Layer 2 Tokens Outshine BTC Post-Halving

In the wake of the Bitcoin blockchain’s latest halving event early Saturday, tokens associated with Bitcoin layer 2 solutions have seen remarkable gains, outperforming Bitcoin (BTC) itself. STX, the native token of Stacks, a leading Bitcoin layer 2 network, surged nearly 20% to $2.87. This rise followed the halving which cut the per-block coin emission from 6.25 BTC to 3.125 BTC. In contrast, Bitcoin has posted a modest increase of just over 4.7% to $66,300.

STX has emerged as one of the top performers among the top 25 cryptocurrencies over the past 24 hours, according to Velo Data. Other notable layer 2 tokens like Elastos’ ELA and SatoshiVM’s SAVM have also experienced significant upticks, rising 11% and 5% respectively since the halving.

Bitcoin layer 2 solutions are designed to enhance scalability and transaction speed on the Bitcoin blockchain. These projects operate atop the Bitcoin blockchain and increase scalability by processing transactions off the main chain. Unlike Ethereum’s layer 2 solutions, which primarily enhance the scalability of its smart contract capabilities, Bitcoin layer 2 initiatives focus on scaling and introducing programmability features without an Ethereum-like virtual machine.

The performance boost for Bitcoin layer 2 tokens coincides with a spike in transaction fees on the Bitcoin blockchain post-halving. According to Glassnode, the average transaction fee escalated to nearly 0.0020 BTC, the highest since early 2018. This increase in fees is partly due to the launch of the new Runes protocol, which allows users to “etch” and mint tokens directly on the Bitcoin blockchain. The launch sparked a flurry of activity as speculators rushed to mint and trade meme coins, thus driving up transaction volumes and fees.

At press time, there have been 3,700 Runes inscriptions recorded on the Bitcoin blockchain, as per data from Ord.io. This innovative use of the Bitcoin network underscores the growing interest and development in layer 2 solutions as they continue to offer new functionalities and improve transaction efficiency, further cementing their market position in the cryptocurrency ecosystem.