Bitcoin ecosystem is thriving, and Layer 2 projects have become the new focus

In recent months, the inscription project has sparked a craze in the entire cryptocurrency market, with related token prices reaching new highs. However, this boom has also brought some issues, such as Bitcoin network congestion and soaring transaction fees. Against this backdrop, the trend of "L2" in the Bitcoin ecosystem seems to have become unstoppable.

Layer 2 solutions not only alleviate network congestion issues but also support various DeFi applications such as trading, lending, and liquidity mining by increasing programmability. So, what are the current development trends in the Bitcoin L2 space? Which early projects are worth paying attention to?

The "L2ization" Trend of Bitcoin

As the craze for inscriptions continues, manually participating in new inscription projects has become increasingly difficult. Although inscriptions provide ordinary users with opportunities to participate, they have also caused serious congestion issues for the Bitcoin network.

Due to the typically lower transaction fees of inscription transactions, they have been replaced by more urgent Bitcoin transfers, which has congested the Bitcoin mempool. According to statistics, the number of Bitcoin UTXOs has skyrocketed from 87 million to 140 million in just 7 months, with most of them being very small transactions.

This situation not only causes network congestion but may also result in a large number of transactions never being packaged on-chain, leading to a waste of resources. This is also why some Bitcoin core developers hold a critical attitude towards inscriptions.

In this case, the advantages of Bitcoin L2 solutions become apparent. They not only solve network congestion issues but also bring more DeFi application scenarios to the Bitcoin ecosystem.

Bitcoin L2 Project Overview

Stacks: Bitcoin smart contract layer

Stacks, as a second layer for Bitcoin, introduces Ethereum-like smart contract functionality while remaining anchored to the Bitcoin blockchain. It has its own chain, compiler, and programming language, operating in sync with Bitcoin.

However, Stacks implements cross-chain BTC through a "hook" method, which carries certain centralization risks. In addition, its network gas uses the mainnet token STX instead of BTC, which may affect miners' willingness to participate.

RSK: A general smart contract platform based on Bitcoin

RSK is a smart contract platform secured by the Bitcoin network, supporting the migration of Ethereum applications to the Bitcoin blockchain. Its block generation speed and transaction processing capability outperform the Bitcoin mainnet.

The most unique design of RSK is merged mining, which allows miners to mine for both Bitcoin and the RSK blockchain simultaneously, increasing profitability. However, RSK uses smartBTC (RBTC) for bridging, which still carries certain security risks.

BitVM: The New Star of Bitcoin Smart Contracts

BitVM aims to achieve Turing-complete Bitcoin contracts without modifying the operation code. It introduces state through Bit Commitments, uses logic gates to achieve verifiability, and maintains the lightweight characteristics of the Bitcoin network.

However, BitVM currently has limited functionality and mainly stays at the theoretical stage. Its smart contract layer operates off-chain, and contracts do not share state, and it has not yet achieved true decentralized BTC cross-chain.

BEVM: Decentralized Bitcoin L2 Solution

BEVM is a Bitcoin Layer 2 that uses BTC as Gas and is compatible with EVM. It achieves BTC cross-chain through a decentralized approach and supports various decentralized applications. BEVM is fully compatible with EVM, allowing Ethereum DApp developers to easily migrate to the Bitcoin ecosystem.

MAP Protocol: Peer-to-peer cross-chain interoperable Bitcoin L2 network

MAP Protocol leverages the security mechanisms of Bitcoin, allowing other public chain assets to interact with the Bitcoin network. It offers lower Gas fees and implements BRC20 cross-chain capabilities. Users can trade BRC20 tokens at a low cost on SATSAT and roll back to the Bitcoin main chain through Rolluper.

Summary

As the crypto community recognizes the importance of Layer 2 solutions for the future of Bitcoin, the entire Bitcoin L2 sector is ushering in new development opportunities. This field is still in its early stages and is expected to produce a number of leading projects worth billions of dollars.

Bitcoin L2, as a new solution, offers tremendous imaginative space and is worthy of long-term attention. As the market recognizes these projects more, we may see more innovation and development.