Besides Ankr (ANKR), which is seeing a massive price increase due to its partnerships with Microsoft and Tencent, the Bitcoin layer-2 network Stacks is currently the hottest topic on the altcoin market. STX is up a whopping 132% in the last seven days and has seen a 15% price increase in the last 24 hours alone.
The hype around STX was sparked by the Bitcoin NFTs “Ordinals” which have caused a lot of controversy in the Bitcoin community. Stacks is different, however, as it is a layer-2 project for the Bitcoin blockchain to enable NFTs, smart contracts and dApps.
“Whatever you can build on Ethereum, Solana, you can build on Stacks L2s,” Muneeb Ali, co-founder of Stacks said recently.
Since its inception in 2017, the project has been one of the top Bitcoin L2 projects in the crypto market, though the term is actually not accurate. Technically, Stacks works a bit differently than Ethereum sidechains or rollups, which is why the developers sometimes use the term layer-1.5.
The next planned version, called the Nakamoto version, will no longer have a separate security budget from Bitcoin. Instead, 100% of Bitcoin hashpower will determine the finality of the Stacks layer. This means that in order to reorganize Stacks blocks, attackers would have to reorganize Bitcoin L1 itself.
The upcoming @Stacks upgrade this year will make it a Bitcoin L2 with 100% of BTC hash power giving finality.
The Bitcoin economy grows in layers.
— muneeb.btc (@muneeb) February 19, 2023
This Is Why Stacks Sees A Massive Hype
In addition to the hype surrounding the Bitcoin NFT project “Ordinals,” the increased developer activity on Stacks is probably primarily responsible for the rise in STX’s price. According to Stacks, there are now around 35,000 smart contracts running on the Bitcoin layer-2 network.
In addition, according to the team, more than 150 different projects are now developing applications on Stacks. DeFi is particularly promising in this regard.
According to co-founder Muneeb Ali, the goal is to “unlock $500 billion in BTC capital” by enabling sBTC for a Bitcoin-based DeFi. “sBTC can do for Bitcoin DeFi what Ordinals did for Bitcoin NFTs,” believes Ali, who further stated recently that $250 million is already in the stacking contract and 2,200 BTC have been paid out as rewards.
1/ Stacks is an open-source project started by a bunch of Bitcoin builders. The devs behind it have extensive experience in building apps & protocols on Bitcoin L1.
In 2017, after the block size wars, it was abundantly clear that the only way to scale transactions or new use… https://t.co/VyxHG7eNSP
— muneeb.btc (@muneeb) February 20, 2023
Similar to Bitcoin NFTs, however, this could be just the beginning for Bitcoin DeFi. An advantage of Stacks over Ethereum and other blockchains is also that the smart contracts can be developed for free.
The number of daily active wallets in the network is also promising. According to Messari, these are up 67.4% year-over-year. Still, with an average of just under 1,000 active wallets per day, Stacks is still in its infancy compared to Ethereum layer-2 networks. Ethereum’s Arbitrum, for example, comes in at just under 30,000 active wallets per day.
As for NFTs, the L2 also already boasts an active community of creators. There have been 650,000 Bitcoin NFTs minted on Stacks. All these NFTs are automatically hashed on Bitcoin L1 and backed by Bitcoin in a scalable way – unlike Ordinals.
The token (STX) is valuable as it is used as an incentive for miners and incentive for peg-out signers for sBTC to keep mining and signing decentralized rather than using federation.
At press time, STX traded at $0.7880. Despite the massive gains in the last two weeks, the 1-week chart reveals that Stacks is still nowhere near its all-time high of $3.39 set on December 01, 2021.
Featured image from iStock, Chart from TradingView.com