Stacks, a Bitcoin layer-2 (L2) network, has achieved a significant milestone with a record high in active accounts, signaling a surge in interest in Bitcoin-native decentralized finance (DeFi). In April, Stacks reported having 122,497 active accounts, which are defined as addresses that have conducted at least one transaction. This increase in activity is attributed to the growing enthusiasm around Bitcoin DeFi, or BTCFi, particularly following the recent developments in the network and the broader Bitcoin ecosystem.

The rise in Stacks’ user base coincides with several key events in the Bitcoin space, including the 2024 Bitcoin halving and the launch of Runes, a new protocol designed to issue fungible tokens on the Bitcoin network. These developments are poised to expand the utility and capabilities of Bitcoin beyond its traditional role as a digital gold, fostering a burgeoning ecosystem of financial products and services built around its blockchain.

Andre Serrano, product and partnership manager at Stacks, highlighted the implications of these innovations for Bitcoin’s network infrastructure. According to Serrano, the anticipated increase in asset issuance on Bitcoin’s layer-1 (L1) will drive transaction fees higher, which could sideline smaller transactions and users due to cost constraints. This shift is expected to catalyze more activity towards L2 solutions like Stacks, which offer a more affordable and scalable alternative for conducting transactions and executing smart contracts on Bitcoin’s network.

The necessity for L2 networks is becoming increasingly apparent as Bitcoin’s transaction fees fluctuate. Although median transaction fees recently decreased to $1.72, they had previously soared to over $92. This volatility in transaction costs underscores the challenges of scaling Bitcoin’s network to accommodate a higher volume of transactions and complex contract interactions.

Bitcoin L2s are crucial not only for enhancing Bitcoin’s scalability but also for expanding its functionality to include smart contract capabilities, which are inherent in networks like Ethereum. By enabling smart contracts, Stacks and similar L2 solutions allow for the creation of sophisticated financial instruments and services directly on the Bitcoin blockchain, paving the way for a richer, more diverse DeFi ecosystem.

The enthusiasm for BTCFi is growing, and industry insiders predict that Bitcoin-based financial innovations could eventually rival those seen in Ethereum’s DeFi landscape. Nash Lee, co-founder of MerlinSwap, expressed optimism about the future of BTCFi, suggesting that it holds the potential to match Ethereum’s DeFi innovation.

As Stacks continues to evolve and expand its features, the network is set to play a pivotal role in the broader adoption and implementation of Bitcoin DeFi. With its new record in active accounts and ongoing developments, Stacks is not only enhancing the Bitcoin ecosystem but also setting the stage for a new era of financial innovation built on the world’s first and most prominent blockchain.