Bitcoin Layer-2 Projects Face Struggles as "Honeymoon Phase" Ends, Says Stacks' Muneeb Ali

Muneeb Ali, the co-founder of Stacks, has raised concerns about the long-term viability of many Bitcoin layer-2 (L2) projects, suggesting that the initial excitement surrounding these solutions will fade over the next few years. Speaking at Consensus 2025, Ali warned that over two-thirds of the current Bitcoin L2 projects would likely disappear within three years, as the market’s challenges become more apparent.

"The honeymoon phase for Bitcoin L2s is a little bit over," Ali told Cointelegraph, highlighting that many projects have yet to prove their sustainability beyond the early-stage hype. Ali, whose Stacks platform originally launched as Blockstack in 2013, shared key updates on the project’s recent developments, signaling its continued growth despite broader industry struggles.

The Challenges Facing Bitcoin L2 Projects

Bitcoin L2 projects have become a popular topic in the crypto world as developers seek to leverage Bitcoin’s security while improving scalability and transaction speed. However, Ali believes that many of these projects will not withstand the test of time. "My guess would be less than one-third of all Bitcoin projects will be around," he said, emphasizing that many are not mission-driven or sufficiently committed to building beyond the initial surge of interest.

While many projects within the Bitcoin L2 ecosystem are struggling to keep momentum, Ali expressed confidence that a few standout projects, like Stacks and Babylon, would continue to thrive. He noted that despite current market suppression, particularly in terms of trading volumes and market caps, Stacks has gained ground relative to other projects and is increasingly seen as a "blue-chip" player in the space.

Stacks' Recent Advancements

Stacks has been making strides to solidify its position within the Bitcoin L2 ecosystem. The project recently completed a major network upgrade, known as Nakamoto, which Ali highlighted as a significant improvement for the user experience. This upgrade enables faster transaction confirmations while still leveraging the security of Bitcoin’s network, which now secures Stacks with 100% of Bitcoin’s hash power.

These improvements have bolstered Stacks' standing in the market, positioning it as one of the few Bitcoin L2 projects that has a clear vision for long-term growth. Ali pointed out that investors are gravitating toward more established projects, with Stacks becoming a preferred choice for those seeking less risky, long-term investments.

A Shifting Focus Towards Bitcoin

Ali also shared his outlook on the broader market, predicting a shift toward Bitcoin as other major layer-1 chains, such as Ethereum and Solana, experience a decline. He pointed to the influx of capital into Bitcoin, driven in part by external investments like spot Bitcoin exchange-traded funds (ETFs), as a key factor differentiating Bitcoin from other blockchain projects.

"Bitcoin is probably the only asset that has net new buyers," Ali said, explaining that while other sectors of the crypto market, including memecoins, attract capital rotation, Bitcoin is drawing new investments from outside the industry. This capital flow, according to Ali, provides Bitcoin with a unique advantage and reinforces its position as a dominant force in the market.

Confidence in Bitcoin's Future

Ali expressed strong confidence in Bitcoin’s long-term value, predicting that its price would never fall below $50,000. He pointed to historical data, including Bitcoin's halving cycles, as evidence that large hedge funds are likely to continue following patterns that reinforce Bitcoin’s upward trajectory. "It’s almost like a self-fulfilling prophecy," Ali remarked, suggesting that the patterns seen over the last decade will continue to attract institutional interest.

Conclusion

As the Bitcoin L2 landscape matures, Muneeb Ali’s insights suggest that the initial wave of excitement may be fading for many projects, but those with strong foundations like Stacks are well-positioned to endure. As Bitcoin continues to capture capital from outside the crypto industry, its dominance may grow, particularly as other layer-1 chains face challenges. Despite market fluctuations, Ali's optimism about Bitcoin's long-term prospects reflects the growing confidence in the digital asset's potential to remain a leading force in the evolving blockchain ecosystem.