What is Stacks (STX)?

Partnerships

The Stacks ecosystem, whose governance is coordinated and whose growth is supported by the non-profit Stacks Foundation, is home to many independent entities working toward the growth of its network. Here are a few of the partners working with Stacks:

• Chainlink (LINK +1.13%) oracles have been integrated into the Stacks platform to provide financial market data.
• Algorand (ALGO -1.15%) is working with Stacks to support the design and development of the Clarity smart contract language.
• Blockchain infrastructure platform Blockdaemon has partnered with Stacks to provide a seamless path to running a Stacks 2.0 node.

Stacks also often gives out grants to a variety of projects, including decentralized finance (DeFi) platforms, developer tools, and much more. One of the more notable examples happened in December 2021 when Stacks helped fund CityCoins through its Stacks Accelerator program. CityCoins are cryptocurrencies built on Stacks that provide an ongoing crypto revenue stream to their respective cities.

Can I make passive income with Stacks?

You can make passive income with Stacks by locking up your STX tokens on the network. Stacks calls this "stacking," although it's essentially the same thing as crypto staking.

By stacking, you're contributing to the proof-of-transfer system and helping to keep the network secure. In return, you'll receive a share of the Bitcoin rewards transferred by Stacks miners.

There are a few different ways to stack STX tokens. The simplest is through a crypto exchange that supports stacking, such as Okcoin or Binance. If you're in the United States, note that Binance isn't available to U.S. residents, and Binance U.S. doesn’t offer the STX token.

You can also stack with your own crypto wallet. Most investors will need to join a stacking pool, such as OKcoin’s, because the minimum to stack on your own is generally about 100,000 STX.

Unique risks

If Stacks fails, the most likely reason will be a lack of interest either from developers or users. The network currently only has a few dozen dApps, so it's still very much in the early stages. That's the case with most programmable blockchains other than Ethereum, which has built a larger user base due to its first-mover advantage.

The other potential risk with Stacks is that it's closely tied to Bitcoin. Given the technical dependence of Stacks on the Bitcoin blockchain, its future success is dependent on Bitcoin's continued stable operation.

Of course, Stacks wouldn't be the only cryptocurrency with problems in that situation. Bitcoin leads the entire crypto market, so a Bitcoin crash would likely affect almost everything. However, Stacks would be hit harder than other blockchain networks because it relies so much on Bitcoin.

Is Stacks a good investment?

Stacks is worth considering if you're looking for a blockchain project that works a bit differently.

It's in a competitive space, but it has some unique characteristics that set it apart from other programmable blockchains, especially the proof-of-transfer system. The fact that you can earn Bitcoin rewards by stacking STX tokens is also a significant benefit.

Stacks isn't a household name yet, which is good for investors who believe in it and still want to get in reasonably early. In terms of its price and market cap, there's still plenty of room to grow.

When investing in cryptocurrency, always remember that it's a volatile market, and prices can change dramatically. Make sure you treat it as a long-term investment and try not to pay too much attention to weekly price swings. That's especially important with a project such as Stacks since it hasn't been around too long and could take time to develop.

How to buy Stacks

Stacks is available for purchase on several popular crypto exchanges, including a few U.S. exchanges. Here are places to buy Stacks:

• Okcoin
• Coinbase Global (COIN +16.46%)
• Crypto.com

You can purchase Stacks by setting up an account on any of those exchanges. Okcoin is a good choice because it lets you stack your STX tokens. However, you could also buy Stacks on another exchange, transfer it to your wallet, and stack it in a pool.

While other programmable blockchains built from the ground up, Stacks took an innovative approach by building on Bitcoin. Its close connection to the biggest cryptocurrency could be beneficial, especially since Stacks gives investors the opportunity to earn Bitcoin rewards.