Bitcoin Layer2 Development Prospects Outlook

With the birth of the Ordinal protocol, Bitcoin has welcomed a brand new asset type known as inscriptions. The craze for inscriptions quickly swept through the market, giving rise to various protocols such as BRC20, Atomical, Runes, and well-known projects like ORDI and SATS. This has brought spring back to the Bitcoin ecosystem, attracting a large amount of funds, users, and developers.

However, the limitations of Bitcoin as Layer 1 are gradually becoming apparent. On one hand, Bitcoin does not support smart contracts, making it difficult to expand into richer application scenarios. On the other hand, performance and miner fee issues have become significant obstacles to further development of the ecosystem. These factors have prompted the market to shift its focus to the Bitcoin scalability track, making Bitcoin Layer 2 a new hot topic.

Merlin Chain quickly gained popularity as an early Bitcoin Layer2 project, but after its listing, both the coin price and TVL plummeted, leading to doubts about Bitcoin Layer2. In fact, the development of the blockchain industry has been continuously exploring and advancing. As a pioneer, Ethereum's Layer2 development journey is worth learning from for the Bitcoin ecosystem.

Looking back at the scaling journey of Ethereum, it has gone through early attempts such as state channels, the Lightning Network, and sidechains, until the emergence of Rollup technology truly broke the bottleneck. The success of projects like Optimism and Arbitrum has attracted more teams into the Layer 2 track, creating a flourishing situation. In this process, decentralization, data availability, and security are key factors.

Bitcoin Layer 2, although it started early, has always faced limitations in its development. Solutions like the Lightning Network, Liquid Network, RSK, and RGB are all facing their own issues. Currently, the mainstream Bitcoin Layer 2 solutions in the market are still in exploration, urgently needing breakthroughs.

Recently, emerging projects like BEVM and Mezo have attracted attention. BEVM implements a trustless Bitcoin network solution based on Taproot Consensus, opening up new technological paths. Mezo innovatively realizes Layer2 functionality using tBTC as the foundation. These attempts bring new possibilities for the development of Bitcoin Layer2.

Looking to the future, Bitcoin Layer 2 needs more projects that possess decentralization, native properties, and security, while also requiring established projects to continue innovating. Only by forming a diverse ecosystem can Bitcoin Layer 2 truly experience an explosion. Despite the current challenges, the potential of this hundred billion market has already become evident. We need to maintain patience and perseverance, believing that the Bitcoin ecosystem will eventually usher in true prosperity.