BitLayer Ecosystem Project Inventory

This article provides a brief analysis of Bitlayer and elaborates on the views on Bitlayer and BTC Layer2.

Author: Eureka Partners

Prospects of Bitcoin Layer2

Bitcoin was initially conceived for use in electronic payment systems. Therefore, in order to ensure security and stability, the design of a non-Turing complete scripting language limited Bitcoin's ability to perform complex calculations. Bitcoin exists more as a digital gold for storing value. With the explosive growth of ecosystems on public chains such as Ethereum and Solana, developers have been exploring scaling solutions for the Bitcoin ecosystem in order to unlock the trillions of dollars of dormant assets. However, the technical limitations of solutions such as sidechains and the Lightning Network still exist, so progress has been slow.

In 2023, the emergence of the Inscription Tide, initiated by Ordinals, expanded the new asset form of the Bitcoin ecosystem, further sparking market thinking and exploration of Bitcoin's scalability and programmability. A series of new Layer2 solutions such as Merlin and B² Network have emerged, creating a range of DeFi applications such as swaps, lending, and liquidity mining to expand new application scenarios in the Bitcoin ecosystem using programmability.

Currently, most Layer2 solutions in the market bridge liquidity to the Ethereum ecosystem and participate in on-chain scenarios such as DeFi by coupling with the Ethereum ecosystem. However, many Layer2 withdrawal bridges are essentially multi-signature bridges, and the bridge solutions that manage public assets through multi-signatures often have trust risks and cannot allow users to withdraw assets in a trustless manner at any time. For many BTC holders, they have no incentive and are not confident in bridging BTC assets to the Ethereum ecosystem to seek unknown returns, as the security of funds is the cornerstone of all returns. Therefore, an ideal Bitcoin Layer2 should inherit the security features of Bitcoin and be able to build a scalable and programmable on-chain financial infrastructure.

BitLayer as the Core Support of Layer2

As a leader in BTC Layer2, Bitlayer adopts Layered Virtual Machine technology, combined with zero-knowledge proofs (ZKP) and optimistic verification (OP) mechanisms, to support a wide range of computational tasks. In addition, Bitlayer has built a bidirectional locked asset bridge through its innovative OP-DLC and BitVM bridge technologies, inheriting the security of the Bitcoin base layer.

The main technological innovation of Bitlayer lies in the adoption of the latest BitVM computing paradigm and OP-DLC bridge.

Compared with other Bitcoin Layer2 solutions, Bitlayer aims to address the three core issues faced by Layer2 and proposes corresponding solutions:

Trustless 2-Way Peg —— By combining OP-DLC with BitVM bridge, a new model beyond the traditional multi-signature mode is proposed, achieving trustless bidirectional flow of assets between the Bitcoin main chain and Bitlayer.
Layer 1 Verification —— By inheriting the security of Bitcoin through BitVM.
Turing-Completeness —— Supporting multiple virtual machines, achieving 100% compatibility with the Ethereum Virtual Machine (EVM) environment.

Token Airdrop (Ready Player One)

In addition to underlying technology, the prosperity of on-chain ecosystems is also crucial for the development of a chain. In order to encourage DEX, Wallet, NFT Marketplace, Lending, LSD, Bridge, Stablecoin, and other projects to be built on Bitlayer, on March 29, Bitlayer officially announced a series of ecosystem incentive plans. The first phase of the Ready Player One event will distribute $50 million worth of on-chain tokens to ecosystem builders and projects. According to official data, as of now, Ready Player One has attracted over 800 projects to sign up. Before the voting ends on May 10, users can actively participate in voting to earn "Top Player" activity points. At the same time, the project teams that sign up can accumulate popularity points, which will help them occupy a favorable position in the Bitlayer official leaderboard to compete for more developer airdrop rewards and grants.

Overview of Native Projects in the Bitlayer Ecosystem

Native definition: Exclusively for BitLayer, cross-chain and multi-chain projects are not included; the top 30 in the leaderboard

Pumpad

Pumpad is a native Launchpad project of Bitlayer. According to the official statement, Pumpad is a one-stop Launchpad for the BTC ecosystem that issues VGA assets according to the IPOS standard. After the assets are issued, Pumpad can help the issuer automatically add liquidity to the DEX and deploy an automated market maker protocol. It can be said that Pumpad is a platform that provides full-cycle services for project issuers, not just providing IDO services.

In terms of positioning, Pumpad has proposed two concepts:

1️⃣ IPOS: Initial Pump Offering Standard refers to a set of full-cycle IDO service packages, including IDO mechanisms, market value management, etc., to allow project issuers to operate pre- and post-coin issuance affairs with minimal operational costs.

2️⃣ VGA: Value-Growing Asset Building refers to the assets issued on Pumpad that will follow IPOS to ensure that project issuers cannot run away or withdraw funds, and earn a certain amount of commission income through this model.

Currently, there are no specific details about the above two concepts. In addition, Pumpad's Pump Point is used to incentivize loyal and active users and may be used for airdrops of Pumpad's own platform tokens or priority launches in the future.

Specifically, Pumpad has two main business operations:

1️⃣ Launchpad: Pumpad's Launchpad will support various issuance methods, including oversubscription lottery, weighted distribution, and first-come, first-served IDO methods.

2️⃣ Airdrop: Pumpad's Airdrop module is a platform for users to claim airdrop incentives, and project issuers can customize airdrop activities to incentivize different types of users.

As of May 10, Pumpad ranks 19th on the Bitlayer Dapp Leaderboard and is ranked first in this category. Other Launchpads have not been seen to receive attention or promotion from Bitlayer, indicating that Pumpad's "orthodoxy" is relatively strong. The first project to be cooperated with on the platform is $CBD, which is also the MEME mentioned below. The strong cooperation between "No.1 MEME+No.1 Launchpad" may achieve a significant increase in traffic for both parties.

Official Twitter: https://twitter.com/pumpad_io

Macaron

Macaron is the first native DEX on Bitlayer. Macaron provides users with a range of tools, including liquidity farming, staking incentives, trade-to-earn, airdrops, and more to increase user earnings.

With the technical and ecosystem support of Bitlayer, the Macaron team has been committed to creating excellent products, making the Macaron DEX safer, cheaper, and faster. As the native DEX of Bitlayer, Macaron will serve as a trading platform for Bitlayer's ecosystem assets and mainstream BTC assets, with the following advantages:

1️⃣ Industry-leading security: Utilizing multi-signature protocols and other technologies to ensure fund security, Macaron can provide users with round-the-clock protection.

2️⃣ Advanced AMM algorithm: Macaron's unique AMM algorithm ensures efficient asset trading at lightning speed, providing high liquidity while minimizing slippage and optimizing yield.

3️⃣ Liquidity provider rewards: When users provide liquidity, Macaron will reward them based on the fees collected. These rewards help the team continuously improve the liquidity provider's trading experience.

4️⃣ Trading earnings: Macaron's trade-to-earn reward program introduces a revolutionary trading incentive method. A certain proportion of governance tokens in Macaron will be distributed to users as rewards.

5️⃣ Low gas fees: Thanks to Bitlayer's excellent underlying functionality, as a native DEX, Macaron can achieve high performance with low fees, lightning-fast confirmations, and seamless trading.

6️⃣ Seamless user experience: Macaron DEX's advanced AMM algorithm and outstanding features ensure that users can enjoy a seamless trading and liquidity staking experience similar to a top-tier CEX.

Macaron offers users a comprehensive incentive plan, including a points system, Macaron NFT, and native DeFi earnings such as trade earnings, LP incentives, staking rewards, and more. The points system consists of social points and DeFi points, each with different acquisition methods and future exchange rates for the mainnet token. Macaron NFT is a PFP NFT launched by the platform, providing benefits such as future airdrops and governance rights. DeFi native earnings include stable asset returns from trading, staking, and adding liquidity on Macaron. For more specific information, users can follow Macaron's official social media channels.

As of May 10, Macaron ranks 2nd on the Bitlayer Dapp Leaderboard, second only to the stablecoin bitSmiley. It already has 49.2k followers on Twitter, indicating high popularity.

Official Twitter: https://twitter.com/macarondex

Cat Driving Bitcoin ($CBD)

Cat Driving Bitcoin ($CBD) is the native MEME token on the Bitlayer chain, with a visual theme centered around cats and driving elements, aligning with the overall Bitlayer elements. According to the official statement, $CBD aims to disrupt the meme economy by building MEME CBD—a prosperous, modern, and high-rise Bitcoin world. $CBD is committed to becoming the largest community asset on BitLayer, driving Bitcoin to become the best human asset on Earth. It has already gained attention from Bitlayer and Marcaron.

As of May 10, $CBD ranks 3rd on the Bitlayer Dapp Leaderboard in the MEME category. Combining this with the previous data for $BONE, which ranked 9th in the MEME category and gained attention from bitSmiley and Bitlayer, accumulating 12.2k followers within 24 hours of listing. Compared to this, the potential of $CBD should not be underestimated.

In the token model, unlike $BONE, which airdropped most tokens to bitSmiley testnet users, $CBD leans towards a more widespread airdrop model: 70% for airdrops, 20% for liquidity, and 10% for the treasury.

Based on current information, $CBD will be airdropped to 4 types of users:

1️⃣ Holders of Bitlayer helmet NFTs who have completed some cross-chain interactions

2️⃣ Holders of BTC-related assets who have recently executed BTC transactions

3️⃣ Participants in the community ecosystem, such as voting, co-building, etc.

4️⃣ Holders of other assets in the Bitlayer ecosystem

It is worth noting that the $CBD airdrop channel is not conducted by the project team itself, but through Pumpad. Additionally, based on the above rules, holders of Bitlayer helmet NFTs have the clearest participation rules at present. Users can continue to follow official social media channels for more airdrop updates.

Official Twitter: https://twitter.com/catdrivebitcoin

TrustIn Finance

TrustIn Finance is the native permissionless lending protocol on Bitlayer, driven by a Bitcoin-secure equivalent Layer2 solution built on BitVM.

TrustIn Finance adopts the following designs:

1️⃣ Floating interest rates: In TrustIn Finance, the interest rates for lenders and borrowers are determined based on the market's fund usage. This ensures that participants can obtain the most ideal rates while safeguarding the safety of funds in the liquidity pool.

2️⃣ Risk isolation: To simplify the protocol and enhance security, TrustIn Finance isolates asset pools based on different underlying assets to prevent a large number of defaults from overwhelming the protocol and mitigate potential uncontrollable consequences.

3️⃣ Reserve fund: The reserve fund is another important security measure introduced by TrustIn Finance to address potential debt loss issues in the protocol. TrustIn Finance allocates a portion of the loan interest as a reserve fund based on the reserve fund coefficient, further safeguarding the assets within the protocol.

4️⃣ Early contributor incentive mechanism: TrustIn Finance aims to grow together with each participant and is committed to incentivizing all contributors. Specific incentive mechanisms are pending further official notification.

TrustIn Finance is expected to announce a points incentive plan soon, where users can earn points by depositing or interacting with assets. Points will serve as an important reference for the airdrop of TrustIn Finance governance tokens and will be distributed to users who hold points at a certain ratio. Users can follow the official social media channels for more information.

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As of May 10th, TrustIn Finance ranks 6th on the Bitlayer Dapp Leaderboard, with a number of votes close to Nekoswap. It has 38.1k followers on Twitter.

Official Twitter: https://twitter.com/TrustIn_Finance

Nekoswap

Nekoswap is the first native decentralized runic and token cross-chain exchange on Bitlayer.

NekoRunes will be the first runic asset token on Neko swap. NekoSats promises a Fair launch, with only 2% of $RNeko held by the project team, and all other tokens will be airdropped and added to the liquidity pool. Additionally, Neko will attempt to solve the circulation of Layer 1 and Layer 2 runic assets through mapping, and if the technical time cost is high, other methods will be used to realize the rights realization. In terms of token holder rights, Nekoswap has made a series of commitments, including Nekosats holders permanently sharing Nekoswap's trading fee dividends.

Nekoswap's work is currently in progress, and there is currently no official website or documentation. Nekoswap is committed to becoming a fully community-driven, fair, transparent, and decentralized exchange, including functions such as Swap, liquidity pools, Farm, Launchpad, runic trading, and more. The project team has stated that they will consider community opinions for the access, deployment, and development of public chains, and will decide on the development direction through voting, AMA, and other methods. For more information, users can follow Nekoswap's official social media channels.

As of May 10th, Nekoswap ranks 4th on the Bitlayer Dapp Leaderboard and has 23k followers on Twitter.

Official Twitter: https://twitter.com/NekoSwap

Ecological Project Puzzle

On March 29th, Bitlayer launched an ecological incentive program, announcing a $50 million incentive for early builders and contributors. As of the time of writing this article (May 10th), a total of over 280 projects have been deployed on Bitlayer.

It can be seen that Bitlayer's ecosystem is rapidly expanding, with more and more projects entering Bitlayer. This gives Bitlayer a significant advantage in the current fierce BTC Layer2 competition.

Where is the Endgame for Bitcoin Layer2

In the current fierce competition in the Bitcoin Layer2 race, we have summarized three core solutions: rollup system (emphasizing Layer1 verifiability), sidechain system (emphasizing solution maturity), and client verification (emphasizing Layer1 native DA). Undoubtedly, the market has not yet determined a winner, but we believe that the greatest value of Bitcoin lies in the security of its Layer1. Therefore, the inheritance of security by Layer2 is crucial. Although client verification can largely ensure that all ledger records occur on Layer1, the user's trust cost in the client is inherent and unavoidable. The rollup system strives to ensure user trust costs are controlled as much as possible while ensuring Layer1 verifiability through modular solutions. Therefore, from this value system, we believe that the rollup system will ultimately outperform the other two.

Among the rollup systems, Bitlayer's consideration is more comprehensive. Bitlayer emphasizes the verifiability of Bitcoin through BitVM and has added fraud proof to the original DLC bridge to ensure oracle trust. Although the current cross-chain bridge solution still requires external trust in the oracle, it is almost equivalent to the security of a "rollup" native bridge.

In addition, the prosperity of the Bitlayer ecosystem has pushed the expected tokens on the Leadboard to its peak. A large number of native projects have joined the ecosystem construction, including DEX, permissionless lending protocols, MEME, and more. As of now, Bitlayer's ecosystem has attracted over 280 projects.

In the early stage of the bull market, Eureka Partners remains cautiously optimistic about the overall development of Bitcoin Layer2. Although the current market sentiment is weak, we believe that when liquidity is sufficient, market enthusiasm will still be reflected in the Bitcoin ecosystem, including Bitcoin-related assets and Layer2. At that time, Bitlayer will definitely be an ecosystem not to be missed.