What Are STX20 Tokens? A Beginner's Guide to Inscriptions on Stacks

STX20 tokens, heavily inspired by the BRC20 token standard on Bitcoin, are the latest innovation in the Stacks ecosystem.

Read on to learn about STX20 tokens, how they work, and how you can mint them. 

What Are STX20 Tokens?

STX20 tokens are a new fungible token standard on the Stacks network, a Bitcoin layer built for smart contracts and Web3 applications. These tokens have been inspired by Bitcoin’s new BRC20 token standard and are created as a result of the STX20 protocol. 

The STX20 protocol allows for the creation and distribution of fungible, on-chain tokens on Stacks through inscription of data onto individual STX tokens. The protocol leverages the transaction memo field to offer a more efficient, gas-saving alternative to conventional smart contracts for specific use cases on Stacks.

STX20 tokens are created to be efficient, streamlined and space-saving to fit into Stack’s memory limit and maintain the network’s integrity. Anyone can create an STX20 token by minting it on the STX20.com using a Stacks-compatible Bitcoin Web3 wallet like Xverse. 

The project’s Github outlines the STX20 protocol developer's future plans, including enabling independent transaction verification, enhancing transparency and traceability, and making protocol rules available for review to leverage Stacks' security.

Now, let’s take a closer look at exactly how STX20 tokens work. 

How Do STX20 Tokens Work?

STX20 tokens are created using the STX20 protocol, a set of standards built on the Stacks blockchain. The STX20 protocol allows developers and users to embed data onto the metadata of STX tokens. The protocol utilizes the 34-symbol limit of Stacks' transaction memos to conserve blockchain space and maintain network integrity during token inscription.

All STX20 token mints and transfers are done in a single transaction with transaction order in a block helping to determine prioritization of the transaction being completed. Further, all inscriptions adhere to the Stack network’s standard 64base format, which helps to encode binary data as printable text and share information across different networks. 

Since the STX protocol is built to be decentralized, so are all STX20 tokens. In fact, when you mint an STX20 token, you will be required to set it to have a limited supply, inspired by Bitcoin’s limited supply. Once a new STX20 token is deployed, anyone can mint it until the maximum supply is reached. 

What’s the Difference Between STX20 and BRC20 Tokens? 

The STX20 protocol was inspired by Bitcoin’s BRC20 token standard, which allows for the minting and transferring of fungible tokens directly on the Bitcoin blockchain. STX20 tokens are de facto the BRC20 equivalent except for the Stacks blockchain. 

While BRC20 tokens are minted directly on the Bitcoin blockchain, STX20 tokens are minted on the Stacks blockchain, which is a leading Bitcoin layer built for the development Web3 solutions secured by Bitcoin. 

Another difference between STX20 and BRC20 is that the STX20 team has stated that one of the main functions of the token is to bring more smart contract capabilities to Stacks, while BRC20 was mainly created to bring fungible tokens to the chain.

Lastly, BRC20 tokens utilizes the Ordinal protocol during their minting process and only require a Bitcoin wallet to mint and trade the tokens. STX20 uses the STX20 protocol that requires a Stacks wallet like Xverse to mint and trade the tokens.

What’s the Difference Between STX20 and SIP10 Tokens?

While STX20 brings increased functionality to the Stacks ecosystem, it’s not the first token standard to bring fungibility to the network. 

One of the first standards to bring this to Stacks is SIP10. SIP10 was created in 2021 and had the main goal of defining a Clarity trait that all fungible tokens can implement to make it easier to create fungible tokens on Stacks and to make them interoperable. 

A key difference between STX20 and SIP10 tokens lies in their purpose of creation. STX20 tokens were created as low-resource-intensive fungible tokens and increased smart contract functionality to Stacks. Conversely, SIP10 was created to define traits for the creation of fungible tokens on Stacks and promote interoperability on the network. 

SIP10 tokens are essentially Ethereum’s ERC20 tokens-equivalent on Stacks, whereas STX20 tokens are the equivalent of Bitcoin’s BRC20 tokens on Stacks. 

In SIP10’s Github, the proposers outline specific characteristics, referred to as ‘traits’ that developers should follow when creating fungible tokens on Stacks, while in STX20’s Github, the proposers state that the STX20 protocol shall be used to create simple fungible tokens. 

How to Mint STX20 Tokens Using Xverse 

To mint STX20 tokens, you can access STX20.com and connect your Xverse wallet. 

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You can search for the token you want to mint using the ‘Explore’ dashboard.

Alternatively, click ‘Inscribe’ and type in the ticket of the STX20 token you want to mint. Provided it hasn’t minted out yet, you can mint any token up to its mint limit dictated by the deployed token’s design. 

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Ensure that the destination STX20 wallet address you use is different than the connected wallet. You can create a second STX wallet address within the Xverse app by clicking on ‘Account’ and ‘Create new account.’ 

Complete the STX20 token mint by clicking ‘Mint’ and confirming the transaction details (including the transaction fee) using Xverse wallet. Make sure you have enough STX tokens in your Stacks wallet to cover the gas fees. 

And that’s it! You have minted STX20 tokens. 

Securely Store Your STX20 Tokens With Xverse 

Xverse is the market-leading Bitcoin Web3 wallet supporting popular Bitcoin layers, such as Stacks. 

The non-custodial wallet, available for Android, iOS, and Chrome, allows you to securely store and manage Stacks (STX), SIP10, and STX20 tokens, as well as Bitcoin layer-1 assets like Ordinals, BRC20 tokens, and Runes.

Download Xverse today and explore the brave new world of STX20 tokens on Stacks.

Frequently Asked Questions

What is the STX20 Protocol?

The STX20 protocol is a new token standard built on Stacks that allows you to create fungible on-chain tokens in minutes. These tokens can have data inscribed on them using the protocol, bringing a new type of fungible tokens to Stacks. The STX20 protocol also helps to increase smart contract capability on the network.