Author: Web3CN Editor
I have been following the Bitcoin Layer2 track since August 2023, for over a year now. Like most people, the overall impression I have of the Bitcoin Layer2 track is: very dilapidated, feels like it's going to collapse!
To avoid offending anyone, I won't name them one by one.
The current state of the Bitcoin Layer2 is: those that have been listed are performing poorly, and those that have not been listed have a general development situation.
Is the Bitcoin Layer2 track really going to collapse?
I have been trying to find the real reason behind all this:
Is it that the investment institutions are not glamorous enough?
Of course not, many BTC Layer2 projects have also received investments from top institutions such as MultiCoin and Polychain.
Is it that the project teams are not capable?
Of course not, many BTC Layer2 project teams are known for their exceptional ability to get things done.
If it's not the problem of institutional endorsement and the team's ability to get things done, there must be deeper reasons!
I've been thinking about it!
Until recently, I saw that BEVM (a team known for its technological innovation, but whose ecological situation is also dilapidated) released the latest technical framework white paper Super Bitcoin, from which I seemed to find the answer.
This white paper is very interesting, talking about a word throughout: sharing Bitcoin's consensus security.
The slogan proposed is: Bitcoin Layer2 that cannot share Bitcoin's consensus security must die!
Very tough!
But, reasonable!
The Super Bitcoin white paper also proposes: the reason why Ethereum Layer2 was established is that Ethereum Layer2 can share Ethereum's consensus security, and people play Ethereum Layer2 based on their trust in Ethereum's network.
However, almost all Bitcoin Layer2 do not share Bitcoin's consensus security, basically just a multi-signature wallet plus a chain with independent consensus, completely unrelated to Bitcoin, let alone sharing Bitcoin's consensus security.
Therefore, for a new chain that claims to be a Bitcoin Layer2 but has nothing to do with Bitcoin's consensus, users have no trust and consensus basis at all, so the market naturally doesn't buy it!
I found it very interesting, so I delved into it and now I'm sharing some of the results of my research with you!
First, let's clarify a few concepts.
What is consensus security? What is shared consensus security?
What is consensus security?
Consensus security refers to the fact that in a blockchain network, nodes ensure the security and validity of transactions through a consistent consensus algorithm. For most blockchain networks, consensus security means that the majority of nodes in the network need to reach a consensus through some form of verification mechanism to resist external attacks or tampering.
It can be said that consensus security is the core of the blockchain, and consensus security is the highest level of security, because consensus security is maintained by all chain nodes at the consensus level.
Each independent public chain has its own consensus security mechanism, such as Bitcoin's POW mechanism, Ethereum's POS mechanism, TRON's DPOS mechanism, Solana's POH mechanism, etc.
However, the degree of consensus security of a public chain is not essentially related to what mechanism is used, but only to the cost of disrupting the consensus of this network.
For example, to disrupt Bitcoin's consensus, you need to control 51% of Bitcoin's computing power to launch an effective attack on the Bitcoin network. Currently, the total Bitcoin computing power is about 725EH/s, so you need to control at least 370EH/s (51%) of the computing power to launch an effective attack on Bitcoin. At the current market price of Bitcoin computing power, the cost of 370EH/s of Bitcoin computing power is over $150 billion, plus the corresponding electricity costs, totaling well over $200 billion.
Public chains like Ethereum that use the POS mechanism can estimate their consensus security level (i.e., attack cost) by the "total value of node staked tokens". For example, the current total POS node staked amount on the Ethereum mainnet is about 35 million, with a current value of about $90 billion, so the cost of attacking the Ethereum network is about $46 billion.
From the data, the attack cost of Bitcoin's network consensus is more than 4 times that of Ethereum's network consensus. Therefore, the consensus security level of the Bitcoin network is far greater than that of Ethereum!
Compared to other POS chains, for example, FDV is less than $10 billion, with a staking rate of less than 20%, so the "total value of staked tokens" is less than $2 billion, and the attack cost is only $1.1 billion. Its consensus security level is relatively low.
Through the most intuitive "attack cost theory", we can make a clear judgment on the consensus security level of all public chains.
From the data, Bitcoin's network is undoubtedly the most secure blockchain!
So what is shared consensus security?
Shared consensus security means that certain blockchains (mainly referring to subchains or Layer2) can borrow the consensus mechanism of the mainnet to ensure their own security. This means that even when transacting on the second layer, side chain or parallel chain, users can still enjoy the security guarantee of the mainnet level. For example:
1. Polkadot and Parachains:
In Polkadot's architectural design, the Relay Chain is responsible for providing global security, while each Parachain can ensure its own security by sharing the consensus mechanism of the Relay Chain. Parachains can focus on their own specific functions without sacrificing security, as they rely on the consensus of the Polkadot Relay Chain. (Of course, the current total market value of DOT is about $6 billion, the DOT staking rate is about 58%, which is about $3.48 billion, and its network attack cost is about $1.77 billion, so its network consensus security level is relatively low, so even if it goes to share Polkadot's consensus security, the significance is not very great, which is also one of the important reasons why the Polkadot ecosystem has never been hot.)
2. Ethereum and Ethereum Layer 2:
Ethereum's Layer 2 solutions, such as Optimistic Rollup and ZK-Rollup, record simplified transaction states on the Ethereum mainnet, using the mainnet's security mechanism to guarantee the transaction security of Layer 2. This means that although Layer 2 can independently process a large number of transactions, its security still depends on Ethereum's consensus mechanism.
From these examples, we can see that the core of shared consensus security is that it allows developers to create subchains or second-layer networks with independent scalability, while maintaining the security level of the mainnet.
So why must Bitcoin Layer2 share Bitcoin's consensus security?
The reason is already clear!
Because all mainstream Layer2 do not have their own independent consensus, they all exist by relying on the consensus of the mainnet. For example, Ethereum Layer2, whether it's Arbitrum, ZKSync or BASE, none of them have their own consensus, the entire Layer2 network is completely dependent on the official sequencer (usually Layer2 only has one official sequencer) to order to the mainnet, and ultimately rely on the mainnet to guarantee the security and credibility of Layer2.
That is, Ethereum Layer2 all share Ethereum's consensus security. The essence of users' trust in Ethereum Layer2 is to trust the security of Ethereum, not Layer2 itself.
So if a Bitcoin Layer2 cannot share Bitcoin's consensus security, then it is not a true Bitcoin Layer2. Without the Bitcoin network to guarantee security, Bitcoin Layer2 cannot truly gain the trust of users and funds. (After all, users need to put real money into Layer2 to play, without trust, how can they participate?)
This is the dilemma faced by all current Bitcoin Layer2.
There are two more sets of data that can corroborate this view:
First: Comparison of TVL between Bitcoin Layer2 and Ethereum Layer2
Currently, the TVL of Bitcoin Layer2 chains is about $1.45 billion, while the TVL of Ethereum Layer2 chains is about $36 billion (data from footprint.network). The difference is more than 30 times. This represents that the level of trust in funds for Bitcoin Layer2 chains is far lower than that of Ethereum Layer2.
Second: Comparison of average market capitalization between Bitcoin Layer2 and Ethereum Layer2
The average market capitalization of Bitcoin Layer2 is generally less than $1 billion (currently, most Bitcoin Layer2 valuations are less than $500 million), while the market capitalization of mainstream Ethereum Layer2 is generally around $50 billion to $100 billion. The difference is 5-10 times. This represents that the capital market's confidence in the Bitcoin Layer2 track is far lower than that of Ethereum Layer2.
According to the "attack cost theory" of blockchain network consensus, the consensus security level of the Bitcoin network is more than 4 times that of Ethereum. Therefore, the theoretical valuation of Bitcoin Layer2 should be more than 4 times that of Ethereum Layer2, but the reality is the opposite!
Why?
The reason is: almost all Bitcoin Layer2 solutions are unable to share the consensus security of Bitcoin. They use a chain completely unrelated to Bitcoin, plus a multi-signature scheme, and call it a Bitcoin Layer2. Then they try to gain user trust through the concept of Bitcoin Layer2 and airdrop expectations. However, the real data represents the true attitude of capital and users.
Bitcoin Layer2 that cannot share the consensus security of Bitcoin cannot gain the trust of users!
No wonder the entire Bitcoin Layer2 track is so dilapidated, and the reason is actually this!
So, is there really no Bitcoin Layer2 that can share the consensus security of Bitcoin?
There is one!
That is the Lightning Network!
The Lightning Network can maintain the circulation of more than 5,000 BTC in the network without any token incentives, and this data has already exceeded the vast majority of the so-called Bitcoin Layer2 that rely on token incentives to attract BTC.
Why?
There is only one reason, that is: the Lightning Network fully shares the consensus security of Bitcoin.
People choose to use the Lightning Network because they trust the security of Bitcoin, with the same level of security as Bitcoin, which is the root cause of the problem.
So, how does the Lightning Network achieve the sharing of Bitcoin's consensus security?
The principle is as follows:
Lightning Network nodes can freely establish state channels (this state channel is a fast payment channel established on the Bitcoin blockchain, and the solution was proposed by Satoshi Nakamoto). The opening of the channel involves creating a signed output on the Bitcoin blockchain, and the closing of the channel requires broadcasting the final state to the mainnet, which is the core mechanism for the Lightning Network to share the consensus security of Bitcoin. If you compare it carefully, you will find that the Rollup solution of Ethereum Layer2 is actually borrowing the concept of state channels from the Lightning Network)
Each update of the channel state generates a new commitment transaction, and these transactions can be broadcast to the Bitcoin mainnet when needed. The design of the commitment transaction ensures that even if one party in the channel does not cooperate, the other party can still close the channel and obtain the funds they are entitled to by broadcasting the latest commitment transaction. This mechanism directly depends on the consensus rules and security of Bitcoin, making the security of the Lightning Network actually guaranteed by the Bitcoin network, that is, fully sharing the consensus security of Bitcoin.
The Lightning Network, which can share the consensus security of Bitcoin, can attract more than 5,000 BTC to circulate within the Lightning Network even without any token incentives, which is the sense of security brought to users by sharing the consensus of Bitcoin.
Of course, the Lightning Network, as a Bitcoin Layer2, also has its shortcomings.
That is, the Lightning Network only supports payment scenarios and does not support more complex smart contract scenarios.
Super Bitcoin precisely grasps this point of the Lightning Network and proposes its own solution: that is, to use Bitcoin as the basic ledger layer, and the Lightning Network as the only Bitcoin Layer2, and then to upgrade the point-like Lightning Network nodes to a chain-like node that supports smart contracts, thereby breaking through the limitation of the Lightning Network that can only do payments and cannot do smart contracts, thereby realizing the further expansion of Bitcoin, that is, to achieve the unlimited expansion of Bitcoin while ensuring the sharing of Bitcoin's consensus security.
Furthermore, Super Bitcoin also shares the consensus security of Bitcoin to various Lightning Chains built based on the modular abstraction of the Super Bitcoin Stack, which is the solution of Super Bitcoin. If you want to know more details, you can research the white paper of Super Bitcoin https://bevm-blog.webflow.io/post/super-bitcoin-a-value-internet-sharing-bitcoins-consensus-security
In summary:
By studying the importance of "sharing the consensus security of Bitcoin" for Bitcoin Layer2, I have found the deep-seated reason why the current Bitcoin Layer2 track is so dilapidated - they do not share the consensus security of Bitcoin!
If the Bitcoin Layer2 is to truly develop in the future, it must indeed return to Bitcoin and study how to share the consensus security of Bitcoin. The Lightning Network, as the only Bitcoin Layer2 that can share the consensus security of Bitcoin, does have great reference value. If you really want to do a Bitcoin expansion plan, go back to Bitcoin, go back to the direction of sharing the consensus security of Bitcoin (such as based on the Lightning Network) to continue the expansion, perhaps this is the only way out at the moment.
