Bitcoin Layer 2 coins such as STX, ELA, and SAVM have shown strong performance since the recent halving event, outperforming Bitcoin itself. STX, the native token of Stacks, a prominent Layer 2 network, has experienced a nearly 20% surge to $2.87 following the reduction in block coin emission. In contrast, Bitcoin has seen a more modest increase of just over 4.7% to $66,300. ELA and SAVM, associated with other Layer 2 solutions, have also seen gains of 11% and 5% respectively since the halving occurred.
Layer 2 solutions for Bitcoin aim to address scalability and transaction speed limitations by processing transactions off the main chain. While Ethereum Layer 2 solutions primarily focus on the Ethereum smart contract blockchain, Bitcoin Layer 2 projects seek to scale and introduce programmability features to the main Bitcoin blockchain. This distinction arises from the fact that the Bitcoin blockchain does not operate a virtual machine like Ethereum.
The rise of Bitcoin Layer 2 coins coincides with a surge in transaction fees on the Bitcoin blockchain following the halving event. The mean transaction fee reached approximately 0.0020 BTC, the highest level since early 2018. This increase in fees can be attributed to the launch of a new protocol called Runes, which enables users to mint and trade tokens on the Bitcoin blockchain. The introduction of Runes sparked speculators’ interest, leading to a rise in transaction activity and subsequently higher transaction costs. As of now, there have been 3,700 Runes inscriptions on the Bitcoin blockchain, according to data from Ord.io.