Now that I understand how Stacks works and will work in the future after Nakamoto, the big question is how people use it. I know how users are experimenting with Ordinals – digital artifacts, token speculation, and innovation, so if users use Stacks along those lines, they may have some crossover. But, if people are using the Ordinal stack for the same things Stacks offers, Ordinals may pull attention, users, and volume away from Stacks projects.
First, however, some disclaimers: I cannot verify the data I have found. Stacks still has a small ecosystem when compared to other larger projects. Its small ecosystem gives little incentive for builders to create the robust data tools I have grown accustomed to when researching Bitcoin or EVM-based projects. The Stacks version of Dune, Stacksonchain.com, is new and doesn’t yet have the massive community of wizards who have created dashboards for everything. As such, take the data and charts here with some skepticism. Secondly, the Stacks ecosystem and metrics are much smaller than other competing L2s, so don’t be shocked at the smaller numbers – Stacks and STX is probably more of a bet on growth potential than its current ecosystem.
First, we can look at some data around gas consumption to see which contracts are the most popular with Stacks users. >50% of the gas user spend on Stacks is for four contracts – AMM swaps (likely ALEX DEX), a swap helper (also ALEX), Bitcoin Name System (BNS), and an STX staking helper. The top gas-consuming contracts suggest that users primarily use Stacks to swap tokens, register BNS names, and stake STX in the Stacker contract. However, just because a contract consumes the most gas doesn’t mean it is the most popular contract. The operations in the contract could just be the most expensive compute-wise – which would skew the numbers somewhat. But regardless, this tells us that people primarily spend STX for token swaps.
One DEX To Rule Them All
When we dive a bit deeper into the AMM ecosystem of Stacks, we see it’s divided between two small protocols, ALEX and Stackswap. ALEX is by far the dominant DEX on Stacks – it has almost 100X the TVL of Stackswap. Stackswap is probably a dead project at this point, as ALEX’s is so far in the lead. However, the DEX market is small enough that a new entrant could easily surpass the lead DEX.
The Stacks Name Space
Next, I want to look at BNS as I was surprised that it is as popular as it is. BNS is the same as ENS – it allows users to register domain names secured by Stacks. Domain names primarily have a suffix of .btc – if you know of ENS, BNS is the Stacks equivalent. 90% of BNS registrations are for .btc names, followed by .id and .stx. Despite Stacks being a small ecosystem, there have still been around 190K BNS names registered – although I am sure this has more to do with people speculating and purchasing BNS namespace than any strong demand for BNS domains. Regardless, BNS has become a pillar of the Stacks ecosystem, and if ENS popularity is anything to go by may continue to be so. However, BNS could face stiff competition from Ordinal domain inscription standards, like .sats. I am unsure if users will prefer a domain naming system secured by Bitcoin L1 inscriptions or by Stack’ L2, but my guess is that users will probably prefer their names on Bitcoin rather than Stacks. As such, Ordinals could challenge one of Stacks’ most popular apps.
Finally, I was surprised to see little NFT sales and volume on Stacks. Stacks NFT data was hard to come by, but what I found was not the most encouraging. When we look at the last 100K Stacks blocks, we see that Megapont Ape Club NFTs dominate NFT trading volume at 5.2M STX, followed by BNS at 1.4M STX. I am skeptical of Megaponts dominance here as wash trading is sometimes prevalent with NFTs, and BNS is one of the most popular contracts on Stacks. But regardless, it looks like Stacks NFTs may not be performing exceptionally well at the moment. Like BNS, I worry that Ordinal Inscriptions will capture a large part of the Bitcoin-NFT market and may end up hurting Stack’s NFT projects.
These four charts showed me about what I expected. Stacks is like a mini-ETH ecosystem with a few DEXs competing for market share, a struggling NFT ecosystem, and a burgeoning namespace market. Unfortunately for Stacks, though, the Ordinal ecosystem is much the same. Ordinals have competitive marketplaces that are always hunting for new users and volume, and new inscriptions are constantly emerging. There are even competing namespaces like .sats, .pepe, and .ord. My original hypothesis looks like it is becoming increasingly correct; Ordinals are a competitor to Stacks.