Bitcoin Layer-2 Network Stacks Reaches Record High in Active Users, Signaling DeFi Surge

Stacks, a leading Bitcoin layer-2 (L2) network, has reached an all-time high of 122,497 active users in April 2023. This surge is attributed to increased interest in Bitcoin-native decentralized finance (DeFi) and the launch of new protocols like Runes and Ordinals. Experts believe that increasing Bitcoin network fees will drive more activity to L2 networks like Stacks, as they provide lower transaction costs and enable additional use cases for the Bitcoin blockchain.

Bitcoin Layer-2 Network Stacks Surges to All-Time High in Active Users

New York, May 3, 2023 - Stacks, a prominent Bitcoin layer-2 (L2) network, has achieved an unprecedented milestone with a record number of active users, signaling a surge in interest in Bitcoin-native decentralized finance (DeFi).

Data released by Bitcoin data provider Signal 21 indicates that Stacks reached a new all-time high of 122,497 active accounts in April. Active accounts are defined as addresses that have executed at least one transaction on the network.

This surge in active accounts coincides with a period of heightened interest in Bitcoin DeFi, also known as BTCFi. The development comes shortly after the highly anticipated 2024 Bitcoin halving and the launch of Runes, an innovative protocol that facilitates the issuance of fungible tokens on the Bitcoin network.

Industry experts attribute the growing adoption of Stacks and other Bitcoin L2 networks to several factors. Andre Serrano, product and partnership manager at Stacks, maintains that rising Bitcoin network fees are driving smaller transactions to L2s.

"We anticipate a significant increase in asset issuance on the Bitcoin L1 network, which will escalate transaction fees," said Serrano. "This will inevitably result in the exclusion of many users and activities, exacerbating the need for L2 solutions."

According to data from CryptoQuant, Bitcoin median transaction fees have plummeted to $1.72 on May 1, a considerable decrease from the all-time high of over $92 recorded on April 20. The decline can be attributed to the halving event that reduced the block reward for Bitcoin miners.

Importance of Bitcoin L2s for DeFi

Bitcoin L2s play a crucial role in the development of Bitcoin DeFi. They enable lower transaction costs and facilitate a wider range of use cases on the foundational blockchain network. Stacks, for instance, allows for the creation of smart contracts on Bitcoin, expanding its capabilities beyond its original design.

Serrano emphasizes the critical nature of L2s for Bitcoin, contrasting it with Ethereum, which natively supports smart contracts. He contends that L2s are essential for scaling the Bitcoin network and addressing its current transaction limitations.

"L2s for Bitcoin are more consequential than L2s for Ethereum, which has inherent smart contract functionality," said Serrano. "For Bitcoin, L2s provide a means to unlock the network's full potential."

BTCFi's Growing Momentum

BTCFi has garnered widespread attention within the cryptocurrency community. Nash Lee, co-founder of MerlinSwap, believes that with continued growth, BTCFi could rival the innovation seen in Ethereum-native DeFi.

"The emergence of Runes presents a substantial lifeline for Bitcoin miners," said TeraWulf COO. "It offers them a new revenue stream, increasing the resilience of the Bitcoin network."

As the Bitcoin ecosystem continues to evolve, L2 networks like Stacks are expected to play an increasingly significant role in enabling DeFi innovation and expanding the utility of the Bitcoin blockchain.