Checking Out Blockstack, Part 4

Over the past few days I’ve been looking into Blockstack. So far I’ve done an overview and looked into the system architecture and layers within the architecture.

Today I start looking into the tokens for Blockstack called Stacks.

Blockstack needs a token for long-term success and sustainable growth of the network. It is used both for governance structures and as an incentive mechanisms.

Governance ensures that no one single entity can control the network and stakeholders can vote on protocol upgrades.

Incentive mechanisms are needed to overcome the problem where neither developers or users have an incentive to participate.

In Blockstack, Stacks are the blockchain token protocol that enables independent verification of the longest Blockstack blockchain, provides an incentive mechanism for developers, and provides an incentive mechanisms for users.

On Blockstack the scarce network resource is digital property like domain names and registered applications. Users spend tokens to register digital property.

Once implemented on the Blockstack blockchain, its native token will be used to perform operations, help the chain migrate to a new underlying chain if needed, enable light-client support, enable new features like namespace auctioning, and will be used for decentralized governance.

It looks like there will be a total of 6 billion Stacks as you can see from the chart below.

The mining system starts by releasing 8,000 new tokens per block. The rate slows down by 500 per year until it reaches 2,000 tokens. It continues to give 2,000 per block forever. Inflation is roughly 2% after year 13.

Per Blockstack, you need inflation to accommodate for new users and applications, even decades down the line. Also, tokens are destroyed during registration operations which decreases supply.

Stacks will be introduced to the Blockstack blockchain as the part of the Stack protocol. Based on the whitepaper it should be implemented in the next year or so.

In next installment, I’ll go over and review Blockstack’s unique mining methods.

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