• Tue. Jun 25th, 2024

Stacks Records All-Time High in Active Users Amid Bitcoin DeFi Surge

Steve Kornacki

BySteve Kornacki

May 2, 2024
Stacks Records All-Time High in Active Users Amid Bitcoin DeFi Surge

Stacks Surges to All-Time High in Active Users

In a milestone indicative of the growing prominence of Bitcoin-native decentralized finance (DeFi), Stacks, a leading Bitcoin layer-2 (L2) network, has witnessed a record surge in active users. According to data from Bitcoin data provider Signal 21, Stacks reached an all-time high of 122,497 active accounts in April.

The surge in active accounts on Stacks follows increasing interest in Bitcoin DeFi, or BTCFi, following the 2024 Bitcoin halving and the introduction of Runes, a novel protocol designed for issuing fungible tokens on the Bitcoin network. As Bitcoin network fees escalate, smaller transactions are priced out, making L2 networks like Stacks pivotal for accommodating such transactions and fostering further development in BTCFi.

L2 Networks and Bitcoin DeFi Scalability

Meanwhile, Andre Serrano, Stacks’s product and partnership manager, emphasized the importance of L2 networks in Bitcoin DeFi. He noted that asset issuance on the Bitcoin base layer could drive up transaction fees, necessitating the transition of activities to L2 solutions. 

Average BTC transaction fees, which peaked at over $92 on April 20, fell to $1.72 on May 1, underscoring the significance of L2 networks in mitigating transaction costs and enhancing scalability. Bitcoin L2 networks, such as Stacks, play a crucial role in expanding the utility of the Bitcoin network by enabling smart contract functionality and facilitating lower transaction costs. 

Unlike Ethereum, which inherently supports smart contracts, Bitcoin relies on L2 solutions to overcome its current transaction limitations and unlock additional use cases. Serrano highlighted the imperative nature of L2 networks to scale the Bitcoin network and drive greater innovation within the BTCFi ecosystem.

The enthusiasm surrounding BTCFi has garnered widespread attention across the cryptocurrency space, with industry experts speculating that it could rival Ethereum’s DeFi ecosystem in innovation and adoption. Nash Lee, the co-founder of MerlinSwap, expressed optimism about the transformative impact of L2 networks like Stacks on the broader cryptocurrency landscape, adding that BTCFi could usurp Ethereum’s DeFi sooner than later.

DeFi TVL Sees $10 Billion Drop in April

In April 2024, the decentralized finance (DeFi) landscape witnessed a $10 billion decline in total value locked (TVL), according to DefiLlama data, a DeFi metric aggregator platform. Among the top 10 blockchains by TVL, Avalanche experienced the most notable decrease, with 31.5% of funds exiting the chain. Also, about 30% of assets left the Solana ecosystem.

Despite these setbacks, Solana remains the third-largest blockchain in terms of total value locked, with over $6 billion in its applications. Despite a 14.2% drop, Ethereum continues to dominate DeFi with almost 69% of the total TVL. Additionally, Blast, another Layer-2 blockchain built on Ethereum, experienced a modest 4.4% growth in April, rounding off the list of winners for the month. 

Bitcoin and Base Gain Traction amidst DeFi’s TVL Decline

Despite the outflow of locked funds, Bitcoin and Base attracted more capital, surpassing the $1 billion threshold. Base, a Layer-2 blockchain created by the cryptocurrency exchange Coinbase, recorded a TVL increase of 18.4% in April. 

Seamless Protocol, Moonwell, and Tarot applications were the main drivers of this growth. Bitcoin also achieved a surge in TVL, rising by almost 39% in a month, primarily due to introducing a new Layer-2 infrastructure. 

The Bitcoin DeFi narrative has been gaining momentum, with industry players like Trust Machines emphasizing its functionalities comparable to other blockchains. Mark Hendrickson from Trust Machines highlighted the impact of events like Stacks’ Nakamoto upgrade on boosting the Bitcoin DeFi narrative.

Despite the decline in DeFi TVL, the rise of Bitcoin and Base suggests a shift in user preferences and investment strategies within the DeFi ecosystem. 

Also, Ethereum maintains its dominance even though other blockchains are emerging as viable alternatives, attracting users and capital with innovative features and infrastructure improvements.

Steve Kornacki

Steve Kornacki

Steve Kornacki, a respected author at Big Trends Signals, uses his deep online trading acumen to create comprehensive guides and balanced reviews, empowering traders in their digital pursuits.

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