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Bitcoin L2s could start a liquidity war this month, KuCoin report suggests

Merlin Chain's TVL peaks as Stacks prepares for Nakamoto upgrade.

Bitcoin L2s could start a liquidity war this month, KuCoin report suggests

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Bitcoin layer-2 (L2) infrastructure Stacks’ upcoming Nakamoto upgrade set to go live this month might start a liquidity war on the Bitcoin finance (BTCfi) ecosystem, according to a report by KuCoin Research.

Merlin Chain is one of the most significant ecosystems within BTCfi sector, with over $2.6 billion in total value locked (TVL). The amount is almost double the TVL shown by the whole BTCfi ecosystem, and it is tied to the Merlins Seal event in preparation for the structure’s native token MERL.

In contrast, while Stacks has also experienced growth in its TVL over the past two months, it remains comparatively modest at $180 million. However, KuCoin analysts predict that the upcoming Nakamoto upgrade for Stacks, which introduces the synthetic Bitcoin token sBTC, might attract investor attention to its ecosystem.

Moreover, this event could trigger a potential response from Merlin Chain, which has been actively engaging in lock-up staking activities, igniting a competitive struggle for assets and user attention among Bitcoin L2 solutions, marking a pivotal moment in the BTC expansion narrative.

“Perhaps, this will truly kick off a battle for assets and attention among BTC Layer2 solutions,” conclude KuCoin analysts on the potential Bitcoin ‘L2 Wars’.

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