- Stacks activates the Nakamoto upgrade, which will be completed by the end of May.
- A successful upgrade could fuel ‘Bitcoin DeFi Summer’.
The Runes Protocol attracted increasing interest during the halving Bitcoin [BTC] reimbursements by 1,200%. Transaction fees hit an all-time high of $80 million after the new memecoin protocol went live on Bitcoin.
Stacks [STX], another major player in the Bitcoin L2 space, could generate higher fees after completing the two-step Nakamoto upgrade. In response to the Runes-related increase in fees, Stacks co-founder Muneeb Ali noted,
“Remember when we told you Bitcoin fees will be 500x? Yes, we worked on Bitcoin L2s for a reason. Happy halving, everyone! Next stop, Nakamoto.
The overheated Bitcoin L2 space caught Bernstein’s attention. In a Monday note to clients, Bernstein analysts reiterated:
“Bitcoin is experiencing a ‘Defi Summer’, much like Ethereum did in 2020, when multiple decentralized apps and tokens launched on the Ethereum blockchain, leading to a glut of liquidity and transaction fees.”
Stacks Nakamoto Upgrade: Will BTC Benefit?
Despite being over three years old, Stacks struggles with speed. The Nakamoto upgrade is a two-step overhaul that started on April 22. It aims to improve speed and enable the movement of BTC from L1 to L2.
Louise Payawal, growth manager at Stacks, summarizes the Nakamoto release: noted That;
“Essentially, the Nakamoto release is poised to redefine the role and utility of Bitcoin, expand its capabilities, and truly fulfill the Bitcoin DeFi story. Stacks makes it possible after so many years.”
STX rose more than 36% on the weekly charts and was up 8% on Monday. This was just before the first phase of the Nakamoto upgrade went live. It was trading at $3 at the time of writing, after hitting resistance at $3.1.
The second and final phase of Nakamoto will take place at the end of May. This will be a new dawn and opportunity for programmable Bitcoin.
Some market watchers believe that STX and BTC have not fully priced the upgrade. Matt Zhang of web3 investment firm Hivemind Capital Partners noted That;
“Next month will be “orange” because Stacks Nakamoto Upgrade is not priced in.”
However, Stacks faces competition. A relatively new L2, Merlin Chain and Rootstock are leading in terms of TVL (Total value locked).
Stacks was among the top three based on TVL. As BTC L2 heats up, it remains to be seen whether the upgrade will give Stacks an edge over the competition.