On March 19, the Bitcoin second-layer network Merlin Chain announced the launch of M-Token and started the release of M-BTC. Recently, Babylon has reached a cooperation with B² Network, and the concept of Layer 2 and staking on Bitcoin has sparked heated discussions. In addition, multiple Layer 2 projects on the Bitcoin chain are also continuing to make efforts. So, what impact will Babylon and B² Network have on the Bitcoin ecosystem? What other Bitcoin Layer 2 projects are worthy of attention in the Bitcoin ecosystem?
Bitcoin Layer 2 has been making frequent moves recently, and the cooperation between Babylon and B² has attracted market attention.
The Babylon team proposed the concept of BTC staking, allowing BTC holders to pledge their idle BTC to enhance the security of the PoS chain. The B² Network team proposes to build Bitcoin’s execution layer through modular design, allowing BTC holders to deposit BTC into Bitcoin’s execution layer (commonly referred to as Layer-2s) to perform various DApp operations, thereby increasing BTC of liquidity. B² Network and Babylon announced a close collaboration to build infrastructure and services using Rollup as an execution layer protected by the Bitcoin network.
Crypto researcher Haotian said: One is a BTC modular expansion solution provider that launched the B² Hub modular DA layer, and the other is a BTC second-layer POS security pledge service provider that brings native asset pledge interest generation into the BTC network. The BTC pledge system introduced by Babylon can ensure the security of the external POS system. It should be said that every key step in B² Hub involves the verification and governance of a decentralized network of Validators. When B² Hub partnered with Babylon, it enhanced the security of its decentralized verification network. Eigenlayer's re-pledge ensures the provision of EigenDA node services by giving Ethereum nodes gain Buffs, which is equivalent to enhancing node verification capabilities through an economic incentive mechanism. By analogy, the role of Babylon is actually very similar to the Function provided by Eigenlayer. All in all, if we compare the impact of this cooperation between B² Network and Babylon on the BTC layer2 ecosystem to the effect of Celestia DA and Eigenlayer Restaking on Ethereum layer2.
What are the mainstream Layer 2 public chains on Bitcoin?
With the rise of staking and re-staking on Ethereum, the staking track on the Bitcoin network has also become the focus of market attention. In addition, there are also many projects in the Layer 2 ecology and modular ecology of Bitcoin that have gained market attention.
BounceBit
BounceBit's staking is handed over to the CeFi custodian, and bounceBTC is minted on the BounceBit chain. At this time, the user can entrust bounceBTC to the Staking operating node, and the operating node will give the user stBTC, the liquid version of the bounceBTC pledge. Users can also gain more income possibilities in on-chain DeFi through stBTC. This means that bounceBTC users will receive three types of income: 1. CeFi income; 2. Staking income; 3. DeFi income. BounceBit previously completed a $6 million seed round of financing, co-led by Blockchain Capital and Breyer Capital.
Babylon
Babylon's staking is self-custodial, and the custody contract is expressed by UTXO transactions. Babylon attempts to build three secure sharing protocols: Bitcoin Staking Protocol, Bitcoin Timestamp Protocol, and Bitcoin Data Availability Protocol. Bitcoin Timestamping Protocol: The Bitcoin Timestamping Protocol is used to synchronize the PoS chain and the BTC chain, preventing users from withdrawing from staking on the BTC chain, but showing that they have not withdrawn from the PoS chain, and they can continue to vote and participate. Manage this situation from happening. Babylon completed an $18 million Series A round of financing in December last year, led by Polychain Capital and Hack VC, with subsequent additional investment from Binance Labs
Merlin
Merlin Protocol builds a universal adaptation protocol dedicated to cryptoassets on the Bitcoin network. The Merlin team uses comprehensive technical solutions such as smart contracts, data oracles, encryption economic incentive mechanisms, and encryption algorithms to seamlessly adapt the encrypted assets of the Bitcoin ecosystem to the EVM ecosystem and the Bitcoin L2 ecosystem through the Merlin Protocol, directly solving the problem of Bitcoin The liquidity and scalability issues of network encrypted assets have opened up a new path for Bitcoin ecological developers.
On March 19, the Bitcoin second-layer network Merlin Chain announced the launch of M-Token and started the release of M-BTC. Merlin's first Runes rune asset $RUFI is about to start a fair launch. The ace chain game Dragonverse Neo released a white paper and announced that it will launch the native token $MDBL. MerlinSwap announced that it will soon open the IDO of the governance token $MP. At the same time, Influpia, MerlinSwap, Unicross and other ecological applications have been launched successively.
CKB
CKB was originally a long-established Bitcoin ecological public chain. In July 2018, CKB completed US$28 million in financing, with participation from many well-known investment institutions such as Polychain Capital, Sequoia China, Wanxiang Blockchain, and Blockchain Capital. Recently, it announced that it will adjust mainnet positioning to Bitcoin Layer 2 and launch a layer of asset protocol RGB++.
The RGB++ solution proposed by Nervos and Cipher attempts to entrust RGB's asset status, contract release and transaction verification to the CKB public chain. CKB acts as a third-party data hosting and computing platform, eliminating the need for users to run the RGB client themselves. Since CKB itself is an extended UTXO model (Cell), the off-chain information of RGB assets can be written into the Cell, and a 1-to-1 mapping relationship can be established between the Cell and Bitcoin UTXO to realize RGB asset data based on CKB Hosting and verification solutions to address ease-of-use issues as an enhanced complement to RGB's original solution. Leveraging the development momentum of Bitcoin Layer 2, coupled with its own UTXO + PoW orthodox "BUFF", CKB has quickly become a hot topic in the community.
Stack
Stacks is the smart contract layer on Bitcoin. Its official construction began in 2017, and the initial version will be online in 2021. The initiators were a group of computer scientists from Princeton. TVL on Stack exceeds $140m; the upcoming Nakomoto upgrade in Q2 will produce faster blocks, further improve security, and is expected to significantly enhance the DeFi experience and attract more liquidity.
Among them, ALEX in Stacks is the head protocol, contributing 60% of TVL. ALEX has developed a set of DeFi related components, including AMM, Orderbook, Oracle, Bridge, etc., in addition to the Launchpad business. The monthly transaction volume of Stacks is in the hundreds of thousands. In the past two months, benefiting from the vigorous development of STX 20, the transaction volume has shown an obvious upward trend. In January, it exceeded the 1M mark, accounting for close to 10% of the overall Bitcoin transactions. In addition, the number of mature developers (with 2 years+ working experience in crypto) continues to rise steadily, with an annual growth rate of +51%.
Summarize
With the Bitcoin halving, Bitcoin Layer 2 is expected to usher in a new round of sharp rise. In addition, developers of Bitcoin Layer 2, on the one hand, draw on the technical concepts of Ethereum Layer 2 and modularity, and on the other hand, combine the characteristics of Bitcoin with technological innovations to promote the rapid development of the Bitcoin ecosystem. In the future, the development of the Bitcoin ecosystem may become the main narrative of this bull market.
