Bitcoin Layer 2 Stacks Networks STX Token Spikes 50% As ‘Ordinals’ Boom
STX, the original token of the Bitcoin layer 2 Stacks Network, is surging as the recent arrival of the Ordinals protocol has unleashed a new narrative of non-fungible tokens (NFTs) and smart contracts on the Bitcoin blockchain.
Stacks Network is a Bitcoin layer 2 smart contract focused on establishing the world’s largest and oldest blockchain programmable – a dominant feature of Ethereum and its competitors such as Solana, which currently accounts for the majority of global NFT and decentralized finance (DeFi) activity .
Stacks has its own ledger to store data outside of the Bitcoin blockchain, allowing developers to build applications similar to Ethereum and Solana. Noted to be the first token offering qualified by the US Securities and Exchange Commission (SEC), STX is used to incentivize Stacks miners and participants in the proposed Stacks bitcoin system (sBTC), which aims to make bitcoin fully programmable.
The token has risen almost 50% to $0.60 in the last 24 hours, taking its monthly gain to 125%. Prices were quoted as high as $0.84 early Monday, the highest since May, CoinDesk data shows. Meanwhile, market leader bitcoin (BTC) has risen just 6% this month.
The outsized move comes as the crypto community fumes over Ordinals, which launched on January 21 and allows users to enter references to digital art in small transactions on the Bitcoin blockchain. In other words, Ordinals are like drawing artwork directly on satoshi (sats), the lowest denomination of a bitcoin, while NFTs on Ethereum are analogous to a certificate of authenticity from the creator that is separate from ether.
The number of newly created Ordinals or NFTs inscribed directly into Satoshis on Bitcoin crossed the 100,000 mark last week, causing network congestion on the Bitcoin blockchain.
Per Muneeb Ali, co-founder of Stacks, the growing popularity of Ordinals will bode well for layer 2 solutions.
“Ordinals on Bitcoin L1 are complementary to Bitcoin NFTs on L2s that stack. Ordinals have a natural limit on the L1 scale, and L2s provide a clear scalability path,” Ali tweeted Monday. “Wallets like Xverse and & Hiro are among the first to release or work with Ordinals.”
Activity in NFTs on Stacks has picked up in the wake of Ordinals’ growing popularity. Data from DappRadar shows that trading volume on Gamma.io, a Stack-based Bitcoin NFT marketplace, has increased by more than 1000% in the last 30 days. Meanwhile, volumes at Megapont have increased by 125%. As per the data tweeted by Ali, there is an active community of artists and creators on Stacks and people have created 650K Bitcoin NFTs on the layer 2 solution.
“Ordinal’s NFT on the Bitcoin blockchain has been very successful, leading to a general Bitcoin NFT fever,” said CK Cheung, investment analyst at DeFiance Capital. “Stacks benefits from this as it is an L2 supporting smart contracts built on top of the Bitcoin network. People can create new Bitcoin NFTs on top of Stacks at a lower cost and higher speed.”
Earlier this month, Gamma.io unveiled a no-code platform for NFTs on native Bitcoin through the use of ordinals, opening doors for users to create inscriptions without having to run a full Bitcoin node or write any code. Gamma’s new launch essentially made Ordinals available to everyone.
“Ordinals (inscriptions) are similar to NFTs, digital assets are inscribed on the smallest value of Bitcoin (satoshis). This now opens up the use case for NFTs and merges them with the Bitcoin network security layer,” Markus Thielen, Head of Research and strategy at crypto services provider Matrixport, said in an email while pointing to the upcoming “Building on Bitcoin Hackathon” which key event to watch out for in the short term.
The hackathon, scheduled from February 24 to March 7, will allow participants to build their own smart contracts using Clarity, the programming language for writing smart contracts on the Stacks 2.0 blockchain.
“This virtual hackathon is attracting a lot of attention as Stacks uses ‘Clarity’, a programming language for writing smart contracts that may be easier to learn than Solidity. The hackathon will reveal over the next two weeks whether anyone can now build smart contracts without too much technical knowledge,” Thielen noted.
Finally, on top of all this, STX is apparently pulling a haven bid, according to Dubai-based cryptoanalyst and trader Reetika Malik.
“STX is also one of the rare tokens approved by the SEC. So in these uncertain times when the regulator is going after many crypto companies, an SEC-approved token also sounds like a good thing for the market,” Malik said.
