Analysis on the development of Bitcoin’s second-layer network

Author: Daoshuo Blockchain

At the end of these days’ articles, many readers have left messages mentioning Bitcoin’s second-layer network Merlin and its continued growth in pledges.

The Bitcoin second-layer network where Merlin is located is already a very well-known track in the current and even the next bull market, and there is a high probability that this track will be in this wave and even the next market. Massive outbreak.

So I have been paying close attention to the development of this track and related projects.

Bitcoin’s second-layer network is not new to the past two years. As early as 2017 and 2018, there were projects related to the second layer of Bitcoin network.

But at that time, apart from Bitcoin, there were basically no other liquid assets on the Bitcoin network. Therefore, the second layer of Bitcoin network that appeared at that time could be described as "untimely". After these There has not been much improvement in development in 2016.

After the emergence of the Inscription Ecosystem, a large number of assets with higher market value and better liquidity appeared on Bitcoin. However, due to technical limitations, it will be quite difficult to establish relevant application services and call these assets on the Bitcoin main network. Therefore, this provides an excellent opportunity for the development of the Bitcoin second-layer network.

In addition, the development of Ethereum’s second-layer network over the years has provided relatively mature technical routes. Whether these technical routes will eventually be suitable for Bitcoin is not said, but it at least provides a lot of reference. reference. This provides a good technical reserve for the development of the second layer of Bitcoin network.

Facilitated by these conditions, the second-layer network of Bitcoin has exploded in the past two years, especially since the end of last year and the beginning of this year.

It is worth noting that the emerging projects that have exploded in this round are far stronger than the old projects (such as Rootstock and Stacks) in terms of experience and market response.

If we measure it by the currently more common standard TVL, the second-layer Bitcoin network with the highest value at the moment is undoubtedly Merlin.

According to the latest data from geniidata.com (https://geniidata.com/ordinals/index/merlin?ref=H2534F), Merlin’s TVL has exceeded 3 billion US dollars. This value has exceeded Solana.

My feelings about the Merlin project are a bit complicated:

On the one hand, the way this project used email registration in the previous operation made me a little disgusted; but on the other hand, the project The measures taken by Fang in terms of staking are quite inclusive, not only covering various popular assets in the Bitcoin ecosystem, but also extending its reach to the Ethereum ecosystem, allowing holders of ETHS to pledge.

Because of such measures, its TVL has shown explosive growth and its popularity has also risen rapidly.

But from a purely technical perspective, I don’t think Merlin has much innovation. They are all relatively old-fashioned methods: using a multi-signature wallet to lock assets on the main network and issuing anchors on the side chain. assets.

These are compromises that have been well established for several years.

In fact, most of the second-layer Bitcoin networks currently have no technical innovation. It is difficult for these projects to obtain the security guarantee of the Bitcoin main network. This is different from the second-layer network of Ethereum. There is a big gap compared with the layer network. Even if some projects can obtain the security guarantee of the Bitcoin main network to a considerable extent, there are considerable flaws in the application of somatosensory.

So I can’t yet judge the final direction of Bitcoin’s second-layer network. But in the short and medium term, especially in the next bull market, I believe this track can still attract considerable popularity and funds.

Merlin’s impressive achievements in pledged assets have two most direct impacts:

First, it directly benefits the project itself; second, it directly boosts related pledged assets. s price.

I believe that this impact will accelerate in the future, especially in increasing the price of pledged assets.

Because of Merlin’s example, more Bitcoin second-layer network projects will emerge in the future. These projects will definitely launch more intense and larger-scale incentives to attract users to mortgage valuable assets in the Bitcoin ecosystem into the projects. This will further boost the prices of these assets.

Look at the development of the second layer network of Ethereum next door: In my opinion, it is already close to the blue ocean track. There are still a lot of venture capital and funds flowing into new projects. These New projects are competing for users and TVL through continuously strengthening airdrop expectations.

Looking at the second-layer network of Bitcoin, this track is obviously still in the horse racing stage, and it will definitely be lively in the future.

For investors, I have two suggestions:

First, when mortgaging assets, you should be more cautious, do not mortgage all assets, and leave some margin.

The second is to hold on to the valuable assets in your hands and don't sell them easily in the hope of a temporary price increase. If you take them to the bull market, I believe you will reap even more amazing returns.