Crypto Review: $STX Stacks
Smart Contracts on BTC
Apologies, as this review came late, I could not finish it in time before my flight left on 12/24, so I have only come back to it now after returning from christmas vacation.
This is not a paid review.
These reviews will include links to centralized exchanges that have the crypto I am reviewing listed. Some of these links will be affiliate links in later reviews, but not in this one.
Please refer to Definitions page for any terms or abbreviations that I use that you don’t understand. If a term is missing, please let me know.
I am going to make some very standard categories for comparing crypto protocols against each other and will be using these same categories every time.
I currently have an existing position in $STX and its ecosystem coins that at the time of writing is valued between $10,000-$100,000. I know the exact value, but I am giving you a range out of my own preference for keeping people that may know me personally out of my exact business while offering some transparency about my level of skin in the game.
In general it is good practice not to talk about money with people, there is a lot of pain going on in this country, and over the next decade, the separation will get much worse. Keep it to yourself. Consider the kind of wealth you would be comfortable flashing in Guatemala or Colombia, and thats the level of wealth you should flash in mixed company in the US.
Table of Contents
Mindfulness of Shills
Categories for Comparison
Overview
Centralized Exchange Availability
User Activity
Developer Activity and available dApps
Founder and Team Experience
Marketing and Social Media Presence
Frog Rating & Decentralization
Security, Accessibility & User Experience
Conclusion
1. Mindfulness of Shills
As I have stated in Section 5 of This Post, 90% of the crypto content on the internet are paid shills. The twitter thread below is a good example of this, and I will cover this as well in the Marketing and Social Media Presence section. If someone is putting a token or coin in front of your face and telling you to buy it, or why you should buy it, they were either paid to say so, or they are a bag holder hoping you and others will buy it to make their bags profitable.
Most everybody is selling something, information is rarely shared for free, especially not for your benefit. “But wait, Flirtcheap, aren’t you doing the exact same thing and charging $10 a month for it?” Yes, I am, and I hope that my transparency about where my sources of income are coming from, can help you to have a level of trust for the information I share. I also hope that I can provide enough value to you, that the $10 can be almost forgotten. And I hope that the writing and information is engaging and useful enough that you don’t want to leave.
This might seem like sour grapes, but I promise that its not. Really good content is not going to come from large accounts in general, especially when it comes to financial information. With the Exception of BowTiedBull, most large accounts appeal to the lowest common denominator. The human urge to get something for nothing, or to get something for very little work is usually what is being exploited by large accounts. They will either try to sell you a lifestyle, like many MLM (Multi-Level Marketing) programs do, or trading signals programs. Or they will try to sell you the potential of a 20x, or 100x token or coin.
Life-changing wealth in this sphere will not come overnight. It will come slow. It will not come from trading. It will come from investing and forgetting. Truly. You don’t need to give me $10 a month to find that out. It’s right here, thats the secret in italics. Buy some ETH on a monthly or weekly basis, put it in a metamask wallet, and go about your life. Hold the position for long enough with conviction and in 10 years you will be free. This substack exists to help you with the timing, the context, and to also provide money tips and the occasional crypto review when there are good protocols that I think people should know about and be exposed to.
2. Categories for Comparison
For an explanation of these categories and what they mean, please read the guide.
User Activity
Developer Activity and available dApps
Founder and Team Experience
Marketing and Social Media Presence
Frog Rating & Decentralization
Security, Accessibility & User Experience
3. Overview
The STX whitepaper and other documents can be read here. This is my best explanation about what STX is as follows;
They call themselves a L1, but they are really a L2 using bitcoin as a finality layer. As a L2 on bitcoin, they benefit from being secured by the most decentralized blockchain that currently exists, Bitcoin. STX is smart contract capable and uses the Clarity coding language.
For the absolute basics of any crypto currency, you need to understand these metrics to understand reasonable price targets in this current market. These can all be found on CoinMarketCap and its a good place to start.
Circulating Supply - 1,290,000,000
Max Supply - 1,818,000,000
Market Cap - $2,946,525,979
Fully Diluted Market Cap - $4,151,040,852
Current Price - $2.28
Rank by Market Cap - #54
EVM Compatible? - No
The circulating supply is the total amount in circulation that can be bought or is in public hands. The market cap is the Current price multiplied by the circulating supply. The fully diluted market cap is the current price multiplied by the max supply. New coins are minted and emitted with a set schedule and so we know what the total supply of the coin will be for certain coins. There are some coins that do not have a max supply by design, $STX is not one of those coins.
STX is a smart contract platform, an appropriate comparison is Ethereum. If STX were to have the market cap of ethereum, it’s price would be $373.98 (164x). This is not a target price, but instead a number given for context. Any price target above this is not feasible in any sense with the current market capitalization of the entire crypto-currency sector. But, as the sector grows, the possible price targets for a top coin or token rises as well. 10 years from now, its plausible that the top 50 might all have a market cap higher than what ETH has today. However, today, it’s not feasible for even a top 5 token to Eclipse Ethereum.
The STX main-net went live in January 2021, and thus this is still a relatively new project. It runs on a validation system called Proof of Transfer (PoX), where $BTC miners are paid in STX to write STX transactions into the BTC network. In exchange for this, they forfeit their $BTC block rewards to “Stackers.”
Mining
If you own STX and would like to Stack you can earn BTC, this can be done on the OKCoin centralized exchange for those relatively new to crypto. Or can be done directly from the non-custodial Hiro wallet which is a browser extension. Stacking is equivalent to staking for those of you familiar with the term. The amount of BTC earned per STX changes every day and is dependent on how much the BTC miners are willing to bid in for a set block reward of STX. Meaning that as the price of STX increases against BTC, mining becomes more profitable, and vice versa.
4. Centralized Exchange Availability
You can view the exchanges where STX is currently trading on coinmarketcap here.
STX does not trade on binance.us, only binance.com, meaning that is only available to non americans.
For Americans, options to buy STX are a little limited. It is listed on crypto.com, but only available for residents of certain states. It is also listed on kucoin. Another option for Americans is Okcoin, my state is also limited on this exchange and I cannot trade cash for crypto here. So what I did was send Bitcoin to my account on OkCoin where I was able to buy STX with my bitcoin. You will sometimes have to get a bit creative if you live in a more restricted country or state, as I do.
5. User Activity
In general this is a healthy graph.
User activity is trending up and to the right. Main-net launched in January at which point there wasn’t much to do except Stack and earn rewards, but that has quickly changed over just a year. As there are now several NFT markets, several DExes, and quite a few other dApps, including a decentralized social media dApp have been launched on the network and are all driving transactions up and to the right.
Of course, if you compare this to the chart of Daily ETH transactions, you can see that $STX is a fraction of ETH in terms of transactions.
Eth is seeing over 100x as many daily transactions, so it makes perfect sense that ETH’s market cap is 164x that of STX. For current user activity, I would give STX a 5 out of 10 (as reference, ETH is a 10). While STX has a relatively low amount of daily transactions, it is showing faster growth in transactions than ETH over time. Eventually that may slow down, but there is a major draw for smart contracts secured in the most secure blockchain that currently exists. It also will benefit significantly from the amount of liquidity in BTC as the ability to wrap BTC onto the STX network which launched today.
6. Developer Activity and Available dApps
For being only a year old, STX has a decent stable of dApps that can be accessed through the Hiro browser wallet.
For judging a smart contract platform we need to compare to Ethereum, as there are some basic platforms that have been already been created and should be replicated on all other smart contract platforms. For instance, every smart contract chain needs DeFi in the form of a DEx, a money market, a yield aggregator, and an NFT exchange (yes an NFT exchange is DeFi, assets in art will be lent out sooner than you think, and several already generate income). Of course there are more platforms that can be and should be created. But when viewed from a developer standpoint, these 4 are the simplest to replicate and represent low hanging fruit for developers to make some decent money.
STX is not EVM compatible, meaning that Devs have to write the code for all of these dApps from scratch. So for platforms that are not EVM compatible, we can see these dApps develop slower.
For STX, they have the following dApps.
DExes
Money Markets
None that I know of
Yield Aggregators
Dependent on a Money market and active bridges
NFT Exchange
Notable Projects:
CityCoins - Crowdfunding city treasuries with crypto
For a chain that has a main-net less than 1 year old this is a fairly decent start, especially considering the chain is not EVM compatible and all of the code has to be written and audited for these dApps. This also means that these dApps are much more susceptible to early hacks and exploits. As an example, Arkadiko has been hacked once, and exploited once despite being barely 6 weeks old. It was audited, but there is no audit as strong as time in the markets. DExes on ETH have code that is almost 4 years old now, and EVM compatible chains benefit from this time and optimization of code.
For the main DeFi segment of STX, I give it a 6 out of 10, and for project interest in STX, I give it a 7, with a total dApp score of a 7.
I give STX such a high score here despite a relatively sparse stable of dApps due to the interest they have generated for projects outside of DeFi. CityCoins could have chosen any architecture to build on, but they chose STX, and if CityCoins grows and can attract 100 different cities to the protocol, then the amount of transactions that project will generate will necessitate significant growth of the market cap for STX. Similarly, for STX to have attracted Theopetra to their chain speaks volumes about where the most forward looking developers are looking to expand. I expect to see far more projects growing on STX, especially since a few hours ago xBTC (a wrapped version of BTC) can now be utilized on STX dApps which will unlock a significant increase in liquidity for all DeFi and dApps on STX.
My expectation is for dApp and transaction growth on STX to continue.
7. Founder and Team Experience
The Founder of STX is Muneeb Ali, he has been in the blockchain space for ~10 years now, which is what you are looking for in general from a founder. He has worked on STX since 2013, but the main-net did not go live until January 2021. He has put a lot of work into this chain and is visible on twitter, linkedin, github, and the official website is professional and SEO optimized. Not having a GooglePlay or Apple app for their wallet is a ding, and the wallet is not focused on user experience, which says that the dev. team has not focused on the user experience as much as they could.
Looking ahead at their open positions, we can see a focus on improving the user experience with a front end Dev, as well as an engineeer focused on interacting with Developers. I believe that a blockchain lives and dies based on attracting new users and attracting new Developers to keep adding more dApps. They currently show a team of 37 on LinkedIn, but not all employees are going to create an account on LinkedIn, and web 3.0 leans towards anonymous employees and less wallet naming. So I am unsure of how many employees there are at STX. Muneeb is not an interloper who has just entered this space for a quick buck. He genuinely believes in Web 3.0. I believe STX has earned an 8 out of 10 on their founder and team experience.
8. Marketing and Social Media Presence
For IRL advertisements STX has not been too active yet, but they have had ads paid for in Times Square NYC, which is great for visibility.
The successful citycoins project is great advertising in and of itself, especially when the mayor is a proponent of the project. Good and popular dApps, are the best form of advertising.
Twitter will always be the main public square (for now) for a social media presence for blockchain protocols, STX’s twitter account has a decent following and moderate interactions, but the Founder gets far more interactions on his tweets. As far as active advertising campaigns, STX is still very lax in advertising efforts. They haven’t plastered the NYC subway like AVAX, nor have they sponsored an F1 team, eSports, nor an NBA stadium’s naming rights. Most all advertisements have come from users and dApps themselves, not from the foundation, which is a very decentralized form of advertising. On this scale I give STX a 5 out of 10.
9. Frog Rating & Decentralization
STX has been a darling among the frogs, and has been fairly decentralized in its offerings to developers. The DeFi and projects that have launched on STX have not been developed nor funded by the internal team (this is a good thing); the BowTied Cohort have also been supporters of STX, which is another good thing. This category is always going to be more of a feeling rating for me, and less of a science. I see very few blue checks tweeting about STX, but there is a significant amount of anonymous chatter on this blockchain. I will give it a 9 out of 10.
10. Security, Accessibility & User Experience
From a security standpoint, the STX architecture is one of the most secure smart contract platforms. However, for the time being it is not very user friendly, with only 1 wallet, and only as a browser extension. This is ultimately something they need to work on, and I hope that the open position for a front end developer represents their intention to improve this. I give this a 5 out of 10.
11. Conclusion
Overall, I really like STX, and am very bullish on it, as it presents a strong potential for growth to tap into the significant liquidity currently locked in Bitcoin.
In the short term, I would suggest starting to DCA into STX. You can certainly stack it on a centralized exchange like OkCoin, and earn BTC to either hold or convert into more STX. I would look for more dApps to be developed and rolled out.
Looking at the current chart, I see opportunities for accumulation ~$2, but honestly I would not worry so much about entry price, especially if you will be holding for a few years. I suspect that STX will manage to outpace BTC in growth over the next 1-5 years and will represent a solid investment in this space, especially as dApp growth continues. As a reference, my average buy in is at ~$0.76, my position is solidly green, and generating income in STX, BTC, and in some of the governance tokens of their L3 dApps like Arkadiko. I am not looking for your exit liquidity and have no intention to sell my STX position anytime soon.
Nice im in. If it goes down at all at any point even a little thenfuck you
Flirt, great write up. Definitely spurred me to look into STX deeper. A couple of questions.
1) Is STX still qualified as a security by the SEC (instead of a currency)? I believe it was expected by muneeb to be overturned, but not sure if the SEC ever openly declared it.
2) Is the reason STX was originally qualified a security still an issue? Centralization and possibly a small number of people holding a large % of STX's circulating supply. Or did Stacks 2.0 fix these issues?
TIA