Nakamoto for Exchanges

This page breaks down what exchanges should expect in terms of the upgrade and timing for Nakamoto. This upgrade will be follow the standard update process.

What is the Nakamoto upgrade?

The Nakamoto release brings many new capabilities and improvements to the Stacks blockchain by focusing on a set of core advancements: improving transaction speed, enhancing finality guarantees for transactions, mitigating Bitcoin miner MEV (miner extractable value) opportunities that affect PoX, and boosting robustness against chain reorganizations. This strategic upgrade aims to solidify trust in the Stacks network, offer greater alignment with Bitcoin's immutable nature, and foster an environment ripe for advanced Decentralized Finance (DeFi) applications. The expected outcome is a versatile, scalable, and secure platform that closely integrates with, yet distinctly enhances, the Bitcoin ecosystem. Learn more: Nakamoto in 10 Minutes

What does the Nakamoto upgrade mean for exchanges?

The main thing exchanges will notice when the Nakamoto rollout is complete is the faster blocks! Gone are the days of waiting for Bitcoin blocks for confirmations. In addition to fast blocks, exchanges will benefit from:

  • Smoother block production

  • No forking at the Stacks layer, once a transaction is confirmed in an anchor block, it is as irreversible as a Bitcoin transaction (and therefore, can update confirmation rules (number of confirmations) to match Bitcoin's)

  • For exchanges offering Stacking pools, likely increased BTC rewards thanks to MEV improvements

How should exchanges prepare for the upgrade?

This upgrade will feel very familiar. You will be able to follow the usual node upgrade process and the corresponding API upgrade is non-schema-breaking, so no event replay is needed. In other words, the Nakamoto upgrade will look and feel like a simple hotfix update/node update.

Exchanges that support native Bitcoin yield via Stacking may have extra upgrade considerations: Nakamoto for Stacking Providers

Upgrade Steps:

  1. Download and install binaries/docker images which will be provided directly in your dedicated support channel and linked here when ready

  2. Restart the node

Timeline

Core developers expect to release binaries on or around August 28th. Exchanges can expect their usual ecosystem point of contact to provide them with detailed information and updates during the process.

  1. Instantiation block: The first hard fork occurred at Bitcoin block 840,360. If you haven't already, you will need to upgrade to the latest node software or they will not process valid blocks and users will not be able to move funds on the network.

  2. Activation block: The second hard fork occurs around August 28. At this time, the Nakamoto consensus rules will activate, meaning the new Nakamoto features will be made live. Exchanges will need to repeat the upgrade process at this time. Again, no genesis sync, just a download and restart.

Other Recommendations:

  • With just a bit of extra work, exchanges can support the Stacks SIP-10 token standard. This allows an exchange to easily list any of a growing number of tokens built on Stacks as well as the upcoming sBTC asset.

  • Exchanges that already offer staking type services to their users (programs often called Earn/Stake/etc.) should consider adding Stacking to their platform alongside other offerings. Users can earn BTC by participating in Stacks consensus through a simple pool.

  • The Stacks Foundation is seeking a handful of exchanges to pilot rapid BTC withdrawals via the upcoming sBTC asset, expected to closely follow the Nakamoto hard fork. Interest exchange can reach out to their usual point of contact or complete this form.

Resources:

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