<aside> 🟧 Hey Stackers, we’re getting closer to Nakamoto every day, and with so much planned to make it a success, we wanted to be sure there was one place you could go to deep dive on all the key aspects of the upgrade. Not only do we hope this prepares you to vote, but also empowers you to spread the word about the world’s leading Bitcoin L2 from a place of expertise and clarity. Your Governance pals, AcrossFire, HeroGamer, and Jenny Mith

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<aside> ⭐ When you’re ready, test your Naka•knowledge with the quiz!

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<aside> ℹ️ Note: The Stacks Nakamoto release is a complex project with many moving parts owned by owners from all over the ecosystem. As such, some items in this guide may fall out of date from time to time. We’ll try our best to keep it as up to date as much as possible but we would also appreciate your help in flagging any corrections that you see. Thanks!

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Table of Contents

Stacks Nakamoto Release Overview

Introduction to the Nakamoto Update

The Stacks Blockchain represents an innovative layer built upon Bitcoin, designed to extend its capabilities. While Bitcoin excels in secure transactions and as a store of value, Stacks introduces fully expressive smart contracts, enabling a spectrum of decentralized applications directly linked to the security and capital of Bitcoin. By leveraging Bitcoin's blockchain, Stacks ensures that operations within its ecosystem inherit that deeply rooted security and integrity. This symbiotic relationship enables Stacks to harness Bitcoin's strengths while elevating its utility.

The Nakamoto release brings many new capabilities and improvements to the Stacks blockchain by focusing on a set of core advancements: improving transaction speed, enhancing finality guarantees for transactions, mitigating Bitcoin miner MEV (miner extractable value) opportunities that affect PoX, and boosting robustness against chain reorganizations. This strategic upgrade aims to solidify trust in the Stacks network, offer greater alignment with Bitcoin's immutable nature, and foster an environment ripe for advanced Decentralized Finance (DeFi) applications. The expected outcome is a versatile, scalable, and secure platform that closely integrates with, yet distinctly enhances, the Bitcoin ecosystem.

Previous versions of Stacks laid the groundwork for a blockchain capable of smart contracts and decentralized apps while still being fundamentally intertwined with Bitcoin. However, the Nakamoto Release promises to refine this vision. The study guide ahead will dive deep into each facet of this release, with the goal being to make this information accessible to all participants in the Stacks ecosystem. From the implications for Stackers and miners to the evolved opportunities for developers and users, this comprehensive study guide serves as your guide for navigating the upgrade to the Stacks Blockchain.

Key Terminology

• ATC-C (Assumed Total Commitment with Carryforward): A mechanism used to calculate the odds of a Stacks miner winning a sortition. It mitigates the potential for MEV by adjusting the chances of winning based on the median of past Bitcoin bids made by miners, discouraging exclusionary tactics.
• Consensus: A general agreement process within a blockchain network on the validity and order of transactions. Stacks' Nakamoto update introduces enhancements that strengthen the consensus mechanism's alignment with Bitcoin's decentralized validation process.
• DKG (Distributed Key Generation): A cryptographic protocol that allows multiple parties to jointly generate and maintain a secure public/private key pair. In the Stacks Nakamoto update, it plays a crucial role in enabling secure operations for the sBTC system and block validation.
• Finality: The assurance that once a transaction has been added to the blockchain, it cannot be altered or reversed. Stacks' Nakamoto update reinforces finality by linking it with the formidable security of the Bitcoin blockchain after a predefined number of confirmations.
• FROST (Flexible Round-Optimized Schnorr Threshold Signatures): A cryptographic protocol used within the Stacks ecosystem, primarily by Stackers, to generate threshold signatures. It is vital for achieving consensus on critical operations like tenure changes and sBTC processes.
• MEV (Miner Extractable Value): It is any extra amount of value that a miner can extract from the network by deviating from expected behavior: including, excluding, or reordering transactions in a block.
• P2TR (Pay to Taproot): A Bitcoin address format introduced in the Stacks blockchain. Although not exclusively related to the Nakamoto upgrade, it's relevant as it can simplify complex spending conditions on the Bitcoin blockchain, which can be beneficial for multi-sig operations like those used in the sBTC system.
• PoX (Proof of Transfer): A novel consensus mechanism unique to Stacks, wherein miners transfer Bitcoin to earn the right to mine new blocks, and Stackers lock their STX tokens to support the network and earn Bitcoin rewards. The Nakamoto update enriches PoX with new rules to improve network security and mining fairness.