done (even bigger than the original mainnet launch in 2021). What is critical here is to ship the right product for the market. I look at it as the opportunity to upgrade as many things as possible based on lessons learned over the last 2 years, and upgrade them all in one go. So on day 1, the new users that are coming can have an amazing first experience!

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#17

I think the above discussion can be summarised with this.

Some people asked where the demand for STX will come from in a world where it’s not the only gas asset? STX demand is and will be driven by the bet that Stacks will be the best Bitcoin L2

If Stacks becomes the best Bitcoin L2 Stacking slots will become extremely valuable by extension (and thereby STX). That’s it.

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#18

These are good points. I change my mind and think its probably net positive/worth the risk to integrate sBTC at the protocol level for gas.

The benefit to exchanges and new wallets that want to integrate the Stacks blockchain is MUCH easier if they only have to support SIP10 tokens, not any additional development required.

My biggest reservations are around the long-term viability of PoX. I’m probably the middle one in the midwit meme right now though overthinking it. Either the economic incentives work long term or they don’t.
I can see a world where the dust limit mining issue gets fixed and stacking slots are sufficiently sought after because of how much usage the network gets.

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#19

Liked your thread. Paying gas fees in sBTC will help to increase the TVL of the stacks chain as more and more people would lock their BTC for sBTC.

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#20

Stacks tokens only as a gas fee on the network are paid to miners. That’s the primary utility for Stacks the network and the tokens. Period

Yes, services would make their choice on paying fee in sBTC which I recommend but not at the protocol level.
ALEX is doing it with XLink paying bridge fees with aBTC which is converted to STX paid to miners.

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