Chainfeeds Summary:
By 2030, we estimate that 2.3% of the circulating BTC supply will be bridged to Bitcoin L2 to interact with the new Bitcoin DeFi ecosystem, fungible tokens, payment applications, and more.
Source:
https://www.jinse.cn/blockchain/3703366.html
Author:
Galaxy Research
Viewpoint:
Galaxy Research: DeFi applications on Bitcoin L2 need to offer higher yields than Bitcoin DeFi on Ethereum to capture market share from the already packaged BTC market. Bitcoin L2 can only succeed if it can take market share from DeFi applications that accept tokenized versions of BTC like WBTC, tBTC, and cbBTC. A thriving DeFi ecosystem on Bitcoin L2 is the most important development for long-term L2 adoption. This is evident when looking at the top TVL applications on Ethereum L2 (Arbitrum, Optimism, and Base), which include lending, DEX, and derivatives platforms. The trust assumptions of new Bitcoin L2 bridge designs are not weaker than the bridge designs of WBTC, cBTC, and tBTC. WBTC holders need to trust the centralized entity BitGo's consortium, while BTC holders on Bitcoin L2 need to trust a relatively more decentralized set of bridge operators. Although any Bitcoin Rollup or sidechain does not have unilateral exit, once this functionality is developed, the bridging on new Bitcoin L2 will be more trustless than WBTC, cBTC, and tBTC. In 2024, Bitcoin L2 received $174 million in venture capital, providing a platform for these projects to execute market strategies. Well-funded Bitcoin L2 will establish ecosystem funds and use this capital to onboard existing EVM applications. Continued investment in the Bitcoin L2 ecosystem will be crucial for the industry's growth over the next 6 years. Once Bitcoin L2 is deployed on the mainnet, crypto venture capital firms may shift towards investing in early native applications. Out of the current 75 Bitcoin L2, only 3-5 participants are likely to capture the majority of the market share. There will not be enough users, liquidity, and attention to be distributed across 75 Bitcoin L2. We highlighted this point in our previous report on Bitcoin Rollups for DA using Bitcoin. The L2 with the most liquidity and yield-generating applications is likely to be the only survivor over the next 6 years. Therefore, business development partnerships in infrastructure, liquidity mining, and market making are crucial in determining which Bitcoin L2 will lead over others.
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