The price of Stacks (STX), the native token of the Stacks Network, skyrocketed in March as interest in Bitcoin Ordinals and the protocol’s total value locked (TVL) increased. Later this year, the project will also receive an upgrade to increase performance and scalability.
STX, the first token distributed through the first-ever qualified token offering approved by the U.S. Securities and Exchange Commission (SEC) in 2019, increased by 23% in March to hit $1.25, the token’s best price since last year. The token has increased by 350% over the past three months, valuing it at $1.5 billion, despite a minor increase slowdown around the end of March.
According to data from Messari, STX is the second best-performing digital asset throughout March among tokens, with a market cap above $1 billion, after only XRP.
Stacks is a Bitcoin layer 2 protocol for smart contracts that aims to expand and change the functionality of Bitcoin from its well-known use as a different type of payment system to a more adaptable and programmable platform.
The token increased last month as market participants’ desire to produce non-fungible Bitcoin Ordinal tokens grew (NFT). According to Stacks co-founder Muneeb Ali, Stacks has native functionality to mint NFTs, and users have minted 650,000 Bitcoin NFTs on the Stacks layer 2.
According to information from DeFiLlama, Stacks Network’s TVL also increased over the past few months, rising from $8 million in February to $35 million in mid-March. After then, it decreased to $25 million.
Decentralized finance (DeFi) analyst Michael Nadeau stated: “The enthusiasm around Stacks is undoubtedly attributable to Ordinals but might be sustained provided the devs stick around.” For Bitcoin to survive over the long term, it needs initiatives like these.
Developers can create programs on the Stacks smart contract protocol, much like Ethereum or Solana, because it has a ledger for storing data outside layer 1 of Bitcoin.
Stacks wants to increase Bitcoin’s programmability, which is more common among the other two blockchain platforms and where most DeFi activity is now concentrated.
In an interview with CoinDesk, Ali from Stacks suggested that demand in STX recently may have been sparked by anticipation for Stacks’ anticipated Protocol update later this year.
According to him, the release would provide users access to complete layer 2 smart contracts, allowing them to move bitcoin (BTC) in and out. In contrast, layer 2 transactions are protected by the layer 1 network’s security.
According to Ali, unlike Ethereum and Arbitrum, users can’t now transfer Bitcoin easily into the Stacks layer. The main impediment is this.
The update is expected to boost the network’s capacity and liquidity.
Stacks allow users to host nodes on less-sophisticated technology, such as Raspberry Pi or standard laptops, making it more accessible for consumers than many blockchains that demand high-power hardware. In contrast to Solana or ICP, Stacks doesn’t mandate running nodes in data centers, which is the normal method for deploying nodes with demanding hardware specifications, in Ali’s opinion.
Despite challenges in building a crypto economy on top of Bitcoin, NorthRock Digital, a hedge fund that invests in cryptocurrencies, stated in research that “Stacks has a potentially massive opportunity’ due to the comparatively modest crypto economy now built atop Bitcoin.”
The three main layer 2 networks on Bitcoin that NorthRock identified are Lightning, RSK, and Stacks. NorthRock stated that although each layer 2 “is complementary and has different goals, of the three Stacks is furthest along in establishing an ecosystem for more typical crypto applications (NFTs, DeFi, Name Services, etc.).
The upcoming halving of Bitcoin, according to NorthRock, will probably be advantageous to Stacks. “Bitcoin’s security budget will be reduced by the halving itself, which emphasizes the need to expand the fee pool by creating a more successful Bitcoin ecosystem. According to the paper, this will reinforce the significance” of layer 2s like Stacks.