Post-halving Bitcoin Alpha – Here are the top Bitcoin L2 Platforms!

Hey anon!

Bitcoin’s fourth halving was successfully done on April 19. 2024!

Let’s hope for a bullish post-halving market.

In the last email, we covered the Bitcoin DeFi ecosystem. Today, we will cover the layer two (L2) ecosystem.

However, before we give you an alpha dump, let’s understand why we need L2 platforms in the first place.

Why Bitcoin Needs L2

Bitcoin's status as 'digital gold' underscores its utility as a store of value. Yet, its underlying technology faces significant scalability challenges that hinder its broader adoption as a daily transactional currency. 

With its original design centered on security and decentralization, the Bitcoin network struggles with slow transaction speeds, low throughput, and rising costs. 

For instance, the network can only handle an average of 7-10 transactions per second!

Layer-2 solutions on Bitcoin are crucial for addressing these limitations. These protocols operate on top of Bitcoin's base layer, enhancing its scalability by processing transactions off the main blockchain. This speeds up transaction times and reduces fees significantly. 

Plus, it also introduces the potential for complex smart contract functionality, opening the doors to DeFi and NFT on Bitcoin.

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Bitcoin L2 Ecosystem

Lightning Network

The Lightning Network represents a critical layer atop the Bitcoin blockchain, designed to address some of its fundamental challenges—particularly scalability and transaction speed. By facilitating instant, high-volume transactions at very low fees, it provides a practical solution for micropayments, something the traditional Bitcoin network struggles to handle efficiently. 

This innovative protocol operates on a system of channels that exist between users, allowing them to conduct transactions almost instantaneously without needing to wait for block confirmations. This is a significant leap from the Bitcoin blockchain, where transactions can take a considerable amount of time to confirm, often with variable fees that can become prohibitively expensive during peak times.

By using smart contracts and multi-party computation, it ensures that transactions are secure and irreversible, without the need for each transaction to be recorded on the main blockchain. This not only speeds up transactions but also drastically reduces the cost, making Bitcoin a more viable option for small, everyday transactions.

Now that you have context, let’s dive into the projects that we are looking at👇🏼

BOB

BOB, or Build on Bitcoin, is an innovative Layer 2 solution designed to enhance the Bitcoin ecosystem by integrating the capabilities of Ethereum's technology. It specifically targets the development of DeFi applications and other advanced functionalities directly on Bitcoin. By incorporating the EVM, BOB enables developers to utilize familiar tools and languages, such as Solidity, to create and deploy smart contracts on Bitcoin. This approach not only leverages the robust security and widespread recognition of Bitcoin but also taps into the mature ecosystem and advanced features of Ethereum, including the extensive developer tools and infrastructure like wallets and block explorers.

In addition to enhancing Bitcoin's utility in the DeFi space, BOB is engineered to address common challenges in blockchain adoption such as user experience, security, and privacy. The platform introduces sophisticated features like account abstraction and smart contract wallets, which simplify user interactions and enhance security through mechanisms such as social recovery and gasless transactions. Moreover, BOB is equipped to support privacy-focused transactions, acknowledging the importance of confidentiality in financial dealings. 

SatoshiVM

SatoshiVM introduces a pioneering approach to enhancing the Bitcoin ecosystem by integrating zero-knowledge (ZK) rollup technology with the versatility of EVM. This decentralized Layer 2 solution utilizes native Bitcoin (BTC) as the transactional gas, blending the intrinsic value and security of Bitcoin with the programmable flexibility of Ethereum's smart contract environment. 

By doing so, SatoshiVM allows developers to deploy and execute EVM-compatible smart contracts and applications directly on Bitcoin’s blockchain, extending the usability and applications of Bitcoin into sectors traditionally dominated by Ethereum, such as decentralized finance (DeFi) and complex decentralized applications (dApps).

At its core, SatoshiVM comprises three layers: the Settlement Layer, where transactions are validated on the Bitcoin blockchain; the Sequencing Layer, which organizes and stores transaction data; and the Proving Layer, where zero-knowledge proofs are generated to verify transactions without compromising privacy or security.

Bitfinity

Bitfinity is a Layer 2 solution tailored for the Bitcoin network. It integrates the EVM, allowing for the execution of smart contracts and the deployment of dApps using Solidity. 

In addition to fostering DeFi on Bitcoin, Bitfinity employs a unique cryptographic mechanism called Chain-Key, which enhances security and decentralization. This system ensures that no single node can control the threshold key, with shares being regenerated periodically to safeguard against potential security breaches. 

This innovative approach contrasts with more common solutions like zero-knowledge proofs or optimistic rollups, offering a novel method to maintain a secure and efficient bridge between Bitfinity and the Bitcoin blockchain. 

Omni Layer

Omni Layer utilizes Bitcoin's secure and tested blockchain infrastructure to execute transactions, ensuring reliability and enhancing the functionality of Bitcoin without compromising its core features. This integration allows users to generate, buy, and sell their own tokens, effectively creating a decentralized asset exchange within the Bitcoin ecosystem.

One of the standout features of the Omni Layer is its ability to facilitate blockchain-based crowdfunding. This feature allows issuers to conduct crowdsales directly through the platform, where participants can send Bitcoin or other Omni-created tokens to an issuer's address. In return, the Omni Layer automatically distributes the new tokens to the contributors, thereby streamlining the process and removing the need for intermediaries. 

MAP Protocol

The MAP Protocol is an EVM-compatible blockchain built on PoS and Byzantine Fault Tolerant consensus mechanism, it extends the reach of Bitcoin by enabling cross-chain interactions not only between tokens but also across data and computing resources. This interoperability is facilitated through innovative technologies such as light clients and zero-knowledge proofs, eliminating the need for trusted third parties and ensuring a decentralized, secure peer-to-peer network.

MAP Protocol's integration with Bitcoin through its unique BRC-201 protocol allows for fluid interaction between Bitcoin's Layer 1 and other Layer 2 solutions, broadening the Bitcoin network's utility and appeal. The protocol supports a diverse range of applications, from DeFi to GameFi, enhancing the user and developer experience by providing the tools necessary for building dApps that operate across multiple blockchains.

Ark

Ark is a layer 2 solution designed to enhance Bitcoin by improving both scalability and privacy. It leverages a shared UTXO model to allow off-chain, confidential transactions through an intermediary known as the Ark Service Provider (ASP). 

The ASP facilitates these transactions without having access to the user's funds, thus ensuring privacy and security. Launched in May 2023, Ark provides an efficient, low-cost alternative for scalable Bitcoin payments, enabling recipients to receive funds without needing inbound liquidity, a typical constraint in other L2 networks like the Lightning Network.

Bitlayer

Bitlayer is a Layer 2 solution designed to augment Bitcoin by improving transaction speed, scalability, and efficiency. It operates atop the existing Bitcoin network, offering a platform for instant, low-cost transactions that maintain the foundational security and decentralization of Bitcoin. By processing transactions off-chain, Bitlayer significantly enhances Bitcoin's throughput, making it more viable for frequent and small-scale transactions, thus broadening its use in everyday financial activities and complex financial systems.

The platform also supports advanced applications and interoperability within the blockchain ecosystem. Bitlayer facilitates micropayments, decentralized finance (DeFi) applications, and cross-chain transactions, enhancing Bitcoin's utility. Additionally, it allows for the development and execution of smart contracts on Bitcoin, expanding the cryptocurrency's capabilities beyond simple transactions to more complex, automated financial agreements. This makes Bitlayer a crucial component in evolving Bitcoin's role in digital finance, providing the tools necessary for a more integrated and efficient blockchain landscape.

BEVM

BEVM is a Bitcoin Layer-2 network that builds on the Substrate framework to offer full compatibility with EVM. This integration allows BEVM to leverage Bitcoin's security while providing the extensive programmability associated with Ethereum. Users can interact with BEVM using Ethereum's APIs, allowing seamless operation of ddApps that typically run in the Ethereum ecosystem. Additionally, BEVM uses BTC as the gas, facilitating a smooth and decentralized process for cross-chain transactions from Bitcoin's mainnet to its Layer 2.

Key features of BEVM include its decentralized nature, which is bolstered by Schnorr's signature algorithm and a PoS consensus mechanism. This setup not only strengthens the network's security and flexibility but also ensures high scalability by supporting up to 1000 consensus nodes. The use of Bitcoin's Taproot technology further enhances this by enabling secure, decentralized asset and data processing between the mainnet and BEVM.

Citrea

Citrea is an innovative Layer 2 solution that utilizes zk technology to expand the functionality of the Bitcoin blockchain, enabling a range of complex applications directly on Bitcoin. As a Type 2 zkEVM, Citrea efficiently processes transactions in batches and confirms their validity through succinct zero-knowledge proofs. 

These proofs are then permanently inscribed into the Bitcoin blockchain, ensuring that all operations are transparent and verifiable by any Bitcoin node operator. This mechanism not only enhances the security and transparency of transactions but also leverages the robustness of the Bitcoin network for data availability and final settlement.

Key to Citrea's integration with Bitcoin is its ability to interact with the EVM, using BTC as gas, which is referred to within its ecosystem as $cBTC to avoid confusion and streamline transactions. Furthermore, Citrea introduces a trust-minimized two-way peg, secured by the Taproot-enhanced BitVM, which ensures that BTC pegged to Citrea is handled securely and withdrawals are governed by valid zero-knowledge proofs.

Bool Network

The Bool Network serves as a verification layer that transforms all blockchains into Layer 2 solutions for Bitcoin, enhancing its scalability and interoperability. By integrating advanced technologies such as Multi-Party Computation (MPC), Trusted Execution Environment (TEE), and zk proofs, Bool Network facilitates secure and seamless cross-chain transactions. Its architecture is built around Dynamic Hidden Committees (DHC), which act as security guardians, ensuring the integrity and privacy of cross-chain data. 

Additionally, Bool Network operates on its own public blockchain, Bool Chain, which is designed to be EVM-compatible, paving the way for future application development directly connected to Bitcoin’s ecosystem. The speed of transactions is optimized by minimizing both on-chain and off-chain computations, eliminating the need for redundant verifications, which typically slow down cross-chain communications. 

Liquid Network

The Liquid Network is a Bitcoin sidechain designed to provide enhanced transaction capabilities beyond what the main Bitcoin blockchain can offer. It is built on the Elements platform by Blockstream and enables fast and confidential transactions, making it particularly suitable for financial institutions and individual users looking for privacy and efficiency. Liquid Network facilitates final settlements in just two minutes, and by concealing transaction amounts and asset types, it significantly enhances the confidentiality of transfers.

One of the key functions of the Liquid Network is its ability to tokenize a wide range of assets, including stablecoins, securities, and even unique instruments like El Salvador’s volcano bond. This capability extends Bitcoin's utility into new areas such as capital markets, offering secure, rapid, and private transaction solutions. Additionally, Liquid Network's interoperability with the Lightning Network allows for seamless, scalable transactions and atomic swaps, broadening its use cases and enhancing its appeal to a wider audience seeking versatile digital asset management and exchange solutions.

BiopDAO

Biop, is a pioneering Layer 2 blockchain solution for Bitcoin, which utilizes the Optimistic rollup protocol to enhance scalability, reduce costs, and bolster decentralization within the Bitcoin ecosystem. As the first of its kind, Biop leverages a Proof of Stake (PoS) consensus mechanism, aiming to address centralization issues prevalent in existing Bitcoin extensions. This blockchain facilitates the development and integration of dApps across various domains such as DeFi, NFTs, GameFi, and SocialFi, through the implementation of the Bitcoin Virtual Machine (BVM) and smart contracts.

BiopDAO's commitment to revolutionizing the Bitcoin infrastructure is evident in its phased development plan, which includes enhancing interactive operations and integrating with Ethereum L2 solutions to foster a vast, interconnected ecosystem. By enabling bidirectional synchronization between Bitcoin's ledger and smart contracts for BRC-20 tokens, BiopDAO ensures a seamless and decentralized token management system.

Merlin Chain

Merlin Chain is a Bitcoin Layer 2 platform that uniquely integrates ZK-Rollup technology with a decentralized oracle network and on-chain BTC fraud proof modules to enhance the scalability and functionality of Bitcoin’s Layer1 assets. Developed by Bitmap Tech, Merlin Chain offers a novel approach to Bitcoin's infrastructure, designed to make Bitcoin transactions faster, more scalable, and economically efficient. 

This platform targets not just enhancing transaction capacity and reducing fees but also enriches Bitcoin's native assets through innovations like the BRC-420 "Blue Box" collection, which has gained popularity among users of Ordinals.

The key advantage of Merlin Chain lies in its use of ZK-Rollup, which significantly increases transaction throughput while ensuring data integrity and security through decentralized oracles. This approach enables Merlin Chain to handle high volumes of transactions with reduced costs, thereby attracting a broader range of applications and users within the Bitcoin ecosystem

ROOS

ROOS is a Layer 2 scaling solution for Bitcoin, employing ZK Rollups to accelerate transaction speeds and broaden the scope of applications while upholding stringent security standards. The platform is engineered to enable a diverse range of Web3 applications by integrating zero-knowledge proof technology directly with Bitcoin, using it as the primary settlement layer. 

The architecture of ROOS is modular, comprising several components including ROOS BTCLayer for computing, ROOS BTCStorage for enhanced data capabilities, and ROOS Bridge for efficient asset transfer between layers. These modules work synergistically to reduce the cost and complexity of storage on the Bitcoin network, potentially lowering such expenses by up to 99%.

ZAP Chain

ZAP Chain is designed to optimize resource use and enhance operational efficiencies within the Bitcoin ecosystem through its innovative decentralized physical infrastructure networks (DePIN). By improving the efficiency of operations and leveraging eco-friendly innovations, ZAP Chain aims to bolster the sustainability and scalability of Bitcoin, ensuring its long-term viability and resilience.

In addition to its core operational enhancements, ZAP Chain is committed to fostering a community-centric ecosystem that spans across Bitcoin and various EVM-compatible networks. The platform emphasizes a multi-application approach, facilitating the development and integration of technologies such as Bitcoin Runes and other blockchain functionalities.

That wraps it up for today, Anon! 

We have a lot more alpha to share with you.

However, we don’t want to cause information overload. So, here’s what we are going to do.

We will split this newsletter into two. 

On Wednesday, we will cover the rest of the Layer 2 platforms on Bitcoin.

We trust you found this issue insightful and that it sets you on course for your venture into the Bitcoin cosmos!

Before we say goodbye for today, hop on over to our lively Telegram community! Chat with our researchers, always ready to tackle your questions, and mingle with fellow enthusiasts! 👇