Muneeb Ali, CEO of Trust Machines and co-creator of the Stacks blockchain, shares his insights on the significant role Bitcoin’s layer 2 solutions are set to play in the cryptocurrency’s ecosystem. Amid Bitcoin reaching new all-time highs and the introduction of spot BTC ETFs, Ali emphasizes the shift towards using Bitcoin as intended: a form of money. Innovations such as the Ordinals protocol, BRC-20 tokens, and advanced smart contracts are revitalizing Bitcoin’s fee economy, moving beyond mere acquisition and holding.
Layer 2s Driving Innovation
Ali highlights that most of the dynamic changes will occur on Bitcoin layer 2s, like Lightning and LayerTwo Labs’s drivechains, as well as secondary solutions like Stacks. These layers are essential for scaling Bitcoin and making its use more affordable, potentially enabling users who never transact on the base layer.
Technical Debt and Upgrade Challenges
Addressing the upcoming Nakamoto upgrade for Stacks, Ali acknowledges the technical debt and challenges in updating a live codebase, especially with $1.4 billion in STX capital locked in consensus. However, he views these challenges as opportunities for Bitcoin layer 2s to demonstrate their resilience and capacity for rapid innovation.
Layer 3s and Modular Development
Ali also discusses the concept of layer 3s, mentioning Stacks’ Bitcoin subnets as an example of how layer 2 solutions can serve as a middle layer, facilitating more modular and interconnected blockchain ecosystems. This modular approach allows developers to leverage different components from layers 1 and 2 to create unique applications.
Interoperability with Lightning and Oracle Ecosystem
Regarding interoperability with Lightning, Ali points out that Stacks is already connected to Lightning through protocols like LNSwap, allowing for atomic swaps between satoshis on Lightning and assets on Stacks. On the topic of oracles, he notes the limitations of direct integration with Bitcoin’s layer 1 and sees potential in layer 2 solutions like Pyth Network to address these gaps.
Admiration for Other Blockchains
Ali expresses respect for developments across the blockchain space, including the talent and innovations from networks like Ethereum and Solana. He believes Bitcoin can learn from these ecosystems, especially in supporting Bitcoin Core development and attracting top engineering talent.
Smart Contract Potential and Institutional Interest
Despite Bitcoin’s dominant use case as a savings technology, Ali sees significant potential for deploying capital productively through smart contracts and DeFi applications. He also highlights the institutional interest in earning yield on BTC in a decentralized manner, comparing the safety and risks associated with different smart contract and DeFi strategies.
Reflecting on Stacks’ Journey and Community Criticism
Ali reflects on Stacks’ journey, the transparency and decentralization achieved through its Reg A+ token listing, and the mixed reactions from the Bitcoin community. Despite facing criticism, he remains motivated by the support of respected Bitcoin OGs and the growing excitement among new builders in the Bitcoin ecosystem.
