Stacks’ Muneeb Ali Predicts Bitcoin Layer-2 Collapse—Who Will Survive?
The Bitcoin Layer-2 (L2) ecosystem is undergoing a critical test as initial excitement fades.
Muneeb Ali, co-founder of Stacks, warns that more than two-thirds of existing Bitcoin L2 projects may collapse within the next three years. However, as Bitcoin continues to gain dominance over Ethereum and Solana, only a handful of mission-driven projects are expected to endure.
Bitcoin Layer-2 In a Challenging Market
Speaking at Consensus 2025, Ali emphasized that the Bitcoin Layer-2 landscape has become increasingly difficult to navigate. He remarked, “The honeymoon phase is a little bit over,” highlighting how many projects that once thrived on market hype now struggle with long-term sustainability.
Ali shared insights into Stacks, a Bitcoin Layer-2 network initially launched as Blockstack in 2013. Stacks recently underwent a significant upgrade, dubbed Nakamoto, which has greatly enhanced user experience by enabling faster transaction confirmations while leveraging 100% of Bitcoin’s security. This breakthrough positions Stacks as a leading force in Bitcoin Layer-2 adoption.
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Ali predicts that fewer than one-third of Bitcoin Layer-2 projects will remain operational in the coming years. Many projects entered the market driven by hype, but only those with strong fundamentals and long-term vision will survive.
Projects like Stacks and Babylon have endured market cycles by prioritizing real-world utility over short-term speculation. According to Ali, investors are increasingly seeking “blue-chip” projects—those expected to last at least five years—as a way to mitigate risk in the volatile cryptocurrency industry.
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Bitcoin’s Enduring Market Dominance
Ali also underscored Bitcoin’s significant advantage over its competitors: continuous capital inflows from outside the crypto industry. While Ethereum, Solana, and other Layer-1 networks compete for existing liquidity, Bitcoin consistently attracts fresh investment, primarily through financial instruments like spot Bitcoin exchange-traded funds (ETFs).
“If memecoins are trendy, capital will come out of L1 infrastructure projects and rotate into the memecoins,” Ali explained. “Bitcoin is probably the only asset that has net new buyers.â€
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Ali remains highly optimistic about Bitcoin’s price trajectory, asserting that BTC will never drop below $50,000. He believes that historical market data and Bitcoin’s halving cycles will bolster institutional confidence, leading to a self-fulfilling prophecy in which hedge funds follow established pricing trends.
While Bitcoin continues to dominate, the L2 ecosystem faces significant challenges. The coming years will determine which Bitcoin L2 projects can rise above the hype and establish themselves as integral components of the network’s future.
