Stacks, a Layer 2 blockchain designed to improve Bitcoin, has launched the Nakamoto upgrade to speed up transaction speeds. Named after Bitcoin’s pseudonymous creator Satoshi Nakamoto, the upgrade will separate Stacks’ block production from Bitcoin’s schedule. The upgrade introduces a new approach to block production using a Proof-Of-Transfer consensus mechanism. In this system, users burn Bitcoin (BTC) to generate Stacks blocks and earn rewards. The method began rolling out in April, with “signers” of blocks verifying “tenures” of transactions.

Stacks aims to increase its utility by incorporating smart contracts and decentralized finance features on top of Bitcoin. Additionally, Stacks has released sBTC, a bridging asset that connects BTC to the Stacks ecosystem. The launch of the Nakamoto upgrade on the Stacks blockchain is likely to have several notable impacts. By separating Stacks block production from the Bitcoin schedule, the upgrade aims to improve transaction speeds and network efficiency, potentially reducing capacity-constrained areas and improving overall performance.

The introduction of a Proof-of-Transfer consensus mechanism, where users burn Bitcoin to mine Stacks blocks, could lead to increased demand for BTC as it is used in the mining process. This could lead to greater integration and utility of Bitcoin in the Stacks ecosystem. As Stacks introduces additional features such as smart contracts and DeFi features, it could attract new users and developers, further enhancing its value proposition. The introduction of sBTC as a bridge asset could facilitate a smoother transition between Bitcoin and Stacks, potentially increasing liquidity and adoption.

Image: Decrypt