CityCoins is a crypto project built around a simple idea: let people support a city’s treasury while earning on-chain rewards. The system is built on Stacks, an open-source blockchain linked to Bitcoin that supports dApps, smart contracts, and NFTs. CityCoins Inc. developed the project with support from the Stacks community, Freehold, Z1, and Syvita Guild.
Several city-linked tokens have already been launched through the model. MiamiCoin (MIA) went live in August 2021, and NYCCoin (NYC) launched in November 2021. The source says the mayors of both cities backed the cryptocurrencies. CityCoins also has ATX, a token tied to Austin, Texas.
How a new CityCoin gets created
CityCoins does not follow the usual model in which a team issues tokens first and then distributes them. Instead, the community votes on which city should receive the next CityCoin. A mayor can also ask the community to launch one. The source notes that New York City Mayor Brian Adams requested a CityCoin for his city, after which the community activated NYCCoin mining.
Once a city is selected, anyone can deploy the smart contract for that CityCoin on the Stacks mainnet, though coding skills are required. The setup process begins with a Stacks wallet, followed by buying STX to cover transaction fees. Users then connect the wallet on minecitycoins.com and deploy the contract. After deployment, 20 unique wallet addresses must send transactions to activate the CityCoin. Twenty-four hours later, mining can begin.
Mining sends STX to city wallets and stackers
CityCoin mining is not based on traditional computational power. Miners compete for the right to propose a block and receive a block reward by sending STX into a smart contract in a given block. A verifiable random function, or VRF, chooses the winner, and the odds are weighted by the total amount of STX spent. Each participant can mine only once per block.
STX spent in mining cannot be reversed. The distribution is fixed: 30% goes to the city wallet and 70% goes to stackers. A larger STX spend raises the probability of winning a block reward. New CityCoins are minted when winning miners claim that reward. According to the emission schedule, the reward starts at 250,000 CityCoins per block and halves every four years over the next 20 years.
Mining works through bids submitted per block, with the bid locked once the transaction is confirmed. Miners can also target several blocks in one transaction by submitting a combined bid. The source lists minecitycoins.com and Syvita Mining as participation channels.
How stacking works in the CityCoins system
Stacking is similar in some ways to crypto staking, but users lock CityCoins rather than a base network token. Participants place their tokens into a smart contract and choose how many reward cycles they want to join. In return, they receive STX rewards. Those STX can then be stacked again within the Stacks ecosystem to earn BTC rewards.
At the end of each cycle, participants can claim their STX rewards and unlocked CityCoins. The payout depends on the share of tokens they stacked relative to the total amount stacked in that reward cycle. The source says each cycle lasts about two weeks. Both Syvita Mining and minecitycoins.com support stacking.
MiamiCoin and NYCCoin show the city-funding use case
For cities, the main appeal is recurring revenue. Every time MIA or NYCCoin is mined, 30% of the STX used is routed into the relevant city wallet. A city can claim those funds and, if it chooses, convert STX into U.S. dollars before using the money for local projects.
For users, the reward paths are split. Miners compete for block rewards, while holders can stack MIA or NYCCoin to earn STX. The source says that in less than three months after MiamiCoin launched, miners had contributed about $20 million worth of STX. That figure points to the scale CityCoins can reach when a large community participates.
MIA and NYCCoin are also programmable through smart contracts. That leaves room for developers to add utility by building applications that use CityCoins inside broader on-chain products.
Why Stacks is the base layer for CityCoins
CityCoins relies on Stacks for its smart contract layer. Stacks is an open-source blockchain protocol that brings smart contracts next to the Bitcoin network through the Clarity programming language. It is built on top of Bitcoin and connects to it through the Proof-of-Transfer (PoX) consensus mechanism. In the source description, Stacks miners transfer Bitcoin to earn newly issued STX tokens.
Muneeb Ali and Ryan Shea founded Stacks in 2013. The project was previously known as Blockstack. Its early backers included Winklevoss Capital, Y Combinator, and Digital Currency Group. The company behind the project is Hiro Systems PBC, originally called Blockstack PBC.