Stacks is an open-source blockchain network that leverages the security and capital of Bitcoin for decentralized apps and smart contracts. The native token on the network is Stacks ($STX) which is used for fueling the execution of smart contracts, processing transactions and registering new digital assets on the Stacks 2.0 blockchain. This tutorial will show you where you can buy $STX and how to ‘stack’ your tokens to earn Bitcoin on the Stacks 2.0 network.
How does Stacking work?
Stacking is locking your $STX temporarily to support the Stacks blockchain’s security and consensus mechanism. As a reward, you earn Bitcoin that miners transfer to you as part of Proof of Transfer mining. In the same way that Bitcoin miners run mining software to support the Bitcoin blockchain and earn BTC, you can support the Stacks blockchain and earn BTC just by buying and locking up $STX tokens.
The different ways to start Stacking
There are a few ways to start Stacking:
- On an exchange
- Custodial exchanges make Stacking easy for you. They’ll hold your STX for you and pool it together with other stackers.
- In a non-custodial pool
- Pool your $STX with others
- On your own
- If you have enough Stacks to meet the protocol minimum (generally above 100,000 $STX), you can enter Stacking without joining a pool.
This tutorial will focus on stacking in a non-custodial pool.
But hold on, please explain what a Pool is?
Pools are run by independent third parties and are an effective, easy way to take part in Stacking. A pool combines participants’ $STX, Stacking it on their behalf, then delivers a proportionate payout of the rewards (minus possible fees) to each participant. There are two different types of pools:
- Non-custodial pools: These pools never access your STX directly as you are instead ‘delegating’ your STX to the pool, but you do still need to trust them with the payment of the rewards. You should also keep in mind that with delegation, you can revoke STX from the pool at any time, however, the funds will remain locked until the end of the cycle you originally chose.
- Custodial pools: These pools require that you send them your STX and then use their wallet to run the Stacking. From there, they pay out your rewards to the BTC address you specified, or in some cases pay you back in STX or another currency.
To see the available pools, you can head to their website to see which pools suit you. Once you have found a pool, you will need to copy the Pool Address and keep it for later.
How long should I Stack for?
Both when pooling and when Stacking by yourself, you can Stack anywhere from 1 to 12 cycles. A cycle is always 2,100 Bitcoin blocks, but the Bitcoin block time varies — a cycle generally lasts around 15 days. To decide how long you’ll Stack you’ll have to consider the cool down cycle.
What is a cool down cycle?
After your chosen duration, you’ll have to wait one cycle before you can Stack from the same address again. Your earnings will be higher if you Stack for more cycles at a time. For example, If you Stack for 3 cycles at a time twice, you’ll be earning rewards 6 out of 8 cycles, with two cool down cycles. If you Stacked for 6 cycles at a time, you would have earned rewards 6 out of 7 cycles.
Now that we’ve got that out the way, let us show you how to Stack!
Step 1: Make sure you have a Hiro wallet
Hiro is the most popular wallet for Stacks, it allows you to store, stack and connect with apps in the Stacks ecosystem, from your browser or on your desktop. You can download the Hiro wallet here. Make sure that you download the desktop application so that you can take part in a pool.
Step 2: Get yourself some $STX tokens
Currently, you can purchase $STX tokens on Coinbase, Kucoin, or using Binance.
$STX uses a unique token standard, consequently, it cannot be bought on a decentralized exchange (DEX), so you will need to use one of the centralized exchanges (CEX) listed above. Once you have bought some $STX, withdraw it to your Hiro wallet.
Step 3: Stack your $STX in a pool
Your $STX should be reflecting in your wallet and is now ready to be added to a pool. Follow the steps below:
- Click on ‘Get Started’ on the home page
- Click ‘Stack in a Pool’
Now you will need to put in a ‘Pool Address’. As mentioned earlier, you can look at the available pools here.
- Paste the address in the ‘Pool Address’ block
- Select the amount of STX you would like to stack
Next, you will need to choose the duration (How long you want to Stack for). Remember that one cycle is roughly 15 days. You can choose two options here:
- Limited – Set a limit between 1 and 12 cycles for how long the pool can stack on your behalf
- Indefinite – The pool has indefinite permission to lock your $STX for up to 12 cycles at a time. You can revoke this manually at any time to prevent further lockups.
For the sake of this tutorial, we are going to select Limited and choose 1 cycle. Next, you click the check box at the bottom and then click ‘Confirm and start pooling’
Well done! You have now successfully Stacked your $STX.
Stacks has developed a simple, but flexible way for people to support the network and earn Bitcoin as rewards. By locking up STX tokens on the network, or ‘Stacking’, you provide valuable security benefits to the network and are contributing to the growth of the decentralized economy. For more staking courses and information, visit StakingRewards.com.