Stacks (STX)

📌 SIP Office Hours Recap
Bitcoin Staking SIP (PoX-5) Q&A

◆ Overview

A SIP Office Hours session hosted by @StacksOrg.
A community Q&A on the Bitcoin Staking SIP (PoX-5) draft
released on June 4.

· Host: Stacks Foundation
· Answering: Alex Miller + Muneeb Ali (Stacks Labs)
· Centered on questions raised on the forum

◆ The Foundation's Role

· Neutral, neither advocating for nor against the SIP
· Purpose is to give the community space and resources to engage
· Supporting a smooth governance process
· Technical and economic questions answered directly by Labs

◆ Why Bitcoin Staking

· Gives more people a reason to care that STX exists
· The biggest top-of-funnel for onboarding Bitcoin holders to Stacks
· Native BTC yield is Stacks' strongest differentiator
· Smart contracts and NFTs alone don't move users right now
· Bitcoin creates the incentive to hold STX,
and STX is what secures the network

◆ Emissions Change

· Block reward permanently restored to 1,000 STX
· Halvings eliminated going forward
· Additional 500 STX boost for the first 6 months (→ 1,500 STX)

Why 1,000 STX:
· The baseline Stacks ran on for its first five years
· The step-down to 500 in April 2026 was the exception
· Based on data from Stacks Labs' finance team and SIP authors (Tange, Sam)
· A proven level where market response can be modeled accurately

Possible future reduction (Alex):
· If the program succeeds and the STX/BTC ratio is high enough
· Emissions could be lowered later
· Or a burn program / burn capacity could be introduced
· But this is a discretionary reduction or burn, not an automatic adjustment

◆ Halvings Are Essentially Legacy Code (Muneeb)

· A convention copied from early Bitcoin clones
(Zcash and others had similar halvings; ~500 coins copied it then)
· Stacks' total supply was first set at 5 billion STX,
then reduced multiple times early on
· Halvings have never actually triggered in Stacks history
(always postponed for one reason or another)
· The first trigger now was only due to SIP timing, otherwise it wouldn't have

Muneeb's future vision (not part of this SIP):
· Bitcoin (store of value) and STX (economic layer) are different assets
· A comprehensive Stacks supply SIP will be needed separately down the road
· A fixed inflation rate based on growth and miner/staker incentives
· Muneeb has a rough sketch of it
· The inflation rate could be adjusted ceremonially at each Bitcoin halving
· But that adjustment should look entirely different from a halving
(since STX is not a store-of-value asset)

◆ Funding the Boost (community feedback applied)

· 6-month 500 STX boost = ~13 million tokens
· Original plan: newly issued via Coinbase rewards
· Community input: "If it's a growth mechanism, the endowment should fund it"
· Revised direction: burn an equivalent amount from the treasury
→ still issued to miners via Coinbase to incentivize BTC bids
→ effectively funded by the endowment's growth programs
· Pending financial and regulatory checks

◆ Mining Competition

· Stacks mining is highly competitive on a financial basis
· Miner margin is around 5%
· ~95% of the STX block reward value flows back as BTC bids
· Nakamoto Bitcoin finality makes reorg games impossible
· High confidence in the market modeling

◆ How It Secures the Network (question)

Q. How does Bitcoin Staking secure the Stacks network?

· Holding STX is the core of network security
· All governance = STX only
· Signer weight (validation authority) = STX only
· Bitcoin has no governance or signer role
· Bitcoin's role: a powerful incentive to hold and align with STX
· Giving Bitcoin some signer weight was discussed, but since
holding more STX means more alignment with the network,
keeping weight on STX alone was judged the more elegant approach

◆ STX Price and Rewards

· What matters is the STX/BTC ratio
· Whether routed through USD or not, it's the same ratio
· USD terms are used simply because they're easier to grasp
· Since Bitcoin always moves, USD-only tables assume
a fixed Bitcoin price (relative movement only)

◆ Depth of Economic Research

· Sam (ex-Black Lotus Capital) joined as a SIP author
· Pulled tick-level trade data from all major exchanges (4-5 years)
· Modeled market flows across pre-bull, bull, post-bull, and bear
· Ongoing weekly monitoring
· SIP-31 made it possible to bring on full-time specialists
· The data behind the SIP appendices comes from this work

◆ Existing STX Holders' Volatility Concern (question)

Q. Doesn't this give incoming participants predictable BTC yield
while exposing existing STX holders to greater volatility?

· That is the intended design of the program
· STX is a higher-beta asset relative to Bitcoin
(when BTC rises, STX rises more; when it falls, STX falls more)
· Large Bitcoin holders are fundamentally risk-averse
· This is a concept borrowed from TradFi
· Institutions get stable yield but with a capped upside
· STX holders may get 0% in one cycle and 10-15% in another
(based on overflow)

◆ How STX-Only Stakers Actually Earn More

· In cycles with little Bitcoin inflow,
the surplus BTC all flows into Tranche 2
→ continuously accruing to STX-only stakers
· STX paired by Bitcoin holders is staked but earns no yield
→ the total STX sharing rewards shrinks
→ raising the yield for existing STX-only stakers

◆ Removing the 100-Block Burn Cycle

· The existing PoX 100-block proof-of-burn cycle is removed
· Historically ~600 BTC was simply burned (never distributed)
· Now it flows through the smart contract to participants
· About 5% of "free yield" is newly captured and distributed

◆ Sell-Pressure Assumptions

Miners:
· Assumes miners sell 100% of the STX they receive (conservative)
· Miners spend BTC to win block rewards, taking only ~5% margin

SIP-31 unlocking STX:
· Does not hit the market the same way
· Much of it is used by the endowment for DeFi deployment / collateral
· Even when sold, it's sold privately to long-term locked holders
· ~4-5M STX unlocks monthly, but not all reaches the market
· The endowment must last far longer than five years,
so much of it needs to be held long-term

◆ The Tension the Bond Structure Resolves (Muneeb)

Two types of participants:
· Institutions / OG Bitcoin holders: extremely risk-averse
- Dislike variable yield, prefer a stable 3% bond
- Willing to give up upside for downside protection
· STX holders: early adopters, risk-tolerant
- Betting on something new with big potential
- Up to 7-8% yield in a bull market (bonds stay at 3%)
- But may earn less in a downturn

Why it matters:
· Each group gets the product it wants
· Reinforces STX as a higher-beta asset in the market's eyes
· The clearer STX's identity, the easier its adoption and integration

◆ Next Steps

· Forum feedback phase stays open
· Draft will be refined and formally moved to GitHub
· Additional calls planned beyond the regular SIP calls
· Recording to be shared and summarized

📚 Forum discussion
https://t.co/AeNeYpfct7