As blockchain technology is changing with each passing day, Bitcoin is not only widely accepted as a digital asset, but its underlying technology is also constantly evolving and innovating. As the Bitcoin ecosystem gradually expands, various Layer 2 solutions have sprung up to improve the scalability, efficiency and security of the Bitcoin network. This article will take a deep look at several innovative Bitcoin Layer 2 projects. Through a detailed analysis of the technical principles, team backgrounds, financing and development roadmaps of these projects, we will understand how they promote the innovation and development of the Bitcoin ecosystem.
Babylon: Cross-chain staking and Bitcoin economic security
Babylon uses cryptography to leverage Bitcoin (BTC)’s native staking to provide proof-of-stake (PoS) security for other blockchains. This mechanism not only brings on-chain benefits to BTC, but also attracts widespread attention from the market.
In terms of technical implementation, Babylon’s staking process relies entirely on cryptography, without the need for a third-party bridge or custodian. BTC pledgers can achieve staking by sending a transaction with two UTXO outputs. The first UTXO is written into the time lock script. After the expiration, the pledger can unlock the BTC with the private key. The second UTXO is transferred to a temporary Bitcoin address, whose public and private key pair meets the cryptographic standard of "Extractable One-Time Signature (EOTS)". When the pledger runs the node of the PoS chain and verifies the only valid block, he signs it with the EOTS private key.
If the pledger operates honestly and only signs one valid block at a time, he will receive the verifier reward of the PoS chain; if he tries to do evil and sign two blocks at the same time, his EOTS private key will be reversed, and anyone can use the private key to transfer the pledged BTC, realizing confiscation and prompting the pledger to remain honest. Babylon also provides BTC timestamp service, which is to upload the checkpoint data of any blockchain to BTC's op_return to enhance security.
Babylon's pledge is cross-chain pledge, and the pledged Bitcoin is retained in the script on the Bitcoin network. The pledger can specify a validator to earn income on the corresponding PoS chain. By staking BTC to provide economic security for other PoS chains, BTC can earn income without leaving the main network, opening up a new track for BTC staking, which will greatly change the way BTC is played.
According to DefiLlama data, the current BTC interest-bearing market size exceeds $10 billion, of which $4 billion is active income, with a yield between 0.01% and 1.25%, which generally needs to be entrusted to a third-party CeFi institution, or bridged or wrapped BTC. The staking rewards of PoS blockchains usually range from 5% to 20%. Through Babylon's staking business, BTC does not need to be entrusted to a third-party institution, and can earn 50 times the traditional BTC income, which has huge growth potential.
Despite this, most BTC holders are passive holders, 25% of BTC has not been used for more than 5 years, and 67% of BTC has been held for more than 1 year, so it is difficult to convince BTC holders to participate in staking. Babylon is staking on the test network and plans to launch the main network test in May-June. It has not yet announced the launch of liquid staking BTC certificate assets.
Babylon was founded in 2022 by Stanford University professors David Tse and Dr. Fisher Yu. Professor Yu is a member of the U.S. Academy of Engineering and is known for his legendary proportional fair scheduling algorithm in the field of wireless communications. On December 7, 2023, Babylon completed $18 million in financing, led by Polychain Capital and Hack VC, and participated by Framework Ventures, Polygon Ventures, OKX Ventures, IOSG Ventures, etc. On February 24, 2024, Binance Labs announced its investment in Babylon. In May 2024, Babylon completed a new round of financing of $70 million, led by Paradigm.
Chakra: Bitcoin Restaking Protocol Powered by ZK
Chakra is a ZK-powered Bitcoin restaking protocol that aims to build a secure Bitcoin PoS system. By leveraging ZK-STARKs and middleware chains, the Chakra network establishes a native modular paradigm for expanding the BTC ecosystem. On April 30, Chakra announced the completion of a new round of strategic financing, with StarkWare, Bixin Ventures, Cogitent Ventures and others participating. The specific amount and valuation information have not been disclosed.
Chakra aims to solve liquidity and interoperability challenges and unlock the huge value of Bitcoin. With Chakra, other BTC second-layer solutions can focus on the execution layer without paying too much attention to the settlement of Bitcoin infrastructure.
The Chakra network unlocks liquidity and gains economic security through a shared settlement layer, thereby empowering BTC ecosystem participants. BTC Layer2 projects and DApps will benefit from the robust liquidity network effect in this secure, vibrant and prosperous ecosystem.
Chakra allows Bitcoin holders to stake without transferring assets out of their wallets by generating UTXOs that contain time locks. Chakra uses STARK to implement the proof system. Compared with SNARK, STARK provides a zero-knowledge proof solution that does not require a trusted setup. Chakra uses STARKs technology to implement zk light clients, which can verify pledge information without connecting to the Bitcoin network, ensuring the efficiency and security of zero-knowledge proofs. By introducing CairoVM, Chakra further enhances the scalability and transparency of the system.
nubit_org: Protocol to Extend Bitcoin Data Availability
Nubit is a protocol for extending the data availability (DA) scenario for BTC. It organizes a DA chain similar to Celestia by running PoS consensus, and regularly uploads Nubit's DA data to the BTC main chain. Nubit does not have smart contract capabilities and needs Rollup to be built based on its DA. Users upload data to Nubit, and these data enter the "soft confirmation" state after being confirmed by the PoS consensus. Then Nubit uploads the data root to the BTC main chain to complete the final confirmation. Users need to upload data tags in the BTC main chain to query the original data in the Merkle tree of the Nubit full node.
There are currently 100 BTC L2s on the market. If all of them choose to upload DA to the BTC block, even if the BTC block is filled, the main network can only support about 20 L2s at most. Therefore, there is a huge narrative gap in how to connect with BTC and use its security guarantees. Nubit's DA repackaging idea is an interesting solution.
Nubit has conducted the first round of Pre-Alpha Testnet, where users can earn points by linking BTC accounts or running light nodes. The first round of testnet has ended, and the second round of testnet is planned. Nubit's angel round financing participants include Bounce Finance and Brc20 founder Domo, and completed a $3 million Pre-Seed round of financing, with participation from dao5, OKX Ventures, and Primitive Ventures.
lorenzo: BTC Liquidity Staking Protocol
Lorenzo, built on Babylon, is a liquidity staking protocol that provides a fast deployment service of L2-as-a-service, aiming to reduce the risk of penalties for pledgers and release the liquidity of pledged BTC assets. Pledgers deposit BTC into Lorenzo's multi-signature address, and can obtain an equal amount of stBTC on its chain as a liquidity proof and receive pledge income.
The Lorenzo chain itself is protected by Babylon Bitcoin shared security and is an EVM-compatible Bitcoin L2. In the future, it will use a modular approach to help more BTC L2 deployments. The Lorenzo chain serves as a direct interoperability chain for these L2 chains. Currently, Lorenzo has announced cooperation with Babylon, BounceBit, etc., and plans to launch a testnet based on the Cosmos architecture. It is currently working with Babylon's fourth testnet to conduct liquidity re-staking tests.
According to Rootdata, Lorenzo is invested by Binance, MH Ventures, and NGC Ventures, and specific details have not been announced. Currently, Lorenzo has announced the launch of the pre-pledge Babylon event and the co-hosting of the Bitlayer Mining Gala. Users can pledge BTC on the pre-pledge Babylon event page to obtain stBTC. All BTC received by Lorenzo will be used by Lorenzo to participate in Babylon staking as soon as Babylon goes online. However, due to the upper limit of Babylon's staking, the actual staking progress may be subject to the possible staking limit of Babylon.
bitsmiley_labs: A comprehensive DeFi protocol for the Bitcoin ecosystem
BitSmiley is a comprehensive DeFi protocol for the Bitcoin ecosystem, including over-collateralized stablecoin issuance, decentralized lending and derivatives. bitUSD is an over-collateralized stablecoin issued by BitSmiley, with a mechanism similar to MakerDAO, and its decentralized lending implementation is similar to Compound. bitUSD can be implemented on both L1 and L2 of BTC, and is issued based on the bitRC-20 standard. It supports upgrades, minting, destruction and other functions, making it convenient to represent stablecoins on the BTC mainnet. BitSmiley has also developed an AMM bitCow for stablecoins, which is being deployed and tested on multiple BTC L2s.
BitSmiley is invested by OKX Ventures, ABCDE Capital, Forsight Ventures, Waterdrip Capital, Kucoin Ventures, CMS Holdings, ArkStream Capital and other institutions. BitSmiley issued Ordinals NFT M-bitDisc-Black in the early stage of the project, which received good market feedback. The NFT was also used as a ticket to participate in the test network.
build_on_bob: BTC EVM sidechain architecture
BOB is a BTC EVM sidechain architecture implemented using OP Superchain SDK. It uses wrapped BTC on ETH such as wBTC and tBTC as gas fees. In the future, the security of BTC will be introduced through the new POW merged mining protocol. At present, the BOB test network has been running for several months and has a certain ecology. On May 1, the main network was officially launched. In the first phase, more than 40 projects have been deployed on the chain, with more than 300 million TVL. The second phase of deposit activities is in progress. The accumulated Spice points of deposits correspond to $BOB tokens.
To participate in BOB's pre-staking, you need to operate on the ETH mainnet. If it is BTC, you need to cross-chain to $tBTC and $wBTC, with a return multiplier of 1.5 times. It also accepts DAI, eDLLR, rETH, USDC, USDT, wstETH, STONE, with a staking reward multiplier of 1.3 times, and accepts ALEX, ETH, eSOV staking, with a reward multiplier of 1 times. BOB has strong resources, cooperated with $MARA, the largest listed mining company in the US stock market, to launch BTC L2, and announced a $10 million investment from Coinbase, which has great potential.
Botanix Labs: EVM equivalent to L2 on Bitcoin
Botanix Labs has built an EVM equivalent to L2 on Bitcoin, which is run by PoS. Users can deposit BTC into a multi-signature address to participate in L2 staking or bridge BTC to L2 to participate in the ecosystem. Its feature is that these BTC assets are protected by the decentralized multi-signature network Spiderchain.
By staking BTC to become a validator node to participate in PoS and the multi-signature network Spiderchain, Botanix uses the Bitcoin block hash value as a source, randomly selects nodes to participate in PoS block generation, and finally confirms that the block header is engraved in the BTC block. All L2 assets on BTC are protected by the multi-signature network Spiderchain. Nodes randomly form multi-signature groups to control the BTC in the multi-signature address. The cost of doing evil is high because the BTC pledged can be fined.
On May 7, 24, Botanix Labs announced that it had received $11.5 million in financing, with participation from a series of angel investors including Polychain Capital, Placeholder Capital, Valor Equity Partners, and Andrew Kang, Fiskantes, Dan Held, The Crypto Dog, and Domo (founder of BRC20).
Botanix's testnet has been running for half a year, and users can participate in the test and receive a series of NFT certificates. Botanix Labs has been building L2 on BTC since 2022 and has certain technical strength. The testnet is a good opportunity to participate.
bounce_bit: BTC interest-bearing and restaking infrastructure
BounceBit is a BTC-based interest-bearing and restaking infrastructure that integrates CeFi and DeFi businesses and uses BTC pledge to guarantee blockchain security. BounceBit itself is also a BTC EVM L2, and L2's PoS staking can pledge native tokens BB or BTC assets. The absorbed BTC assets are held in centralized custody services supported by Mainnet Digital and Ceffu, and the BTC assets deposited by users are turned into bounceBTC on BounceBit, which can be pledged to other validator networks to earn verification income. BounceBit brings triple benefits to users: mainnet BTC asset custody income, on-chain st project income, and restaking rewards.
BounceBit is supported by Binance and will provide 8% of the tokens to BNB stakers in Binance Megadrop.
citrea_xyz: ZK Rollup for Enhanced Bitcoin Blockspace
Citrea is a ZK Rollup based on Bitcoin (BTC) with enhanced blockspace functions, developed by the Chainway team, focusing on the early implementation of BitVM verification. The Citrea network processes transactions in zkVM and generates zk proofs, which are engraved into BTC blocks, and optimistic verification is implemented on the BTC mainnet through BitVM, ensuring that Citrea's settlement and data availability are handled by the Bitcoin mainnet.
Citrea realizes the asset bridge between L2 and BTC main network through the trust-minimized bridge Clementine. When a user needs to withdraw BTC from L2, the asset is transferred to the withdrawal contract of L2 and the BTC address is attached. The operator of the bridge first transfers his BTC assets to the user. Every six months, the Clementine bridge conducts an interruption check, and the operator needs to use the original data of the transaction, the SPV withdrawal certificate, and Citrea's zk certificate to withdraw the BTC he deserves. If the operator does something malicious, the challenger can initiate a challenge to reveal the original data of the transaction, prevent the operator from withdrawing the BTC in the bridge, and ensure the security of the bridge assets.
Currently, Citrea has completed a $2.7 million seed round of financing, led by Galaxy, with participating investors including Delphi Ventures, Eric Wall, Anurag Arjun, BatuX, Igor Barinov and James Parillo.
mintlayer: Bitcoin sidechain based on PoS
Mintlayer is a Bitcoin sidechain based on proof of stake (PoS), using a verifiable random function (VRF) to ensure a stable block speed. Mintlayer uses the UTXO structure like BTC, so it can directly enjoy the various advantages of the BTC network. Token issuance on Mintlayer does not require smart contracts, but adds notes through UTXO, similar to BTC's colored coins; UTXO atomic swaps can also be used to exchange with BTC mainnet assets by creating hash time locks, which is impossible with EVM and BTC L2 with account structure.
Mintlayer has incubated Atomiq DeFi, a DeFi product based on this chain, which uses the characteristics of atomic swaps to allow direct interaction with the mainnet BTC in Atomiq DeFi. Mintlayer's token $ATMQ will be issued at the end of the second quarter.
NervosNetwork: Smart Contract Platform for PoW and UTXO Model
Nervos is a smart contract platform based on proof of work (PoW) and UTXO model. In 2024, it proposed a complete solution for expanding the BTC ecosystem and issued the Bitcoin Layer 1 asset issuance and expansion protocol of RGB++. Based on years of accumulation of UTXO model, Nervos's RGB++ and UTXO isomorphic binding scheme directly utilizes the native capabilities of BTC, and its security is highly related to the BTC mainnet.
RGB++ issues assets on the BTC mainnet and is bound to Bitcoin UTXO. Users can choose to "jump" RGB++ assets to the Nervos network for use. The jumped BTC transaction will output a specific UTXO on the mainnet, triggering related shadow transactions in the Nervos network, and the RGB++ asset information will be written into the Nervos UTXO, and the unlocking condition is a specific BTC UTXO. Users can enjoy smart contract capabilities, lower fees, and higher performance in Nervos, and can also jump back to the BTC main network through isomorphic binding.
Based on the above isomorphic binding ideas, Nervos also released the UTXO Stack application chain architecture, similar to Ethereum's OP Stack, and is developing its own lightning network. Nervos has the most complete BTC ecological expansion solution at present.
Mezo: BTC L2 based on tBTC
Mezo is a BTC second-layer network built on tBTC. It uses the Cosmos EVM architecture and realizes asset transfer from BTC to Mezo L2 through tBTC's multi-signature cross-chain bridge. Mezo introduces the Ponzi economics of HODL Proof, which is similar to ve33 for BTC staking. Users can lock BTC on Mezo to participate in consensus. The longer the lock-up time, the more stake verification weight and rewards they get.
Mezo's PoS is divided into BTC part and native token MEZO part. Both can get veMEZO as rewards. The incentives are divided into different incentive pools. 1/3 of the total incentives are obtained by BTC stakers and 2/3 by MEZO stakers. Mezo has completed a $21 million Series A financing round, led by Pantera Capital, with participation from Multicoin, Hack VC, Draper Associates, etc. Mezo has launched early deposit activities, which can deposit and withdraw native BTC, wBTC and tBTC. It is expected to launch the mainnet in the second half of 2024.
BVMnetwork is a modular Bitcoin L2 protocol on Bitcoin. It is characterized by the batch issuance of L2 related to the BTC ecosystem, and each L2 is optimized for a specific purpose.
BVMnetwork is positioned as Rollup-aaS (Rollup as a Service). Technically, BVMnetwork adopts a model similar to EVM, using Bitcoin as the data layer to achieve transaction-level consensus. By using TxWriter and TxReader, BVMnetwork can embed BVM transactions into Bitcoin transactions and ensure that all BVM nodes remain in a consistent state on the network. TxWriter is responsible for embedding BVM transactions into Bitcoin transactions, similar to the technology of Ordinals. TxReader is responsible for filtering BVM transactions in each new Bitcoin block. BVMnetwork is a multi-layer architecture based on Op-Rollups, including multiple layers such as data availability (DA), smart contract platform, Sequencer, Rollup node, execution engine, settlement and bridging. BVMnetwork provides a fully managed solution where users can deploy a BVM Chain in just a few clicks and choose the configuration that best suits their application.
The current market cap of $BVM is $143M, with a total supply of 100M and a circulation of 23M. The token TGE was conducted on March 24, 2024 and is currently in the staking phase. Users can stake BVM tokens to mine SHARD (BVM's governance token), with an annualized rate of return (APR) of 50% given by the official website. You can also participate in mining other newly launched BTC L2 tokens.
The BVM team has currently issued multiple BTC L2s, alpha chain is the first BTC L2 network, naka is the L2 for BTC DeFi business, EternalAI a BTC L2 with fully on-chain AI, swamps is a BTC L2 that supports SRC-20 DeFi, RuneChain is a BTC L2 focused on Rune transactions, Bittendo is a BTC L2 that supports gamefi, bloom is a BTC L2 that supports BTC L2 for staking and re-staking, and the chains being planned also include several new L2s that introduce POW and RWA.
The BVM team iterates quickly, and the speed of accumulating projects and following hot spots is very fast. The above projects are mostly launched by airdropping to old holders and potential new users, and using old assets to participate in IDO. The BVMnetwork team is composed of some Bitcoin OG members active on Twitter. The team participated in the development of BTC L2 Trustless Computer in 2023, but the response was mediocre at the time. Later, Friend.tech on Bitcoin was developed to turn the tables, and it was not until BVM that it succeeded.
BitLayerLabs: BTC L2 project based on BitVM
BitLayerLabs is the first Bitcoin layer 2 network (L2) based on BitVM, supporting multi-virtual machines and EVM compatibility, and using Op-Rollup technology. On March 27, 2024, it announced the completion of a $5 million seed round of financing, led by Framework Ventures and ABCDE Capital. Other participating institutions include StarkWare, OKX Ventures, Alliance DAO, UTXO Management, etc. On May 19, it received strategic financing from OKX, and the amount was not disclosed.
BitLayerLabs is positioned as Op-Rollup, and its asset bridging method plans to use DLC and BitVM, which allows users to withdraw assets on BTC (escape channel) when there is a problem with the main network. Through BitVM, BitLayerLabs is able to build a Turing-complete computing layer on the Bitcoin stack, using basic building blocks such as hash locks, time locks, and large main root trees to create systems that can handle complex calculations and contracts. BitLayerLabs supports multiple virtual machines, including EVM, CairoVM, SolVM, and MoveVM.
However, the current mainnet uses the PoS + multi-signature bridge method. BitLayer plans to implement a minimal BitVM implementation in Q2 of 2025 to replace the current bridging solution.
Currently, Bitlayer has released Mainnet V1 and announced a developer incentive plan and early supporter NFT activities. It is currently conducting mining activities with Lorenzo, Bitsmiley, Avalon, Bitcow, Pell, Enzo, and Bitparty. The activity will last for two weeks until June 10.
According to the roadmap, Bitlayer will implement Mainnet V2 in September 2024, transform into an equivalent Rollup model, launch the Sequencer+DA model, and protect user asset access based on the DLC/BitVM technical protocol. Mainnet V3 will be implemented in June 2025, using BitVM for L1 verification challenges, achieving BTC security equivalence, implementing BitVM-based OP challenges and BitVM solutions for asset escape DLC-Attestors.
Alpen Labs: Modular ZK-Rollup Project
Alpen Labs is committed to developing ZK-Rollup technology. Although less information is disclosed, its team and financing background are quite good. The project is positioned as a modular ZK-Rollup, native ZK validator and optimistic ZK bridge.
Alpen Labs' ZK verification technology still continues the idea of BitVM, but has designed a ZK SNARK validator SNARKnado dedicated to Bitcoin. Compared with BitVM's validator design, it can reduce the number of rounds of interactive verification, thereby improving feasibility. Some codes have been open sourced.
On April 10, 2024, Alpen Labs announced the completion of a $10.6 million seed round of financing, and the actual financing was completed in 2023. Investors include Castle Island Ventures, Robot Ventures, Axiom Capital, etc. CEO and founder Simanta Gautam founded Alpen Labs in 2022, focusing on BTC and zkSNARKs. Gautam graduated from MIT, worked as a research intern at MIT, NASA, Amazon and other institutions, and founded Synapse. Alpen Labs has not published code on GitHub, and the roadmap has not yet been released.
Anduro: Sidechain system supported by Mara, a NASDAQ-listed mining company
Anduro is a multi-sidechain platform incubated by Marathon Digital Holdings, a NASDAQ-listed mining company, that aims to provide sidechain solutions.
Anduro has designed two sidechains: BTC-compatible COORDINATE and ETH-compatible ALYS. COORDINATE is a UTXO chain that supports protocol innovations such as Ordinals, while ALYS targets physical RWA assets.
All Anduro sidechains are merged-mined with Bitcoin, and its native asset, Anduro BTC, is pegged 1:1 to BTC. Anduro sidechains maximize the native properties of Bitcoin, including blocks produced using Proof of Work (PoW).
anetaBTC: Wrapped BTC based on Cardano and Ergo
anetaBTC is a Wrapped BTC project based on Cardano and Ergo that aims to enable DeFi liquidity for BTC on these two chains. By minting and redeeming AnetaBTC through smart contracts, anetaBTC enables BTC holders to participate in various activities in the DeFi ecosystem of Cardano and Ergo, such as lending, trading, and liquidity mining, without giving up their BTC holdings.
anetaBTC's tokens include $cBTC, $NETA, and $cNETA, of which $cBTC is a Wrapped BTC token minted on the Cardano and Ergo networks by anchoring BTC. Currently, $cBTC is still being minted, and the TGE of $cNETA has been completed. $cBTC is the project's Wrapped BTC, and 17.6 have been minted so far. $NETA and $cNETA are the project's tokens with a total supply of 2 billion, issued on Ergo and Cardano respectively. The market value of cNETA is currently 2.53M, all of which are in circulation, and 70% are publicly allocated.
Currently, the anetaBTC project has launched the V1 version of the mainnet, the V2 version of the testnet is expected to be launched in the second quarter of 2024, the V2 version of the mainnet is scheduled to be launched in the third quarter of 2024, and the V3 version is scheduled to be released in 2025.
The project was founded by Austin Regron, who has many years of development experience and is focused on introducing BTC into the Cardano and Ergo ecosystems. Co-founder Willie McClinton is a student pursuing a doctorate at MIT who was involved in the development of the project but has withdrawn.
BiopDAO: Op Rollup project supporting BRC-20 protocol
BiopDAO is an Op Rollup-based project that focuses on supporting protocols such as BRC-20 and provides Biop Virtual Machine (BVM) to support smart contracts. The goal of the project is to create an efficient, secure and scalable Layer 2 solution. The main token of BiopDAO is $Biop, with a total supply of 21,000,000. Currently, the market capitalization of $Biop is about $500,000, while FDV is $2.5M. BiopDAO plans to launch three versions of the L2 blockchain: V1, V2, and V3. V1 is scheduled to be launched in the first quarter of 2024, V2 is scheduled to be launched in the second quarter of 2024, and V3 is scheduled to be launched in the fourth quarter of 2024. Although the code of BiopDAO is open source, the project is currently progressing slowly and is not very complete.
Bitsat_Official: ZK-Rollup Project to Integrate AI into BTC L2
Bitsat is an EVM- and Cosmos-compatible full-chain interoperability protocol designed to integrate AI into the Bitcoin Layer 2 network (L2).
The core of Bitsat is HyperLayer, a high-performance, scalable platform for deploying and running distributed AI applications on the Bitcoin network. Technical features include ZK-Connector for efficient transmission of data and assets, VM Engine compatible with the Ethereum Virtual Machine (EVM), and an asynchronous high-performance consensus mechanism that provides high performance and scalability.
The project has not yet released relevant Tokenomics information. Bitsat's roadmap includes a testnet in Q2 2024 and a mainnet V1 in Q4 2024.
Bool_Official: Decentralized and secure Bitcoin verification layer
Bool is a modular data availability (DA) layer that uses ZK, MPC and TEE (trusted execution environment) technologies.
The project is positioned to provide a decentralized and secure Bitcoin verification layer driven by distributed key management based on MPC. Technical features include the use of dynamic hidden committees (DHC) and ring verifiable random functions (Ring VRF) protocols to protect member identities, and the execution of all key management processes in a trusted execution environment (TEE). In terms of Tokenomics, the total amount of $BOOL is 1 billion, with an initial allocation of 500M.
The roadmap includes completing the code audit in June 24, launching the mainnet in July, and opening BTC staking in August and beyond. The code is open source, with a high degree of completion, and is awaiting audit.
CashuBTC: A BTC project that emphasizes privacy protection
Cashu is a free and open source Chaumian ecash system built specifically for Bitcoin and deeply integrated with the Lightning Network to ensure privacy. It is more recognized by the BTC core community. Cashu is positioned to provide an open electronic cash protocol called Cashu NUT, which uses blind signatures to protect user privacy and transactions are peer-to-peer.
Technical features include the Lightning Node Operator acting as a custodian for users on the Lightning Network and issuing electronic cash to users. Cashu is an open source protocol that has been supported and applied by multiple systems.
BnzkLabs: BTC L2 project based on ZK-Rollup
BnzkLabs plans to support the ordinal BRC20 protocol (zkToken), and then support BRC721 (zkNFT) and other protocols. The progress is not enough and no code has been seen. In terms of Tokenomics, the total supply of $BNZK tokens is 21 million, with 10% team reserves, 20% ecosystem rewards, 40% public and private sales, and 30% mining rewards. The roadmap includes the testnet in April 24 and the mainnet in September. The current completion is very general and no code has been seen.
LayerTwo Labs was proposed by BTC Drivechain to create the Bitcoin sidechain team. Drivechain is a merged mining BTC sidechain technology designed as a soft fork upgrade of Bitcoin, proposing a new way of sidechain interaction.
Drivechain's proposer Paul Sztorc is the founder and CEO of LayerTwoLabs. He is a former researcher and statistician at Yale University and a senior Bitcoin practitioner. He elaborated on the concept of Drivechain in BIP300 and BIP301.
Drivechain is a sidechain technology for BTC. Through the hash rate hosting mechanism and miner scoring system, it realizes the large-scale sidechain expansion of Bitcoin without changing the core security and decentralization characteristics of Bitcoin. Its basic mechanism is to create a new Bitcoin address. Any funds sent to this address will be locked. These funds can only be spent with the consent of all miners. Miners reach consensus through the "scoring" system. Once a transaction scores high enough, the transaction will be published and the funds will be transferred from the sidechain to the main chain.
Drivechain allows the Bitcoin network to experiment with new use cases through sidechains, such as issuing assets, fully private transactions, state blockchain contracts, etc., without sacrificing the core security and decentralization characteristics of Bitcoin. The project's roadmap has been implemented, and the testnet already has Launchers for Linux, Mac, and Windows. The code is open source, well-completed, and updated frequently.
In December 22, it raised $3M, but the details were not disclosed.
EASTBlue_io: L2 solution focused on large-scale applications
EASTBlue is an L2 solution focused on large-scale applications, backed by NEAR, using Rollup technology and multi-virtual machine support.
The project is based on Rollup and aims to introduce a new programmable layer to Bitcoin through the EAST Account Vault Model (AVM) using NEAR's chain signature and account aggregation, solving the congestion and expansion problems caused by Ordinals and enhancing BTC's smart contract capabilities. EASTBlue implements a new cross-chain transaction paradigm by transferring account ownership to smart contracts.
The $EAST airdrop will begin on March 22, 2024, with priority given to PARAS token holders. The token supply is 1 billion, and $EAST is dynamically issued based on ecosystem behavior and performance, with a 5-year lock-up period. Most of the tokens (52%) are allocated for community building and ecosystem entry. The staking function will be launched, but a complete roadmap has not yet been found, and no project code has been seen.
The Tokenomics distribution rules are as follows:
fedimint: An open source protocol for community custody and trading of Bitcoin
fedimint is an open source protocol for community custody and trading of Bitcoin, designed to emphasize privacy protection and reduce dependence on large centralized exchanges. Co-founders include Justin Moon and Obi Nwosu, co-founders of austinbitdevs.com and former CEO of British Bitcoin exchange Coinfloor, respectively. The project has completed $4.2 million in seed round financing and $17 million in Series A financing, with a total financing of $21.21 million. Fedimint has recently released version v0.3.0, which has made great progress in automated testing of version compatibility.
GeliosOfficial: BTC L2 that supports Runes standard and EVM-friendly
Gelios is a Bitcoin L2 that supports Runes standard and EVM-friendly, designed to facilitate communication and seamless cross-chain interaction between applications. As the dApp layer of Bitcoin, Gelios allows users to transfer BTC and WBTC to Gelios, thereby unlocking the potential of BTC DeFi. The project has cooperated with Ave.ai, OKX, Bitget, Gate, Unisat, etc. Currently, the two-dimensional card placement game Crimson Heart has been deployed to the Gelios network.
Gelios' initial supply is 210,000,000 $gOS, the initial market value is 40 million US dollars, and the initial liquidity is 100 ETH. $gOS has been launched on Alphanet and can be traded with ETH on Uniswap. The roadmap includes airdrops in three phases: testnet (ended), Alphanet (currently in progress), and mainnet (not started).
HacashCom: Bitcoin solution for multi-layer expansion and state channels
Hacash.com is a project dedicated to solving the problem of Bitcoin expansion. It realizes the one-way transfer of Bitcoin through Layer 1, deploys state channels on Layer 2 for payment operations, and further proposes the concept of Layer 3 to achieve ecological expansion.
Since the operation of the Hacash Layer 1 network in 2019, it has adopted the proof-of-work (PoW) consensus mechanism, and realizes the issuance, distribution and settlement of coins through three PoW currencies: HACD, BTC and HAC, to solve the problem that Bitcoin lacks monetary attributes. Layer 2 is mainly used for large-scale payments, building payment settlement channel chains, and serving as the infrastructure for Layer 3. Layer 3 supports an ecosystem of multi-chain interactions and application construction to support asset issuance, smart contract operation, and on-chain data interaction and cross-chain. The founding team includes Ken You, Trevor Stoll, and Leo Yang. The project once raised $60,000 for listing on the Mexc exchange. It is currently in the testnet stage.
Bitcoin can be transferred to Hacash in one direction, maintaining its ownership and native value attributes, with a total supply of 21 million pieces, and circulated in Hacash with the smallest Nakamoto unit. BTC transfers lead to the creation of HAC, and the issuance of HAC gradually decreases. After 1.05 million BTC transfers, only 1 HAC is generated for every 1 BTC transfer. The total supply of HACD is about 16.77 million, which is generated through mining and HAC bidding. The difficulty of mining gradually increases, and the maximum daily output is 58. It is expected that all HACD will take 800 years, but all HACD may never be produced.
interlayHQ: Bitcoin-backed assets for cross-chain interoperability
Interlay's flagship product is "interBTC", a fully collateralized, one-to-one Bitcoin-backed asset that enables interoperability between multiple blockchain ecosystems while maintaining Bitcoin's censorship-resistant nature. Technically, Interlay v2 introduces native DeFi functionality, allowing users to easily access Bitcoin-centric DeFi use cases such as swap, Borrow & Lend, Multi-Chain BTC, and Stake BTC by creating markets that cater to Bitcoin holders and building deep liquidity in these protocols. Users can mint iBTC 1:1 after locking up BTC, use iBTC as collateral for DeFi transactions to earn income, and then redeem BTC. Interlay has been audited by well-known auditing agencies Informal Systems, Quarkslab, NCCgroup, and Security Research Labs. The founding team includes Alexei Zamyatin and Dominik Harz, both PhDs from Imperial College London. So far, Interlay has completed two rounds of financing, with a total financing of US$9.5 million. The most recent round of financing was on December 21, 2021, with a financing amount of US$6.5 million. Investors include IOSG Ventures, DFG, HYPERSPHERE, etc.
libreblockchain: Faster and cheaper Bitcoin L2
Libre is a Bitcoin Layer-2 solution that makes Bitcoin and Ordinals faster, cheaper, and easier to program. Libre.org is a new all-in-one platform for Bitcoin ordinals, providing functions such as search, wallet, trading market, inscription, etc. Libre does not require tokens, has built-in Typescript and other top languages, and uses BTC to join in seconds without KYC. Libre processes 4,000+ transactions per second, has zero transaction fees, and has an on-chain AMM. The Libre mainnet went online on July 4, 2022, and an airdrop of 10 million LIBRE was released, of which only 277,000 were claimed in the end. Libre also launched a beta version of BRC 20 Dex and a mobile app to facilitate users to trade inscriptions.
LightecXYZ: Bitcoin Layer2 Solution Based on ZKP
LightecXYZ aims to build Bitcoin's Layer2 using zero-knowledge proof (ZKP) technology, and its main projects include opZKP and zkBTC. opZKP transfers complex calculations to the off-chain and generates a concise proof, and then verifies the proof of off-chain calculations on the chain by introducing new opcodes in the Bitcoin script language. This solution makes up for the limitations of Bitcoin's Turing incompleteness and makes it possible to deploy various applications on Bitcoin. The technology of opZKP is complex and the development cycle is long. zkBTC is an application based on opZKP, which realizes a cross-chain bridge based on ZKP between Bitcoin and Ethereum. The solution allows users to deposit Bitcoin into a specified address to mint ERC-20 tokens $zkBTC that are pegged one-to-one with Bitcoin. The entire process generates a ZKP proof off-chain, then verifies the proof on the Ethereum smart contract, and mints the corresponding number of $zkBTC tokens after confirming the transaction. When users redeem, they need to destroy the corresponding number of $zkBTC tokens and generate a proof off-chain, and redeem Bitcoin after verification. The Lightec team does not hold the private key of the specified address during the entire process to ensure security and decentralization.
The Lightec team is actively developing the zkBTC project and is expected to launch the test network in a few months. At the same time, they are initially building a token economic model to support the further development of the opZKP proposal and promote the construction of the Bitcoin Layer2 ecosystem.
Liquid_BTC: Bitcoin's fast, secure and confidential Layer2 solution
Liquid Network is a Layer2 solution for Bitcoin, providing fast, secure and confidential settlement and digital asset issuance, including stablecoins, security tokens and other financial instruments. Liquid Network uses a special Federated Byzantine Agreement (FBA) to compress the block generation time to within 2 minutes. Transaction amounts and address information are protected through confidential transactions (Confidential Transactions) technology and zero-knowledge proofs. Liquid Network allows users to conduct fast and private transactions with LBTC (Lightning Bitcoin) as a tradable digital asset, with more than 3,700 LBTC currently in circulation.
Liquid Network is governed by a distributed alliance of more than 65 Bitcoin-centric companies, including Bitbank, BTCBOX, Aquannow, Bitcoin Reserve, Cobo, OpenNode, etc. Bitfinex Securities launches El Salvador's first tokenized debt to fund the new Hilton Hotel, and the token will be issued on Liquid Network.
Liquid Network was developed by Blockstream, which was founded in 2014 and its products include Liquid, Blockstream Green, etc. The company raised $21 million in seed funding in 2014, with participation from Ethereal Ventures, Khosla Ventures, Reid Hoffman, Blockchain Capital, Ribbit Capital, Mosaic Ventures, Future Perfect Ventures, AME Cloud Ventures, Max Levchin, Nicolas Berggruen, Danny Hillis, Eric Schmidt’s Innovation Endeavors, and Ray Ozzie. In 2016, it raised $55 million in Series A funding, with participation from Horizons Ventures, AXA Strategic Ventures (AVP), Blockchain Capital, AME Cloud Ventures, Future Perfect Ventures, Khosla Ventures, Mosaic Ventures, Seven Seas Venture Partners, and Batara Eto. In 2021, it raised $210 million in Series B funding, with a valuation of $3.2 billion, with participation from Baillie Gifford and iFinex.
Eco-projects include wallet AQUA Wallet, DeFi products Bisq, Peach Bitcoin, Boltz, NFT projects tokenocean, as well as SideSwap and Debifi.
LumiBitL2: BTC Layer2 solution with enhanced scalability, privacy and decentralization
LumiBit is a BTC Layer2 solution that uses ZK-EVM to provide enhanced scalability, privacy and decentralization. It has a general circuit design for seamless Ethereum smart contract migration and efficient transaction verification. LumiBit uses Type2 ZK-EVM, which is highly compatible with EVM and optimizes data structure to improve verification efficiency. The integrated Halo2 zero-knowledge proof mechanism does not require trusted settings and enhances security. The introduction of abstract accounts of Omin wallet enables users to use local Bitcoin keys to trade on the LumiBit chain. The LumiBit testnet is online.
mercurylayer: Bitcoin L2 focused on privacy and efficiency
Mercury Layer is a Bitcoin L2 that focuses on enhancing privacy and efficiency through state chains and realizing off-chain transfer and settlement of Bitcoin UTXO. Mercury Layer uses state chains and blind joint signature technology to facilitate instant and free transactions without sacrificing fund custody and security.
Mirror_L2: Bitcoin Layer2 solution for decentralized proof of stake
Mirror Staking Protocol, formerly known as Mirror L2, is a decentralized proof-of-stake (PoS) BTC Layer2 solution that is compatible with EVM and smart contracts and uses BTC as GAS. Mirror Staking Protocol uses the Overlapping Group Multi-Signature (MSG) algorithm and is jointly managed by hundreds of nodes, balancing BTC staking rate, security and decentralization. The mBTC generated, which is 1:1 anchored to BTC, is compatible with EVM and has been used in the restaking mechanism.
Mirror has designed a node management solution. Nodes are selected by the community through four rounds of elections, with 100 nodes in the first round and gradually increasing to 300, 600 and 1000. Nodes must stake at least 1 BTC to the mirror channel and act as decentralized network custodians for 12 months. The election champion will receive a call option reward of 1 million MIRR (Mirror's governance token) with an exercise price of $0.12.
On March 4, 2014, a seed round of financing was conducted, with investors including Conflux, UTXO Management, and IMO Ventures, and the amount was not disclosed. In the future, Mirror Staking Protocol plans to build TVL and ecosystem with other BTC L2 projects through the "Stake Once, Earn Twice" event. In March, it announced the completion of the first round of financing and the opening of the test network. Each redemption will receive 10 points, while minting will not receive points.
RolluxL2: Bitcoin Layer2 solution compatible with Ethereum smart contracts
Rollux was developed by Layer1 blockchain Syscoin (SYS) and is an Optimistic Rollup equivalent to EVM. It plans to switch to ZK-based Rollup in the future. Rollux supports near-instant transactions and contract deployment, protected by the Bitcoin network. The Syscoin blockchain is a two-layer blockchain based on PoW consensus, with the Syscoin blockchain at its core and NEVM providing smart contract functions.
Syscoin was founded in April 2014 and developed by Layer1 blockchain Syscoin (SYS). Syscoin announced in June 2022 that it had received a $20 million ecological development fund. Syscoin has been listed on Binance and its current FDV is $170 million.
SovrynBTC: A decentralized trading and lending platform based on Bitcoin
Sovryn is developed on Rootstock (RSK) and is a decentralized trading and lending platform based on Bitcoin, providing a full range of DeFi services, including stablecoins, AMM, lending pools and margin trading.
Sovryn founder Edan Yago, graduated from Tel Aviv University and is the founder of CementDAO and Sovryn. John Light, product manager, was the head of governance at Aragon One. The project has gone through four rounds of financing: US$2.1 million in seed round financing in 2020, with Greenfield, Collider Ventures, and Monday Capital participating; US$12.5 million in financing in January and March 2021; US$9 million in financing in April 2021, with Anthony Pompliano, Cadenza Ventures, Gate Ventures, AscendEX, Blockware, and Consolidated Trading participating; US$5.4 million in financing in October 2022, with General Catalyst, Collider Ventures, Bering Waters, Bollinger Investment Group, and Balaji Srinivasan participating.
u_protocol: Full-chain decentralized synthesis of BTC
Protocol is a native full-chain decentralized synthetic BTC, compatible with EVM, and its main products are uBTC and U Bitcoin Thunder Network. uBTC is a decentralized Bitcoin for Layer 2, supported by Lido's Wrapped Staked Ether and BTC.b. u_protocol is denominated in BTC, and the redemption mechanism enhances the user experience by charging a one-time redemption fee to prevent frequent redemptions. The system sets a price cap of 1.10 BTC. When the uBTC:BTC exchange rate exceeds this level, borrowers can make immediate profits by maximizing their borrowing and selling uBTC.
ZKBaseOfficial: Infrastructure protocol based on ZK technology
ZKBase is based on zero-knowledge proof (ZK) technology, providing expansion solutions for mainstream blockchains such as Ethereum and Bitcoin, and providing a series of services including decentralized exchanges, cross-chain bridges, second-layer payments, NFT markets, and second-layer domain names. ZKBase will release AMM ZKSwap that supports BRC20 assets to improve market liquidity and capital efficiency. Compared with other protocols, ZKBase technology focuses on privacy and fast transaction processing, while providing a safer way, which is comparable to the security of the BTC network. Chief Strategy Officer Antonio Saaranen was formerly the CSO of the Qtum Foundation. Marketing and Public Relations Director Hailan Jia was formerly the Senior Public Relations Manager of Huobi Global Station. In 2020, the angel round of financing was US$1.7 million, with a valuation of US$25 million. Investors include Bixin Ventures, SNZ Holding, FBG Capital, etc.
Conclusion
The number of Bitcoin Layer2 projects is growing rapidly, and there are nearly 100 projects at present. Generally speaking, they can be divided into four categories.
The first category is the EVM side chain, which is the largest number of projects. Most of them use the rollup modular method to deploy the EVM chain and use the PoS consensus. The entrepreneurial threshold is low and requires strong capital operation capabilities to start effectively. Some of these projects try to introduce more of the latest modular solutions such as ZK.
The second type of projects continued the design ideas of BitVM and innovated in the verification methods, which introduced BTC security to a certain extent. However, these projects all chose to launch an EVM + PoS mainnet to develop the ecosystem first. In essence, they are no different from the first type of EVM sidechain. There are certain narrative expectations and they can often obtain some high-value financing. This is also the track where VCs concentrate their investment.
The third type of projects focuses on BTC deposit pledge, using BTC as a pledged asset in PoS, and introducing a BTC re-pledge concept similar to eigenlayer to try to attract more BTC savings. The leading project Babylon innovates in the cryptographic level in the BTC pledge method, and most other projects innovate at the business level, such as introducing BTC pledge into CeFi to create more revenue. We believe that BTC re-pledge will be the mainstream of the future ecosystem. Before the realization of BitVM, the pledge security guarantee it provides will solve the BTC narrative problem of the above-mentioned BTC EVM sidechain.
The fourth category of projects has conducted more explorations on BTC native, such as further developing the UTXO model and trying to create new sidechain asset binding solutions based on UTXO, such as Nervos. The exploration of BTC native also includes the continued exploration of joint mining sidechains. There are also a few projects that try to promote BTC upgrades to introduce more script operators to expand the BTC ecosystem, which is currently the most degen line.
The BTC ecosystem is in a rapid development stage, and various innovative projects continue to emerge to solve the challenges of the Bitcoin network in scalability, security and efficiency. From Babylon's cross-chain staking to Nubit's extended data availability, from Lorenzo's liquidity staking protocol to BitSmiley's comprehensive DeFi protocol, these projects jointly promote the diversified development of the Bitcoin ecosystem through different technical paths and business models. By continuously paying attention to and participating in these cutting-edge projects, the community and developers will be able to better grasp the future development trends of blockchain technology and jointly build a more efficient, secure and diversified blockchain ecosystem.
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