Will revitalizing Bitcoin L2 development lead to rapid growth of the ecosystem?
BTC L2 development flourishes
According to the BitVM community, Bitcoin L2 development is gaining momentum, with over 30 projects currently available on the market. Project areas span a wide range of areas, including sidechains, off-chain computation, rollups, data availability, integrated AI, and decentralized indexes.
According to statistics from the BitVM community, there are currently more than 30 BTC L2s publicly available on the market, which can be subdivided into side chains, off-chain computing, rollup, data availability, integrated AI, decentralized indexing and others. It is expected…
— Wu Blockchain (@WuBlockchain) January 24, 2024
Such L2 chains are seen as having the potential to increase the usefulness of the base layer Bitcoin blockchain, create new demand for Bitcoin, and increase asset value.
Layer 2 (L2)
Layer 2 is the “second layer†of blockchain. Writing all transaction history to the main chain increases the load, leading to a decrease in processing speed and a rise in network fees. Therefore, by recording part of the transaction history on an off-chain or side chain, it can be expected to reduce the load on the main chain and improve processing speed.
Virtual currency glossary
BitVM, which is attracting attention among these, is an extension protocol that enhances the practicality of smart contracts on Bitcoin. It takes an approach similar to Ethereum’s L2 scaling solution, Optimistic Rollup, by setting up an off-chain calculation and verification system and storing the resulting data on-chain.
In October last year, Robin Narris, a contributor to Bitcoin-related development organization ZeroSync, published a paper. It makes Bitcoin contracts Turing-complete without any network changes, making it possible to significantly expand Bitcoin functionality.
connection:What is “BitVMâ€, a proposal to strengthen Bitcoin smart contracts?
Various L2 projects
TrustlessLabs, a Web3 research and investment firm, categorized emerging major L2 projects into the following areas:
side chain
- BEVM
- Map Protocol
- Merlin Chain
- ckBTC
data availability
- Nubit
- Veda
- Babylon
roll up
- BitVM
- Bison Network
- B² Network
- SatoshiVM
- Chainway
- QED Protocol
decentralized index
- UniSat
- Rooch Network
TrustlessLabs describes the momentum of the crypto asset (virtual currency) industry as rapidly changing, saying that new Bitcoin L2s are being created “every second.†He suggested that the Bitcoin ecosystem will develop significantly in the future with the construction of Layer 2.
Will it follow the growth of Ethereum?
In an interview with crypto media CryptoBriefing, the developer of the Bitcoin Virtual Machine (BVM), who goes by Punk3700, described BVM as “a decentralized Amazon Web Service that powers crypto consumer apps on Bitcoin. Something like,†he explained.
He sees 2024 as an important year for Bitcoin. He noted that the realization of a Bitcoin spot ETF signals Bitcoin’s maturity as an asset class, while Bitcoin L2, which provides a consumer app, will accelerate Bitcoin adoption.
He also said that Bitcoin’s L2 ecosystem is similar to the early days of Ethereum’s development from 2017 to 2018 in that it is still in its early stages of development and has significant room for growth.
The proliferation of Bitcoin-based assets like BRC-20 tokens and Ordinals on the L1 chain suggests that DeFi on Bitcoin L2 is poised for explosive growth.
connection:Conflux, a blockchain compliant with Chinese regulations, launches EVM-compatible Bitcoin L2
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