What Insights Does Ethereum L2 Offer on the Eve of the Bitcoin Layer 2 Explosion?

With the birth of the Ordinal protocol in 2023, Bitcoin has welcomed a brand new asset type - "inscriptions". This native asset issuance method on the first blockchain quickly gained market popularity, not only giving rise to protocols like BRC20, Atomical, and Runes but also spawning well-known inscriptions such as ORDI and SATS, as well as numerous Bitcoin-native NFTs.

For a time, the Bitcoin ecosystem welcomed a new spring, attracting a large amount of funds, users, and developers. However, after a period of development, people gradually realized the limitations of Bitcoin as Layer 1. On one hand, Bitcoin does not support smart contracts, making it difficult to expand into richer application scenarios. On the other hand, Bitcoin's performance and miner fees have also become significant obstacles to further development of the ecosystem.

The inscription craze quickly spread to the Bitcoin scaling track, opening up a popular lane for Bitcoin Layer 2.

The Development History of Bitcoin Layer 2

Bitcoin Layer 2 is not a new concept. As early as 2015, the Lightning Network white paper was published, becoming one of the earliest Layer 2 payment protocols based on Bitcoin. In 2016, Blockstream launched the sidechain Liquid Network. During the same period, the RSK sidechain was also born. In 2019, the RGB protocol began to develop towards practical applications. Stacks, launched in 2018, claims to enable decentralized application development on Bitcoin. BitVM, proposed in 2023, adopts a similar implementation method to Ethereum's Optimistic.

Despite the long development history of Bitcoin Layer 2, there are still very few solutions that are widely recognized. The main dilemma lies in:

1. Technical bottlenecks have led to slow development progress.
2. Some projects opened high and closed low, facing community skepticism.
3. Insufficient decentralization makes it difficult to attract large capital.

To overcome these difficulties, Bitcoin Layer2 needs to achieve a balance in decentralization, data availability, and security in order to attract more funds and users into the ecosystem.

Emerging Bitcoin Layer2 Projects

Recently, two emerging Bitcoin Layer 2 projects have attracted attention:

1. BEVM: A trustless Bitcoin network solution based on Taproot Consensus. It achieves decentralized Bitcoin cross-chain and management through three core functionalities: Schnorr Signature, MAST, and Bitcoin lightweight node network consensus.

2. Mezo: Using tBTC as a base, tBTC is created through a randomly selected network of signers without a centralized custodian. tBTC acts as a bridge between Bitcoin and Ethereum, allowing BTC holders to deposit BTC into a smart contract and receive tBTC.

These new projects bring new technological paths and solutions for Bitcoin Layer 2, which are expected to promote further development of the ecosystem.

Outlook

Although Bitcoin Layer 2 is currently in a difficult climbing period, as long as it develops in the right direction, it is expected to welcome a real explosion in the future. More projects with decentralization, native features, and security need to emerge, as well as the continued contributions of veteran players and the inclusion of innovative projects, to create a flourishing ecosystem.

The trillion-level track of Bitcoin Layer2 has been opened. In addition to maintaining our expectations, we also need more patience and perseverance. As technology continues to advance and the ecosystem gradually improves, Bitcoin Layer2 is expected to welcome a new spring, bringing more possibilities to the Bitcoin ecosystem.