Recently, the cryptocurrency exchange Bybit released a report pointing out that BTC will continue to outperform other major cryptocurrencies in 2024, and it is expected that the achievements of BTC projects in this bull market will also become a trend.

Indeed, the success of projects such as Ordinals and Runes on BTC demonstrates that opportunities and innovation can drive community development. However, with the current dominant position and increasing popularity of the BTC network, challenges related to scalability and transaction efficiency have emerged.

BTC Layer2: Challenges and Future Landscape

Returning to the fundamental issues of blockchain, to achieve efficient and smooth experience on Layer1 blockchain, it is necessary to not only have core decentralization and security, but also consider network scalability, throughput, and low gas fees. However, it is currently difficult to balance these three aspects, which is also known as the "impossible triangle of blockchain".

Therefore, a set of Layer2 solutions built on top of Layer1 chains is needed to improve blockchain performance. The popular BTC Layer2 at present is an extensibility solution built on top of BTC's base layer (Layer1), aimed at addressing the throughput limitations and high transfer fees of the Bitcoin network.

Compared to Layer1's focus on underlying block technology operations such as consensus mechanisms, data immutability, and network incentives, Layer2 focuses more on expanding around the "application layer" and "contract layer" of Layer1 to improve blockchain scalability, unrestricted by the Layer1 platform framework. Bitcoin is also a relatively special type within Layer1 public chains because it does not support smart contracts, so Bitcoin has been constrained from developing a mature ecosystem. The development of Layer2 technology has brought new opportunities for Bitcoin.

Layer2 solutions are not a new concept, with its development history tracing back to the Lightning Network proposed in 2015 for BTC's payment scenarios, but it does not support smart contracts. To meet the efficient operation of smart contracts and higher transaction speed requirements, BTC sidechains were born to offload some of the main chain's workload to the sidechain.

Subsequently, the explosion of the ETH ecosystem shaped a variety of applications, such as Web3 games, NFTs, and social applications. However, it also brought bottlenecks to the Ethereum network itself, prompting the need for scalability. As a result, some scaling solutions inspired by Bitcoin were born, such as the Lightning Network and Plasma, the former being similar to the Lightning Network, supporting all ERC20 token transactions, and the latter being another scaling framework to increase Ethereum's network throughput.

After that, the development of Ethereum's Layer2 took the lead in scaling compared to Bitcoin. Currently, relatively new Ethereum Layer2 technologies mainly include Rollups, OP Rollup, and Zero-Knowledge (ZK) Rollup, which bring higher security and performance improvements and also enable the use of smart contracts on Layer2. Ethereum's Layer2 has finally gained widespread market recognition and has rapidly developed.

Following the successful validation of Ethereum and other Layer2 solutions, with the 2021 BTC Taproot upgrade, better solutions for extending and bridging BTC have emerged, allowing Ethereum's successful experience to be applied to Bitcoin. The current market trend has returned to the original intention of blockchain— the basic infrastructure of BTC Layer2.

Looking at the market size of Ethereum Layer2, its financing valuation starts at around 30 billion USD, and the market size has reached several hundred billion USD. The valuations (FDV) of OP, ARB, and Starknet have exceeded 10 billion USD, and the total locked value (TVL) of most Layer2 solutions is generally over 200 million USD. In addition, the total market value of Ethereum Layer2 has reached about 100 billion USD, and the TVL is as high as 100 billion USD. According to the investment company VanEck's prediction, by 2030, the market value of Ethereum Layer2 will reach 1 trillion USD.

In contrast, BTC Layer2 is still in its early stages, with many projects emerging since 2023, such as the leading Merlin Chain, which has attracted a lot of attention and investment, with the highest locked value reaching about 3.5 billion USD. However, in terms of the overall market size and TVL of BTC Layer2, it is relatively low, and there is still huge market space.

Currently, nearly a hundred projects have emerged for ETH Layer2, while BTC Layer2 projects are just beginning to build their ecosystems. However, considering Bitcoin's leading position in the cryptocurrency field and the importance of Layer2 technology in improving transaction speed and reducing costs, the future story is expected to be very promising.

From the perspective of investors and entrepreneurs, BTC Layer2 is currently the best opportunity. Firstly, as a leader in the cryptocurrency field, BTC has a huge market base and user community, providing a good entry point for capital inflow. From a technical perspective, it is more credible and practical to innovate on the existing Layer1 consensus mechanism than to create a new public chain and a new set of consensus mechanisms.

Currently, there are four mainstream survival strategies for Layer2. The first is the ecological business closed-loop model, such as Arbitrum's creation of multi-asset GMX derivatives, which can drive its sustainable development spontaneously by users and the community. The second is a narrative built around branding, such as OP Chain's one-click deployment of ETH Layer2 based on OP Stack, which has already been deployed in multiple fields. The third is the technical narrative model, such as the zk technology of Starknet and zk Sync, which attracts users and funds through technical innovation. In addition, there is also the violent lock-up to increase TVL model, such as Blast and Merlin, which increase the total locked value by locking up funds.

Compared to ETH Layer2, which flourished in the previous bull market, BTC Layer2 has been evolving continuously over the past year. For builders and communities, the landing and expansion of BTC Layer2 itself is very promising due to BTC's massive market value.

From Strategy to Ecosystem, Who Will Be the Next Leader in BTC Layer2?

In the current development of BTC Layer2, various solutions are emerging. The violent lock-up capital strategy introduced by Blast aims to stimulate community enthusiasm and user sentiment, and has indeed shown strong and effective results as the bull market arrives. In addition, there are also projects like BitVM and the RGB protocol that focus on technological innovation, but these projects often require mature and settled time, perhaps only truly growing and landing in the next bull market cycle.

Of course, many people hope that BTC Layer2 can create a myth of expansion and application like ETH, and there are currently many BTC Layer2 solutions that are imitating Ethereum Layer2. But have you ever thought about why not use BTC's native technology to achieve Layer2 expansion?

From observation, the only representative project at present should be B EVM—a Layer2 solution that is completely based on BTC Taproot technology and compatible with mainstream blockchain technology. The core of B EVM is to combine a series of Bitcoin's native technologies such as Mast contracts, Schnorr signatures, BTC light node networks, and the widely used EVM virtual machine into a solution, thus achieving decentralized BTC Layer2. In addition, B EVM takes a similar branding narrative path to OP—B EVM-Stack can achieve one-click deployment of BTC Layer2.

When the BTC Layer2 ecosystem is booming, the BEVM mainnet went live in March this year, providing a one-stop service for over 100 BTC Layer2 projects. In addition, BEVM Stack can customize Gas and support the use of various currencies as Gas, such as BTC, Sats, etc., providing more possibilities for the development of BTC Layer2.

BEVM aspires to create an ecological closed loop like Optimism and build a commercial empire for BTC's ecosystem like Ethereum. The current BEVM ecosystem has two important applications: Bido, a BTC liquidity staking protocol, and Satoshi Protocol, a BTC stablecoin protocol.

Bido allows BTC holders to stake BTC on Bido to support the operation of BEVM network nodes, similar to Lido on Ethereum, providing more re-staking options for stakers. On one hand, the staking model can maintain the security of Layer2, and on the other hand, BTC stakers can receive Gas fees on the Layer2 platform—users staking on Bido can receive 50% of the Gas revenue of the entire BEVM network.

Satoshi Protocol is a decentralized stablecoin for BTC, using decentralized staking on the BEVM platform to generate stablecoins, which can solve the fluctuation problem of BTC payments on the Lightning Network and is compatible with the full-chain protocol of USDC CCTP, allowing decentralized BTC stablecoins to circulate on any public chain VM platform like USDC.

Based on BTC, How Does BEVM Stand Out?

Due to space limitations, the previous text only briefly mentioned the differences between BEVM and other BTC Layer2 projects. Recently, BEVM has also attracted widespread capital attention, announcing in April that it has received tens of millions in financing from many well-known institutions, including Bitmain, making its valuation as high as 200 million USD.

After the launch of the BEVM mainnet, it conducted an on-chain airdrop activity with the Binance Web3 wallet and became the first BTC Layer2 project to be integrated with Binance. According to official data, this activity attracted 160,000 participants and provided generous rewards.

Various eye-catching figures indicate that the first BTC Layer2 network based on Taproot Consensus and compatible with EVM, and using BTC as Gas, seems to have a strong background and is able to stand out among many BTC Layer2 projects. What are the unique features of BEVM?

1. Strong Technical Accumulation and Development History

Perhaps related to its unique technical advantages and project background, BEVM's seven years of technical accumulation and continuous development history have given it a boost in this bull market.

The earliest form of BEVM can be traced back to the development of the Polkadot cross-chain project ChainX in 2017. At that time, ChainX could be called the first chain of Substrate, combining decentralized BTC with the Polkadot framework, achieving Bitcoin rust SPV light nodes.

During the period from 2018 to 2020, Bitcoin SPV light nodes were integrated into the Substrate's Auto + Grandpa BFT consensus, and the governance module of Polkadot was used for BTC SPV light nodes. At that time, ChainX had already achieved over 100,000 BTC cross-chain transactions, but the industry focus and narrative had not yet centered on BTC, and ChainX did not achieve the expected development.

In 2021, the BTC network underwent its largest upgrade since the 2017 SegWit—Taproot. The main features of this update include the introduction of the Schnorr signature algorithm + MAST contract + the latest BTC script technology, each of which increases the privacy, scalability, and composability of the blockchain.

BEVM sensed the future pattern of the BTC ecosystem and successfully registered and obtained a patent for BTC Taproot around 2022, shaping BEVM's Taproot Consensus Layer2 technology through native Taproot technology. By this time, BEVM had laid a solid technical foundation for the scalability and decentralization of BTC.

From 2023 to the present, with the explosion of BTC protocols such as Ordinals and Runes, BEVM saw the opportunity and demand in the BTC ecosystem and officially promoted itself under the brand of BEVM. It has now launched its mainnet, providing services for over 100 BTC ecosystem projects.

2. Innovation of Taproot Consensus

The Taproot Consensus technology seems to be a unique underlying technology of the BEVM project, currently only used by them. It is a set of technologies based on the Substrate framework, combining the three major native Taproot technologies of BTC: Schnorr signatures, MAST contracts, and SPV light node networks.

Specifically, Schnorr signatures provide a more efficient and more private Bitcoin signature algorithm, allowing multi-signature addresses for Bitcoin to expand to 1000, achieving the decentralization of multi-signature addresses; MAST contracts implement multi-signature management through code, which can improve network security and privacy; and SPV light nodes allow users to verify payments more conveniently.

Therefore, Taproot Consensus not only helps improve the scalability and privacy of BTC, but also ensures the security of on-chain transaction assets in the BEVM network. In addition, BEVM has a unique positioning in technical innovation, such as integrating the privacy communication protocol Signal.

3. BEVM Stack: One-Stop Solution

BEVM Stack, as a new technology stack service, provides a one-stop solution for the deployment of BTC Layer2. By integrating innovative languages such as EVM, WASM, Cario, Move, etc., BEVM Stack enables BTC to connect with various blockchain technologies, providing a more secure and efficient solution for the construction of BTC's ecosystem. As mentioned in the BEVM whitepaper: BEVM Stack aims to provide developers and projects with an easy and low-cost deployment of BTC Layer2, allowing more projects to fully enjoy the security of the Bitcoin network consensus and the convenience of EVM deployment applications.

In addition, BEVM Stack can also integrate multiple-chain blockchain technologies such as Zkstark scalability, XCMP, and full-chain interoperable message protocols such as LayerZero and Wormhole, achieving seamless integration of BTC with other blockchain technologies. The launch of this one-stop solution is in line with OP Stack, and BEVM will mainly promote its Taproot solution, laying the foundation for the extensive application and construction of BTC in the future.

4. Making BTC a "Full-Chain Asset"

BEVM technology provides a new solution for the decentralized circulation of BTC assets across the entire chain. Through the transfer of BEVM, BTC can achieve full-chain circulation on any blockchain innovation platform.

Currently, BEVM has been able to achieve low-cost and fast BTC cross-chain transactions through its ecological application Omni BTC, supporting many underlying protocols such as LayerZero, Connext, and other arbitrary cross-chains. BEVM can integrate various full-chain liquidity aggregation protocols and underlying use LayerZero, Wormhole full-chain interoperable message protocols, providing users with a wider range of asset usage scenarios.

Although the underlying technological logic may seem complex, BEVM makes it clear to users that by using BTC as Gas, they can complete interoperable experiences with major innovative chains such as ETH, SUI, Starknet, OP, BSC, and others. Analogous to the World Wide Web in the internet, users only need to enter a domain name to access any network connected to the WWW. Interconnected chains, all blockchain technologies, and the decentralized currency BTC are integrated into one.

BTC Layer2 is Booming

Looking at the development history of BTC Layer2 as a whole, many projects have already demonstrated extremely rich technical details and unique market observations. However, the appearance of Merlin and BEVM is just the beginning in the author's opinion.

Returning to the original intention of Crypto, looking back at BTC—the first and most famous cryptocurrency, which has completely changed the landscape of traditional finance since its inception in 2009. With the first batch of BTC ETFs approved by the US SEC last year, and the approval of BTC ETFs in Hong Kong last month, terms such as decentralization, DeFi, GameFi, and cross-chain have become less niche.

As developers and the broader community continue to innovate and adopt new solutions, BTC Layer2 solutions will play a crucial role in creating explosive applications in the future.

We are standing at the forefront of a new era, like sailing with the wind. With the push of technology and the excitement of the community, we will witness more innovation and breakthroughs in the future of BTC and Crypto.

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