As one of the leading smart contract Layer 2 solutions for Bitcoin, the Stacks community has been building and iterating for years. Stacks has consistently expanded the capabilities of Bitcoin and allowed the community to explore new paradigms such as DeFi, Ordinals, and more. The upcoming Nakamoto release is a testament to this which is set to change the narrative for decentralized applications on the Bitcoin network.
But, what exactly is the Nakamoto Upgrade? Which changes does it introduce and does it have any impact on the overall security of the network?
What is the Nakamoto Upgrade?
Nakamoto aims to make the Stacks network as secure as the Bitcoin network by integrating concepts like Bitcoin finality into block production. The ecosystem’s goal with Nakamoto is to leverage Bitcoin’s security while achieving transaction speeds comparable to those of Solana.
A key step to achieving this is to decouple Stacks block production from Bitcoin block production.
Bitcoin finality is a core part of Nakamoto. The term refers to an important point where reversing a Stacks transaction becomes as difficult as reversing a Bitcoin transaction. Establishing finality is paramount because it guarantees the immutability and reliability of transactions — core principles of blockchain technology.
Stacks Nakamoto and Bitcoin Security
Stacks is built on Bitcoin and with Bitcoin finality, security dynamics are reinforced. Transactions on the Stacks network are as secure and irreversible as those on the Bitcoin network, but Nakamoto would fundamentally change a lot of how the Stacks blockchain – including how it secures transactions – works.
Let’s look at the top five concepts Nakamoto will introduce and how they could affect the security of transactions on the Stacks blockchain.
Miner Tenure
The Nakamoto Upgrade introduces a significant change with the concept of miner tenure. Traditionally, Stacks block production was closely tied to Bitcoin block production. However, with this upgrade, miner tenure redefines this process. For the duration of one Bitcoin block, a new miner is cryptographically chosen through a preferred transfer mechanism to be the sole producer of blocks during their tenure.
A critical aspect to address is the security concern regarding this cryptographic selection. Since the cryptographic process only applies to the tenure, questions can arise about what prevents a miner from acting maliciously during their production time.
The Nakamoto Upgrade addresses this security concern by altering the role of miners. While miners continue to decide the contents of blocks, Stackers now have the authority to decide whether a block is included in the chain. This distinction is designed to enhance the integrity and security of the block validation process.
This dual-role mechanism ensures that even if a miner attempts to introduce malicious blocks, these blocks must be validated by the Stackers before being added to the blockchain. This division prevents any single group from wielding excessive influence over the Stacks network. Also, it substantially improves security measures against attacks or manipulations.
Signer Validation
Once a miner proposes a block, it must be validated by designated signers, an essential step that enforces security and decentralization. The miner sends the block to signers for validation. For a block to be accepted, 70% of the signers need to agree.
Nakamoto would employ the WSTS protocol along with the FIRE extension, which facilitates scalable distributed key and signature generation. This setup is designed to manage an increasing number of participants while also addressing security challenges posed by potentially malicious Stackers.
After validation, the block is replicated, and this process is repeated several times until the tenure changes. Unlike the Bitcoin network, which takes about 10 minutes to complete a transaction, this process takes only seconds.
Mitigating Bitcoin Miner Extractable Value (MEV)
Addressing Bitcoin Miner Extractable Value (MEV) is essential to prevent miners from using their position to prioritize transactions for personal gain. Such practices could undermine the fairness and security of the blockchain.
The Nakamoto Upgrade tackles this issue through a two-stage approach to validation, involving Miners and Stackers. This method establishes strict protocols that govern the order and inclusion of transactions in blocks, ensuring that all actions taken by miners adhere to a transparent and equitable framework.
Miner Selection Process
A key component of the Nakamoto Upgrade is the new miner selection process, which heavily revolves around the "Index block hash." This hash is crucial as it represents the first block produced by a miner and serves as a cornerstone for Bitcoin finality. The Index block hash is written to the Bitcoin blockchain when a new miner begins their tenure, linking Stacks’ blockchain history directly to Bitcoin’s. As successive miners take over, they continue this chain, creating a continuous and secure record of all transactions and blocks recognized by the Stacks network.
The process begins when miners submit a block commit transaction, which includes the Index block hash. This submission is essential for the selection of new miners, as it establishes a verifiable link to the miner's previous work and the overall blockchain's state. This mechanism ensures a concrete audit trail and secures the integrity of the blockchain against potential manipulation or errors.
Miner Transition
When it's time for a change in miner tenure, a TenureChange transaction is initiated by Stackers. The entire process involved is designed with a high level of security consciousness. This TenureChange transaction data includes:
Tenure Consensus Hash: Represents the current tenure of the miner.
Previous Tenure Consensus Hash: As the name implies, it is the consensus hash from the previous tenure.
Burn View Consensus Hash: This is the hash of the last observed Bitcoin block.
Previous Tenure End: This is represented by an Index block hash, which is essential for informing the new miner about the starting point for their block production.
This comprehensive approach would not only secures the transition between miners but also maintain a continuous, decentralized, and secure validation process. This structured handover is important for maintaining the blockchain’s integrity and ensuring that each miner builds upon a verified and accepted foundation.
By reducing the average block time to mere seconds, the Nakamoto release will significantly enhance the user experience and scalability of the network.
Onward to Nakamoto
For years, the dialogue around blockchain technology has centered on the 'blockchain trilemma'. The theory suggests that improvements in speed and scalability typically come at the cost of decentralization. However, with the Nakamoto upgrade, Stacks is addressing these concerns head-on.
Nakamoto won’t just be a technological upgrade; it will mark a pivotal moment for Stacks and for those invested in the future of the Bitcoin blockchain.
By leveraging Bitcoin's security, Stacks introduces concepts like miner tenure and decentralized validation, signaling a mature approach to blockchain innovation. These changes are not merely incremental; they represent transformative shifts. They aim to make the Bitcoin network more accessible and practical for a broader range of applications than ever before.
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