- Stacks activates the Nakamoto upgrade, which will be completed by end-May.
- A successful upgrade could fuel “Bitcoin DeFi Summer.”
The Runes protocol spiked interest during the halving, increasing Bitcoin [BTC] fees by 1,200%. Transaction fees hit a record high of $80M after the new memecoin protocol went live on Bitcoin.
Stacks [STX], another key player in the Bitcoin L2 space, could drive higher fees after completing the two-step Nakamoto upgrade. Reacting to Runes-linked fee surge, Stacks co-founder Muneeb Ali noted,
“Remember when we told you that Bitcoin fees will do a 500x? Yeah, we’ve been working on Bitcoin L2s for a reason. Happy halving, everyone! Next stop, Nakamoto.”
The overheating Bitcoin L2 space caught Bernstein’s attention. In a Monday note to clients, Bernstein analysts reiterated,
“Bitcoin is experiencing a ‘Defi summer’ like a moment that Ethereum did back in 2020, where multiple decentralized apps and tokens were launched on the Ethereum blockchain, leading to splurge of liquidity and transaction fees.”
Stacks Nakamoto upgrade: Will BTC benefit?
Despite being over three years old, Stacks has struggled with speed. The Nakamoto upgrade is a two-step overhaul that started on 22 April. It aims to improve speed and allow the movement of BTC from L1 to L2.
Summarizing the Nakamoto release, Louise Payawal, growth exec at Stacks, noted that;
“In essence, the Nakamoto release is poised to redefine Bitcoin’s role and utility, elevating its capabilities and actually fulfilling the narrative Bitcoin DeFi. Stacks is making it happen after so many years.”
STX was up over 36% on the weekly charts and rallied 8% on Monday. This was just before the first phase of the Nakamoto upgrade went live. It traded at $3 at press time after hitting resistance at $3.1.
Nakamoto’s second and final phase will occur in late May. This will be a new dawn and capability for programmable Bitcoin.
Some market watchers believe STX and BTC haven’t fully priced the upgrade. Matt Zhang of web3 investment firm Hivemind Capital Partners noted that;
“The next month will be “orange” because Stacks Nakamoto Upgrade is not priced in.”
However, Stacks must contend with 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, whether the upgrade will give Stacks an edge over competitors remains to be seen.
