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What is Stacks (STX)?
Stacks (STX) is a cryptocurrency associated with a layer 2 blockchain network built on top of Bitcoin. Stacks essentially adds another layer on top of Bitcoin, allowing more complex applications to be built, which Bitcoin inherently does not allow. STX token was launched in October 2019 for purchase and trading.
Source: Kraken
Why was Stacks Built on Bitcoin?
The reason is simple, Bitcoin has been around since 2009 as a network and as an asset and is one of the most tested and trusted networks within the web3 industry. Another important factor is its global reach and an enormous user base. Over the past seven years, there has been vast development of dApps on Ethereum. This has led to Bitcoin witnessing a shift, which is now becoming an ecosystem utilizing the untapped potential of the $1 trillion+ liquidity of BTC.
Price history of Bitcoin. (Souce: Investoedia)
Key Features of STX
- It is secure since it is based on Bitcoin, the time-tested network.
- It unlocks the potential of Bitcoin and allows developers to utilize the vast amount of value locked up in Bitcoin for their dApps.
- STX holders can earn Bitcoin through a process called "Stacking," which involves locking up their STX tokens to support the network. This helps give people easy access to the Bitcoin mining pools without the requirement of powerful computing power at the user-end.
- STX is traded on various crypto exchanges such as DigiFinex, Gate.io, and Deepcoin.
The rise of blockchain technology. (Source: Trust Machines)
Stacks & SEC
Stacks & SEC
2024 is proving to be a tough year for crypto space as the SEC kept on suing and investigating many crypto firms. Stacks faced a three-year long investigation by the SEC. SEC argued that STX could be an investment contract and falls under its regulatory purview.
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Stacks argued that it tried to comply with the SEC regulations by launching the “first-ever SEC-qualified offering in 2019.” Stacks launched its own blockchain in January 2021, thereby becoming fully decentralized. Stacks’ cooperation with the regulators and the launch of its decentralized blockchain helped pave the way for a positive outcome for Stacks. Stacks co-creator Muneeb Ali took it to X, on July 12, to announce that SEC has concluded its investigation without an enforcement action.
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Tokenomics of STX
STX has a total supply of 1.81 billion tokens with more than 80% of the supply (1.4 billion tokens) in circulation with a market cap of $2.8 billion.
SEC’s letter, dated July 9, had a positive impact on the price of STX. STX is currently trading at $1.89 which is +39% over the last week. On July 16, 2024, the Fear & Greed Index was at 65, a sign of greed and the 24-hour trading volume stands at $204 million.
Source: SEC
Final Verdict
The conclusion of the investigation is a major win for Stacks as it gives STX a better reputation in the crypto space and offers investor confidence. This should drive price, trade volume and market cap of the STX. Although no price prediction is certain in the world of crypto, experts predict that if current buying pressure is maintained and STX remains above the resistance level of $1.79, the price could go up $2.13.
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Hamza Malik
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