Title: Innovative Bitcoin Layer 2 Projects Revolutionizing the Crypto Landscape
Introduction:
Bitcoin, the world’s first and most popular cryptocurrency, is constantly evolving to address scalability and interoperability challenges. As a result, several Layer 2 solutions have emerged, aiming to enhance the speed, efficiency, and functionality of the Bitcoin network. This article explores some of the most innovative Bitcoin Layer 2 projects and their contributions to the crypto landscape.
Project 1: anetaBTC – Bridging BTC to Cardano and Ergo Ecosystems
anetaBTC is a groundbreaking project founded by Austin Regron, a seasoned developer with a focus on integrating Bitcoin into the Cardano and Ergo ecosystems. Its native tokens, $NETA and $cNETA, have a total supply of 2 billion and are issued on Ergo and Cardano, respectively. With the V1 mainnet already launched and V2 and V3 versions scheduled for release in 2024 and 2025, anetaBTC is set to revolutionize cross-chain interoperability.
Project 2: BiopDAO – Op Rollup Project Supporting BRC-20 Protocol
BiopDAO is an Op Rollup project that supports various protocols, including BRC-20, and offers the Biop Virtual Machine (BVM) to facilitate smart contract execution. Its primary token, $Biop, has a total supply of 21 million, with a current market value of approximately $500,000. Despite a slow progress in development, BiopDAO plans to launch three versions of its L2 blockchain: V1, V2, and V3, in 2024.
Project 3: Bitsat_Official – AI Integration in BTC L2 with ZK-Rollup
Bitsat is an interoperable protocol compatible with EVM and Cosmos, focusing on integrating AI into the Bitcoin Layer 2 network. Powered by HyperLayer, a high-performance and scalable platform, Bitsat enables efficient data and asset transfer through its ZK-Connector. With its VM Engine compatible with Ethereum Virtual Machine (EVM) and an asynchronous consensus mechanism, Bitsat provides high performance and scalability to the Bitcoin network.
Project 4: Bool_Official – Decentralized and Secure Bitcoin Validation Layer
Bool is a modular Data Availability (DA) layer that leverages ZK, MPC, and TEE technologies to provide decentralized and secure Bitcoin validation. Its dynamic hidden committee (DHC) and Ring VRF protocol protect member identities, while all key management processes are executed in a trusted execution environment (TEE). With a total supply of 1 billion $BOOL tokens and a focus on decentralized key management, Bool aims to ensure the security and integrity of the Bitcoin network.
Project 5: CashuBTC – Privacy-Focused Bitcoin Solution
Cashu is an open-source Chaumian ecash system designed specifically for Bitcoin, integrated deeply with the Lightning Network to ensure privacy. Recognized by the Bitcoin Core community, Cashu provides an open electronic cash protocol called Cashu NUT, which protects user privacy through blind signatures and enables peer-to-peer transactions.
Conclusion:
These innovative Bitcoin Layer 2 projects are revolutionizing the crypto landscape by addressing scalability, interoperability, and privacy challenges. From bridging BTC to other ecosystems, supporting various protocols, integrating AI, providing secure validation layers, to emphasizing privacy protection, these projects are enhancing the functionality and efficiency of the Bitcoin network. As the crypto industry continues to evolve, these projects play a crucial role in shaping the future of decentralized finance and blockchain technology.Creative Rewriting:
Article Title: Bitcoin Layer 2 Solutions: A Creative Exploration
LightecXYZ: Bitcoin Layer 2 Solution Based on ZKP Technology
LightecXYZ aims to build Bitcoin’s Layer 2 using Zero-Knowledge Proofs (ZKP) technology. Its main projects include opZKP and zkBTC. opZKP completes complex calculations off-chain and generates a succinct proof. It introduces new opcodes in the Bitcoin script language for on-chain verification of the off-chain computations. This solution overcomes the limitations of Bitcoin’s Turing incompleteness, making it possible to deploy various applications on the Bitcoin network. The development of opZKP is complex and time-consuming. zkBTC, on the other hand, is an application built on top of opZKP, enabling cross-chain bridging between Bitcoin and Ethereum using ZKP. This solution allows users to deposit Bitcoin into a specified address and mint ERC-20 tokens called $zkBTC that are pegged 1:1 to Bitcoin. The entire process involves generating ZKP proofs off-chain and verifying them on the Ethereum smart contract to mint the corresponding $zkBTC tokens upon confirmation of the transaction. When redeeming, users need to destroy the corresponding $zkBTC tokens, generate proofs off-chain, and redeem Bitcoin upon successful verification. The Lightec team does not hold the private keys to the specified address throughout the process, ensuring security and decentralization.
The Lightec team is actively developing the zkBTC project and expects to launch a testnet in a few months. Additionally, they are building a token economic model to support further development of the opZKP proposal and drive the Bitcoin Layer 2 ecosystem’s construction.
Liquid_BTC: Fast, Secure, and Private Bitcoin Layer 2 Solution
Liquid Network is a Bitcoin Layer 2 solution that offers fast, secure, and private settlement and issuance of digital assets, including stablecoins, security tokens, and other financial instruments. Liquid Network compresses block generation time to 2 minutes using a special Federated Byzantine Agreement (FBA) protocol. It protects transaction amounts and address information through Confidential Transactions technology and Zero-Knowledge Proofs. Liquid Network allows users to transact quickly and privately using LBTC (Liquid Bitcoin) as a tradable digital asset. Currently, there are over 3,700 LBTC in circulation.
Liquid Network is governed by a distributed alliance of over 65 Bitcoin-centric companies, including Bitbank, BTCBOX, Aquannow, Bitcoin Reserve, Cobo, and OpenNode. Bitfinex Securities launched the first tokenized debt in El Salvador, providing funding for New Hilton Hotel, with tokens issued on the Liquid Network.
Liquid Network is developed by Blockstream, a company founded in 2014 that offers products such as Liquid and Blockstream Green. The company raised $21 million in seed funding in 2014, with investments 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, Blockstream 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, Blockstream raised $210 million in a Series B funding round, valuing the company at $3.2 billion, with investments from Baillie Gifford and iFinex.
The ecosystem projects of Liquid Network include the AQUA Wallet, DeFi products Bisq, Peach Bitcoin, Boltz, NFT project tokenocean, as well as SideSwap and Debifi.
LumiBit L2: Enhanced Scalability, Privacy, and Decentralization for BTC Layer 2
LumiBit is a BTC Layer 2 solution that leverages ZK-EVM to provide enhanced scalability, privacy, and decentralization. It features a seamless Ethereum smart contract migration, a universal circuit design, and efficient transaction verification. LumiBit adopts Type 2 ZK-EVM, which is highly compatible with EVM and optimizes data structures for improved verification efficiency. By integrating the Halo 2 Zero-Knowledge Proof mechanism, LumiBit enhances security without requiring trusted setups. The introduction of abstract accounts from the Omin wallet allows users to transact on the LumiBit chain using their local Bitcoin keys. LumiBit’s testnet is already live.
mercurylayer: Privacy and Efficiency-focused Bitcoin L2
Mercury Layer is a Bitcoin Layer 2 solution focused on enhancing privacy and efficiency through state chain-based UTXO transfers and settlements. Mercury Layer utilizes state chains and blind threshold signatures to enable instant and fee-less transactions without compromising fund custody and security.
Mirror_L2: Decentralized Bitcoin Layer 2 Solution for Proof of Stake
Mirror Staking Protocol, formerly known as Mirror L2, is a decentralized Proof of Stake (PoS) BTC Layer 2 solution compatible with EVM and smart contracts. It uses BTC as GAS and adopts the Multiple Signature Group (MSG) algorithm managed by hundreds of nodes, balancing BTC staking rate, security, and decentralization. It generates mBTC anchored at a 1:1 ratio with BTC, compatible with EVM, and utilized in the restaking mechanism.
Mirror has designed a node management scheme where community-elected nodes increase gradually from 100 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 champion of the election receives a call option reward of 1 million MIRR (Mirror’s governance token) at an exercise price of $0.12.
Mirror conducted a seed funding round on March 4, 2014, with undisclosed investments from Conflux, UTXO Management, and IMO Ventures. In the future, Mirror Staking Protocol plans to establish TVL and an ecosystem through the “Stake Once, Earn Twice” campaign with other BTC Layer 2 projects. They completed their first funding round and opened the testnet in March. Redemption earns 10 points, while minting does not earn any points.
Rollux L2: Bitcoin Layer 2 Solution Compatible with Ethereum Smart Contracts
Rollux, developed by the Layer 1 blockchain Syscoin (SYS), is an Optimistic Rollup equivalent to EVM. It plans to transition to ZK-based Rollup in the future. Rollux supports near-instant transaction settlement and contract deployment, secured by the Bitcoin network. Syscoin is a dual-layer blockchain based on PoW consensus, with the Syscoin blockchain as the core and NEVM providing smart contract functionality.
Syscoin was founded in April 2014, and in June 2022, they announced a $20 million ecological development fund. Syscoin is listed on Binance, with a current FDV of $170 million.
SovrynBTC: Decentralized Trading and Lending Platform based on Bitcoin
Sovryn, developed on Rootstock (RSK), is a decentralized trading and lending platform based on Bitcoin. It offers a full suite of DeFi services, including stablecoins, AMM, lending pools, and margin trading.
Sovryn’s founder, Edan Yago, is a graduate of Tel Aviv University and the founder of CementDAO and Sovryn. John Light, the Product Lead, previously served as the Governance Lead at Aragon One. The project has undergone four funding rounds: a $2.1 million seed round in 2020 with investments from Greenfield, Collider Ventures, and Monday Capital; $12.5 million raised in January and March 2021; $9 million raised in April 2021 with participation from Anthony Pompliano, Cadenza Ventures, Gate Ventures, AscendEX, Blockware, and Consolidated Trading; and $5.4 million raised in October 2022 with investments from General Catalyst, Collider Ventures, Bering Waters, Bollinger Investment Group, and Balaji Srinivasan.
u_protocol: Fully Decentralized Synthetic BTC
U Protocol is a native fully decentralized synthetic BTC compatible with EVM. 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 utilizes BTC as the pricing unit and enhances user experience by charging a one-time redemption fee to prevent frequent redemptions. The system sets a price cap of 1.10 BTC, and when the uBTC:BTC exchange rate exceeds this level, borrowers can maximize their loans and sell uBTC for instant profits.
ZKBaseOfficial: Infrastructure Protocol Based on ZK Technology
ZKBase provides scalability solutions based on Zero-Knowledge Proofs (ZK) for mainstream blockchains like Ethereum and Bitcoin. It offers a range of services, including decentralized exchanges, cross-chain bridges, layer 2 payments, NFT markets, and layer 2 domains. ZKBase will release ZKSwap, an AMM supporting BRC20 assets, to enhance market liquidity and efficiency. Compared to other protocols, ZKBase prioritizes privacy, fast transaction processing, and provides a more secure way comparable to the Bitcoin network. Chief Strategy Officer Antonio Saaranen previously served as CSO at Qtum Foundation, while Marketing and PR Director Hailan Jia was a senior PR manager at Huobi Global. ZKBase raised $1.7 million in angel funding with a valuation of $25 million, with investments from Bixin Ventures, SNZ Holding, FBG Capital, and others.
Conclusion
The number of Bitcoin Layer 2 projects is rapidly growing, with close to 100 projects currently in existence. They can be broadly categorized into four groups.
The first group consists of EVM sidechains, which make up the majority of projects. Most of these projects deploy EVM chains modularly using rollup technology and adopt PoS consensus. The entry barrier for these projects is relatively low, but they require strong capital operations to be effectively launched. Some projects in this group explore the integration of the latest modular solutions such as ZK.
The second group of projects builds on the BitVM design philosophy and innovates in verification methods, introducing BTC security to a certain extent. However, these projects choose to launch a mainnet with EVM + PoS to develop the ecosystem, which is essentially no different from the first group of EVM sidechains. They often garner high funding due to the narrative expectation and are a popular VC investment track.
The third group focuses on BTC deposit staking, using BTC as the staking asset in PoS. They introduce BTC re-staking concepts similar to eigenlayer and aim to attract more BTC savings. The flagship project Babylon innovates on the cryptographic level for BTC staking, while other projects innovate at the business level, such as introducing BTC staking into CeFi for additional yield. We believe that BTC re-staking will become the mainstream of the future ecosystem. It provides security guarantees for BTC EVM sidechains, solving the BTC narrative challenge before BitVM is realized.
The fourth group explores more possibilities with BTC native approaches. They further develop the UTXO model and attempt to create new sidechain asset binding solutions like Nervos. BTC native exploration also includes continued exploration of federated mining sidechains. Some projects experiment with BTC upgrades to introduce more script operators for expanding the BTC ecosystem, representing the most adventurous path.
The BTC ecosystem is in a phase of rapid development, with various innovative projects emerging to address challenges in scalability, security, and efficiency on the Bitcoin network. From Babylon’s cross-chain staking to Nubit’s expanded data availability, from Lorenzo’s liquidity staking protocol to BitSmiley’s comprehensive DeFi protocol, these projects are collectively driving the diversification of the Bitcoin ecosystem. By continuously monitoring and participating in these cutting-edge projects, the community and developers can better grasp the future trends of blockchain technology and collaboratively build a more efficient, secure, and diverse blockchain ecosystem.
