Since November last year, Bitcoin Core core developer Luke Dashjr has frequently issued fierce criticisms of the inscription track represented by ORDI, and even once proposed restrictions on inscriptions on the Bitcoin chain. community proposal.
However, the latest news is that Luke Dashjr’s proposal to restrict inscriptions has not been passed and has been closed. Although overall most developers still express their dislike of inscriptions, the community Other OGs and developers do not agree with Luke Dashjr's extreme proposal, believing that the market will find a way to digest itself through methods such as Layer 2, so no intervention is needed.
This also means that amid fierce debate, the community is gradually realizing the importance of Layer2 solutions in shaping the future of Bitcoin.
Does the inscription expose the "flaws" of Bitcoin?
Since the emergence of Ethereum and the public chain ecosystem, whether it is the ICO craze in 2017, or the DeFi summer in 2020, and the subsequent NFT craze, almost every carnival in the industry over the years is no longer dominated by Bitcoin, and there is even a gradual trend of leaving Bitcoin alone to dance alone. It was not until this Ordinals craze that BTC was finally no longer absent.
With the explosive development of the Bitcoin ecosystem, BTC, as the highest quality asset in the circle, is destined to give birth to new asset forms with the help of inscription drainage. Demand, but the inscription fire has also exposed the underlying "flaws" of Bitcoin to some extent.
First of all,most of the tens of millions of inscription transactions are small-amount transactions to be processed, which are actually equivalent to spam transactions in DDoS attacks. , may never be packaged and broadcast on the chain in a lifetime:
Because inscriptions are similar to NFTs, allowing users to record various data on the blockchain , but overall since Bitcoin transaction fees are paid based on data size, Inscription users tend to set relatively low transaction fees.
This also means that they are willing to wait longer for confirmation, which can easily lead to inscription transactions being replaced by more urgent Bitcoin transfers. Against this background, these massive inscription transactions, which are all willing to queue up, have overwhelmed the Bitcoin memory pool (the place where all valid transactions that have not been officially added to the network are stored).
Secondly, there are still underlying flaws in smart contract scenarios such as DeFi that are directly implemented on the Bitcoin main chain - this makes the BTC in the hands of Holders still "non-interest-bearing" "Asset", it cannot be used in a wider range of usage scenarios such as DeFi.
There have been many previous attempts to release the liquidity of Bitcoin assets, the most important of which is bridging to the Ethereum ecosystem:
Staking BTC in the form of "package" is equivalent to the Bitcoin version of liquidity staking. Like renBTC, WBTC, and tBTC in the DeFi wave back then, users can pledge BTC and obtain the corresponding package. Tokens, thus serving as a liquidity bridge to the Ethereum ecosystem, can generate revenue through coupling with the Ethereum DeFi ecosystem.
From this perspective, if Bitcoin can be introduced into a wider range of application scenarios, it will be equivalent to revitalizing Bitcoin, a high-quality crypto-native asset, and also provide a good foundation for Bitcoin. Coin holders bring diversified sources of income, which can be said to kill two birds with one stone.
Bitcoin L2 Tradeoffs
Back in the Ordinals wave Competition in the Bitcoin L2 field has been fierce before. The following is the specific trade-offs involved in the different types of L2 that may be built on Bitcoin.
1. OFF-CHAIN Network
For example, Lightning Network and RGB.
None of these solutions are blockchains, but networks that keep data off-chain (stored by users), making data and smart contracts accessible The flexibility and interactivity are greatly reduced, so users cannot experience the full functionality that smart contract blockchains like Ethereum or Solana can provide.
They also require users to run their own nodes or infrastructure in order to be fully decentralized, which results in significant user experience barriers to adoption. Nonetheless, this approach offers scalability and privacy benefits that go far beyond what blockchain technology can offer, making it the best choice for specific application use cases, especially large-scale payments.
2. Decentralized side chain
For example, Stacks , Interlay, Layer-0 and other solutions.
Decentralized sidechains allow anyone to participate in consensus (i.e. mining) as they supplement their security with new tokens issued by the protocol budget, this has given rise to a highly competitive miner market - miners spend resources competing for the native tokens of the blockchain network, which are subsequently used by users to pay gas fees when executing smart contracts.
3. Joint side chain
For example, Liquid, RSK , Botanix and other solutions.
In this case, without tokens, the miners' only income would be paid by the company behind the development work, or by the blockchain network. User fees are incurred, although these fees are usually negligible for the first few years until the network is used on a large scale.
This compensation for miners is necessary because in a proof-of-work consensus model, mining costs money, while in proof-of-stake, There is also a risk that funding will be cut. Even Bitcoin and Ethereum, each with over 100 million users, fund their network security primarily through token reward subsidies.
To solve this problem, the joint sidechain does not open mining to everyone. Taking Liquid as an example, it has established a group of 15 crypto business service providers, including exchanges, OTC merchants and infrastructure providers. Although this approach can work well, it requires trust in the chosen one. entity.
At the same time, in order to become more decentralized over time, an age-old dilemma arises: how to attract a large number of users while running on a trusted group And incur considerable expenses? There are also ongoing efforts to design hardware solutions to automate and democratize membership, transferring trust to the hardware used.
L2 urgently needs new solutions
Since last year, As protocols such as Ordinals, BRC-20, and Runes attract more Web3 developers to build applications on Bitcoin, new options for EVM-compatible L2 solutions are beginning to emerge. BEVM and many new L2 solutions have adopted this approach.
This decision will undoubtedly help accelerate market expansion and ensure compatibility with exchanges and EVM-centric blockchain infrastructure.
Take BEVM as an example. As a BTC Layer2 that uses BTC as Gas and is compatible with EVM, its core goal is to expand the smart contract scenario of Bitcoin and help BTC break through Bitcoin. The coin blockchain is not Turing complete and does not support the constraints of smart contracts, allowing BTC to build decentralized applications with BTC as the native Gas on Layer 2 of BEVM.
When a user transfers BTC from the Bitcoin main network to BEVM, the user's BTC will enter the contract address hosted by 1,000 nodes, and then be transferred to BEVM at the same time. That is, the BTC Layer2 network generates new BTC at a ratio of 1:1.
When the user issues an instruction to transfer BTC from BEVM back to the main network, the BEVM network node will trigger the Mast contract, and the 1,000 nodes that manage assets will follow the established The rules are automatically signed and BTC is returned to the user's address. The entire process is completely decentralized and trustless.
This means that all transactions are transferred from the Bitcoin main chain to run on the Layer2 network. At the same time, since BEVM is fully compatible with EVM, it can also be easily Let BTC realize various decentralized applications and empower Bitcoin ecological sub-projects from L2:
Ethereum DApp developers can directly and seamlessly migrate Go to BEVM and quickly build Swap or even on-chain DeFi scenarios such as lending and liquidity staking on BEVM, bringing more possibilities to the Bitcoin ecosystem. It is also the most decentralized and convenient compared to the first two.
Summary
Overall, most bits Coin Layer 2 projects actually have huge risks, and even more than half of new projects are destined to fail, because developing them requires a steady stream of funds to help expand the ecology and developer community.
BEVM, an EVM-compatible solution, is equivalent to a trade-off: EVM compatibility allows Ethereum-based developers and existing applications to migrate. It is conducive to the further expansion of the ecology and facilitates developers to deploy products, thereby quickly opening up the situation.
Just like Ethereum Layer 2 solutions such as Arbitrum and Optimism in 2021, they are destined to eventually emerge with a number of billion-dollar Bitcoin L2 leading projects. Let's wait and see in 2024.
JinseFinance
