Stacks Co-Founder Warns: Over Two-Thirds of Bitcoin L2s May Disappear by 2028
The Bitcoin Layer-2 (L2) market is booming, but not all projects will survive. According to Muneeb Ali, co-founder of Stacks, most Bitcoin L2s are in a “honeymoon phase” that won’t last. Speaking at Consensus 2025, Ali warned that over two-thirds of existing Bitcoin L2s could fade away within the next three years as the industry shifts from hype-driven speculation to real-world utility, security, and adoption.
His statement comes as Bitcoin L2 projects like Stacks, Lightning, RSK, and drivechains battle for dominance, with Bitcoin itself trading near $98,000 today. But which L2s will thrive, and which will vanish?
Let’s dive into Ali’s market prediction, Stacks’ competitive position, and the broader implications for Bitcoin scalability.
Muneeb Ali’s Prediction at Consensus 2025
During an interview with Cointelegraph, Ali painted a sobering picture for the Bitcoin L2 space:
“The market is maturing. The initial hype is fading. Over two-thirds of Bitcoin L2 projects won’t survive the next three years.”
Why So Many Bitcoin L2s Will Fail:
- Hype vs. Reality – Many projects launched during Bitcoin’s 2024-2025 bull run lack a solid technical foundation.
- User Drop-Off – Without real adoption, speculative interest fades, leading to low liquidity and exit of developers.
- Security Trade-Offs – L2s that don’t fully inherit Bitcoin’s security will struggle against competitors offering safer, more decentralized solutions.
- Funding Drought – The collapse of unsustainable models will push capital toward proven, long-term players.
Ali’s warning isn’t just theoretical—it’s backed by years of experience. As a Princeton-educated computer scientist and CEO of Trust Machines, Ali has been a leader in Bitcoin scaling since 2013, originally launching Stacks (formerly Blockstack) as a way to enable smart contracts on Bitcoin.
His argument? Only mission-driven L2s with strong fundamentals will last.
Stacks’ Nakamoto Upgrade: A Blueprint for Surviving the Shakeout
Ali didn’t just warn about failing L2s—he also highlighted Stacks’ Nakamoto upgrade as a model for long-term success.
What Is the Nakamoto Upgrade?
The Nakamoto upgrade, completed in late 2024, is a game-changer for Stacks, significantly improving:
✅ Speed & User Experience – Instead of waiting for Bitcoin’s 10-minute block time, Stacks now enables near-instant transactions while maintaining Bitcoin finality.
✅ Security – Stacks now leverages 100% of Bitcoin’s hash power, meaning it inherits Bitcoin’s full security.
✅ Scalability – With faster confirmations and improved network efficiency, Stacks can support more users and smart contract activity.
Ali contrasted Stacks’ progress with the struggles of weaker L2s, positioning Stacks as a “blue-chip” Bitcoin L2 alongside Babylon (focused on Bitcoin staking).
In his words:
“Only mission-driven projects like Stacks and Babylon will endure. The rest? Many won’t survive beyond 2028.”
The Bitcoin L2 Ecosystem: Hype vs. Reality
Bitcoin L2s exist to solve two major problems:
- Bitcoin’s slow transactions (7 TPS)
- High fees during network congestion
Several projects have emerged to address these issues:
| Bitcoin L2 | Use Case | Challenges |
|---|---|---|
| Lightning Network | Instant micropayments | Liquidity and routing issues |
| Stacks | Smart contracts & DeFi | Early adoption stage |
| Rootstock (RSK) | Ethereum-compatible Bitcoin L2 | Centralization concerns |
| BitVM & Drivechains | Bitcoin-native scaling | Unclear regulatory landscape |
Ali’s prediction highlights a critical shift:
Phase 1 (Hype Cycle) – L2s launched quickly as Bitcoin surged.
Phase 2 (Reality Check) – Only secure, scalable, and adopted L2s will survive.
Bitcoin’s Market Position: A Maturing Ecosystem
Ali’s broader argument is that Bitcoin itself is becoming the dominant force in crypto, while other ecosystems—Ethereum, Solana, Avalanche—face fragmentation.
Bitcoin Dominance Today: 61% (and rising)
Ali’s BTC Price Target: $150,000 – $200,000 by Q4 2025
As Bitcoin adoption grows, L2s will play a crucial role in scalability—but not all L2s will make it.
Survival Factors for Bitcoin L2s:
✔ Adoption: Real users and applications
✔ Security: Deep integration with Bitcoin’s hash power
✔ Liquidity: Strong developer and investor backing
✔ Regulatory Clarity: Avoiding legal uncertainty
The Three-Year Outlook: What’s Next?
Ali’s 2028 prediction means major shifts are coming for Bitcoin L2s.
Winners: L2s with Real Use Cases
- Stacks: Smart contract execution with Bitcoin-level security
- Babylon: Secure Bitcoin staking solution
- Lightning Network: Remains dominant for microtransactions
At Risk: Projects Lacking Adoption
- Over two-thirds of existing L2s
- Projects reliant on hype, speculation, and vaporware
Ali compared this moment to Ethereum’s 2017 ICO boom, where many projects collapsed post-hype. The same could happen for Bitcoin L2s.
Final Thoughts: Bitcoin L2s Are Evolving—But Only the Strongest Will Survive
Muneeb Ali’s prediction at Consensus 2025 is a reality check for Bitcoin L2s.
While Bitcoin L2s are crucial for scaling, many projects lack long-term viability. As the market matures from speculation to real utility, only a handful of mission-driven solutions will remain.
Key Takeaways:
Over 66% of Bitcoin L2s may disappear by 2028
Stacks’ Nakamoto upgrade positions it as a survivor
Bitcoin’s rising dominance will fuel L2 adoption—but only the best will thrive
This is the survival phase for Bitcoin L2s—who will make it?
