The dust has not yet settled on Bitcoin’s halving, but a new trend is emerging that could reshape the landscape of the leading cryptocurrency. While Bitcoin itself experienced a modest price increase, tokens associated with Bitcoin Layer 2 solutions, such as the STX coin, surged past BTC. This superior performance comes amid a significant increase in transaction fees on the Bitcoin blockchain, a problem that Layer 2 solutions aim to overcome. Let’s take a deeper dive into this unexpected development and discover what it means for the future of Bitcoin.
Layer-2 coins: STX coin, ELA and SAVM stood out
Tokens such as STX (Stacks), ELA (Elastos) and SAVM (SatoshiVM) have witnessed impressive gains since the halving event on April 20. STX, the leader of the pack, is up nearly 20%, while ELA and SAVM are up 11% and 5% respectively. This is in stark contrast to Bitcoin’s 4.7% rise. This surge in Layer 2 tokens highlights growing investor interest in solutions that address the scalability limitations of the Bitcoin blockchain. Bitcoin Layer 2 projects operate on top of the main chain, processing transactions off-chain to increase speed and reduce fees.
Unlike Ethereum Layer 2 solutions, which focus primarily on smart contracts, Bitcoin Layer 2 projects aim to scale the network and offer programmability features while maintaining the security of the Bitcoin blockchain. The Layer 2 rally coincides with a significant increase in transaction fees on the Bitcoin blockchain. Following the halving, data from Glassnode shows that the average transaction fee jumped to approximately 0.0020 BTC, the highest level since early 2018. This increase is likely due to the recent launch of a protocol called Runes.
What’s next?
As Kriptokoin.com reported, Runes allows users to “scrape” and mint tokens directly on the Bitcoin blockchain. The launch of this protocol sparked a frenzy of activity as speculators rushed to mint tokens and trade meme coins, causing network traffic to increase and fees to skyrocket.
The superior performance of Layer 2 tokens shows that investors are increasingly looking for ways to interact with the Bitcoin ecosystem without being subject to the limitations of the main chain. The recent increase in wages further strengthens this argument. As Bitcoin adoption increases, transaction fees are likely to remain variable, potentially hindering mainstream availability. Layer 2 solutions offer an attractive alternative by providing faster transactions at lower costs.
Although it is too early to predict a definitive change, the post-halving performance of layer 2 tokens paints an interesting picture. As scalability concerns continue to grow, layer 2 projects could emerge as a crucial element in ensuring Bitcoin’s long-term viability. The success of these projects will depend on their ability to provide efficient scaling solutions while maintaining the core security principles of the Bitcoin network.
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