• Cryptoasset Report
  • January 4, 2019

Blockstack is an open source project supporting a decentralized web through its decentralized alternatives to DNS and HTTP, and methods for integrating blockchains with existing cloud storage networks.


Blockstack is a decentralized alternative to basic web protocols and services, such as DNS and HTTP, that enables blockchains to integrate with existing cloud storage networks. Blockstack’s multi-layer protocol is built on top of an existing blockchain. By using a base blockchain as a communication and validation layer, Blockstack’s blockchain allows developers to build “blockchain agnostic” products easily moved between blockchains and reduces scalability challenges by minimizing the complexity of the operations validated by major public blockchains. Core services offered through Blockstack include BNS, a blockchain based alternative to DNS, Atlas, a network protocol for data transfer and encryption, and Gaia, a network of hash-pointer-storing hubs that maps user data locations. Blockstack’s founders participated in Y Combinator in 2014 and secured investment from Union Square Ventures and Naval Ravikant before the decision to launch a meta token on Ethereum in order to incentivize network participation and raise funds. A public alpha of the Blockstack browser was released in Q4 2017 with a DApp store,, released in Q2 2018.

Protocol Details

Blockstack’s existing products include Atlas & Gaia. The Atlas Peer Network is a protocol that replaces HTTP for data transfer and encryption. Gaia is a high-performance distributed storage system featuring a network of hubs storing hash pointers mapping the locations of users data, such as hashes of data stored in AWS of Microsoft Azure. The Blockchain Name Service removes the central intermediaries the internet has thus far required to hold a comprehensive registry. BNS associates blockchain addresses to human readable names, which are globally unique and owned by the person with the associated ECDSA private key. Blockstack introduced the abstraction of a virtualchain in their whitepaper as means to separate complicated logic from data storage on the Blockstack base blockchain. Bitcoin is the base blockchain as of September 2018 and stores the BNS. Most operation types on the network, such as retrieving and reading data, need not interface with the base blockchain, helping Blockstack scale. Other operations, like registering a name or changing its information, will require transactions on the base blockchain with any associated costs.

Asset Details

Originally, the Blockstack initiative was funded by VCs before a sale of Stack Tokens (STX) was conducted to raise funds and incentivise network participation. STX is used as a means of payment for services on the network, for voting in governance decisions, and as a reward for contributing to the network. Blockstack’s transition from using a base blockchain token such as BTC to using their own native protocol token, STX, will be imposed via a network hard fork. Historically, Blockstack has undergone a hardfork to instantiate significant software changes annually. The genesis block of the Stacks blockchain is scheduled for Q4 of 2018. STX will be spent to register names and applications on Blockstack. Associating costs to network operations helps prevent spam and reflects domain names’ scarcity. The stacks token will also entitle holders to a say in key governance decisions moving forward.

During the Blockstack token sale, a maximum of 440 million tokens were up for sale. The remaining tokens were generated and distributed in three different “mining” processes. The total supply of STX is expected to reach 4.7 billion in ~10 years. Blockstack mining processes include:

Proof-of-Burn: This is a mechanism that incentivizes users to contribute to the network as Blockstack nodes. In order to earn block rewards, nodes must burn cryptocurrency of the underlying base blockchain by sending it to a black hole address. This is a simple method of identifying the longest chain in the Virtualchain network. All nodes have to do is verify which chain is associated with the greatest amount of burned currency. The block reward starts at 8,000 tokens per block and reduces annually until it hits 2,000 tokens per block, after which point it stays constant forever.

App-Rewards: App rewards are designed to incentivize developers to participate in the ecosystem. App rewards per block are defined by the Stack protocol. Deciding how these rewards are distributed is up to a federation of independent app reviewers.

Web-of-Trust Mining: These are rewards that are intended to incentivize users to participate in the ecosystem and use apps. A pool of STX tokens, defined in the protocol, will be offered to users at a discount on the token sale price. Users who go through a standard KYC process when they set up their account will earn a coupon to buy discounted STX.