At the end of the articles these days, many readers have mentioned the second-layer network of Bitcoin, Merlin, and its continuous growth in staking.

The second-layer network of Bitcoin where Merlin is located has become a very clear track in the current and even the upcoming bull market, and this track is highly likely to erupt on a large scale in this wave and even in the upcoming market.

So I have been paying close attention to the development of this track and related projects.

Bitcoin's second-layer network did not emerge in the past two years. As early as 2017 and 2018, there were projects related to Bitcoin's second-layer network.

However, in those days, apart from Bitcoin, there were basically no other assets with good liquidity on the Bitcoin network, so the emergence of Bitcoin's second-layer network at that time can be said to be "out of sync with the times," and after years of development, it has not made much progress.

With the emergence of the Merlin ecosystem, a large number of assets with high market value and good liquidity have appeared on top of Bitcoin. However, due to technical limitations, it would be quite difficult to establish related application services on the Bitcoin mainnet and call these assets, so this has provided excellent timing for the development of Bitcoin's second-layer network.

In addition, the development of Ethereum's second-layer network in recent years has provided a relatively mature technical roadmap. Whether these technical roadmaps are definitely suitable for Bitcoin is not certain, but they at least provide very meaningful references. This has provided a good technical reserve for the development of Bitcoin's second-layer network.

Under these conditions, especially in the past two years, and especially since the end of last year and the beginning of this year, Bitcoin's second-layer network has shown an explosive situation.

It is worth noting that the emerging projects that have exploded in this round are far stronger in terms of user experience and market response than old projects (such as Rootstock and Stacks).

If we measure by the currently more common standard TVL, the current highest value second-layer network of Bitcoin is undoubtedly Merlin.

According to the latest data from geniidata.com (https://geniidata.com/ordinals/index/merlin?ref=H2534F), Merlin's TVL has exceeded 3 billion US dollars. This value has surpassed Solana.

My feelings about the Merlin project are somewhat complicated:

On the one hand, the way this project used email registration in the previous operations made me a little repulsed; but on the other hand, the measures taken by the project in staking are quite inclusive, not only encompassing various popular assets in the Bitcoin ecosystem, but also reaching into the Ethereum ecosystem, allowing holders of ETHS to stake.

Because of these measures, its TVL has shown explosive growth, and its popularity has risen rapidly.

But purely from a technical perspective, I don't think Merlin has made much innovation; it's all some relatively old-fashioned methods: using multi-signature wallets to lock assets on the mainnet and issue anchored assets on the sidechain.

These are all mature compromise solutions from several years ago.

In fact, the vast majority of Bitcoin's second-layer networks currently do not have much technical innovation, and these projects are very difficult to obtain the guarantee of the Bitcoin mainnet in terms of security, which is quite different from Ethereum's second-layer network. Even if some projects can obtain a considerable degree of security guarantee from the Bitcoin mainnet, there are still significant deficiencies in terms of application and user experience.

So I'm not sure about the ultimate direction of Bitcoin's second-layer network at the moment. But in the short and medium term, especially in the upcoming bull market, I believe this track will still be able to attract considerable attention and funds.

The remarkable achievements made by Merlin in staking assets have two direct impacts:

First, it directly benefits the project itself; second, it directly drives the prices of related staking assets.

I believe that this impact will continue to accelerate, especially in driving up the prices of staking assets.

Because with Merlin as a model, there will be more projects emerging in the second-layer network of Bitcoin. These projects will definitely launch more intense and larger-scale incentive measures to attract users to stake valuable assets from the Bitcoin ecosystem in the project. This will further boost the prices of these assets.

Look at the development of the adjacent Ethereum second-layer network: in my opinion, it is already close to a blue ocean track, and there is still a large amount of venture capital and funds continuously pouring into new projects, and these new projects are competing for users and TVL through continuously strengthened airdrop expectations.

In contrast, the second-layer network of Bitcoin is clearly still in the horse racing stage, and it will definitely be very lively in the future.

For investors, I have two suggestions:

First, when staking assets, it is still necessary to be cautious and not stake all assets, leaving some reserves.

Second, hold onto the valuable assets in your hands, and do not easily sell them for a temporary price increase. I believe that holding onto them until the bull market will yield even more amazing returns.

This Saturday (March 9th) at 8:00 pm, we will have a Twitter exchange. This time, I will communicate directly with everyone.

Exchange link:

https://x.com/DaosViews/status/1764497753634435116?s=20

You can post your questions after the Twitter link.

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