Inventory of Emerging Bitcoin L2 Projects Compatible with EVM

Written by: Samuel Haig, Defiant

Compiled by: xiaozou, Golden Finance

With the launch of Bitcoin spot exchange-traded funds (ETFs), Bitcoin has recently dominated headlines and remains highly popular, but critics argue that the network has failed to keep pace with innovations in the broader web3 ecosystem.

However, a number of emerging projects are building Bitcoin L2 networks that are compatible with Ethereum Virtual Machine (EVM) smart contracts, extending Bitcoin's utility beyond payments.

L2 networks are built on top of existing L1 blockchains, leveraging L1 for transaction finality and security. Ethereum's L2 ecosystem has seen rapid growth in recent years, providing low-cost transactions while inheriting the security of the Ethereum mainnet's consensus layer. According to data from L2beat, the current total locked value (TVL) of Ethereum L2 is $21.1 billion.

1. Conflux Announces Bitcoin L2 Plan

On January 18, the Conflux Layer 1 network development team became the latest project to join the fray, announcing plans to deploy a test network in February or March, followed by the launch of an EVM-compatible Bitcoin L2 in May.

BTC will become the native gas token of the L2, and BTC holders will also be able to stake BTC to participate in its proof-of-stake (PoS) consensus and governance mechanism.

Smart contracts deployed on the network will also have access to events on the Bitcoin blockchain. Conflux stated that the network will bring DeFi utility to Bitcoin-based assets (such as inscription tokens).

"Introducing an EVM-compatible Bitcoin L2 solution on Conflux opens up a wide range of possibilities for blockchain developers and innovators," Conflux stated. "Developers can now build decentralized applications that seamlessly interact across all three domains, unlocking new cross-chain functionality opportunities and creating a more interconnected blockchain landscape."

2. Bitfinity Completes Financing

On January 10, Bitfinity announced that it had successfully raised $6 million through a round of token sales prior to the launch of its mainnet (at the end of January or early February).

Bitfinity also plans to launch an EVM-compatible Bitcoin L2 based on the Dfinity Foundation's Internet Computer Protocol. Bitfinity aims to establish a DeFi ecosystem secured by Bitcoin.

Previously, Bitfinity completed a $1 million seed round in 2021, with investors including Polychain Capital and ParaFi Capital, raising its valuation to $130 million. The recent round of financing concluded in June, and the Bitfinity team did not immediately release related announcements until just weeks before the project's mainnet launch.

3. Botanix Celebrates Testnet Deployment

On November 29, Botanix announced that after a year of research and development, it had launched the first "EVM equivalent" Bitcoin L2 on its test network. Botanix also introduced an accelerator program to support 10 projects building dApps based on Botanix.

"In a multi-chain world, it is clear that EVM is the leading virtual machine—not just for Ethereum, but widely used across any blockchain," said Willem Schroe, founder of Botanix Labs. "The tools, support, and vibrant developer community of EVM make it a natural aggregator for programmability."

On January 19, Botanix revealed that it was organizing a hackathon for developers looking to build EVM applications on Bitcoin.

4. SatoshiVM Accused of "Rug Pull"

However, within the nascent Bitcoin EVM L2 ecosystem, one project has raised eyebrows.

SatoshiVM is a Bitcoin L2 rollup that uses EVM for off-chain computation, and its team has been criticized for allegedly dumping seven-figure tokens from a developer-controlled wallet.

On January 20, 1.21 million SAVM tokens (equivalent to 11.5% of the token supply) were distributed to 200 addresses, several of which were associated with influential celebrities. Previously, multiple celebrities indicated that SatoshiVM might airdrop tokens to testnet participants after the testnet deployment on January 13.

The project also initiated an initial liquidity offering (ILO) through Bounce Finance for token distribution, raising concerns that ILO participants might be exploited for liquidity exit. Subsequently, these funds were transferred to a multi-signature account controlled by Bounce and SatoshiVM to quell public concerns.

On January 19, SatoshiVM announced that SAVM had been listed on Uniswap. Since its listing on CoinGecko on January 19, the price of SAVM has risen by 69.5%, but has since fallen by 28.5% from a local high of $14 yesterday.

Notable on-chain analyst Lookonchain pointed out that one of SatoshiVM team's wallets sold over $1 million worth of tokens on January 22.

Prominent web3 commentator Zachxbt stated on Twitter: "Remember, when celebrities with large followings start pumping a project at the same time, it's likely because they received token distributions, which is why they are dumping their low-priced tokens on you."

5. Other Projects Bringing Smart Contracts to Bitcoin

Despite the recent hype, the upcoming EVM-compatible Bitcoin L2s are not the first projects to provide smart contract functionality for Bitcoin.

The Rootstock sidechain was launched in 2018, enabling smart contract deployment through its Rootstock Virtual Machine (a fork of EVM). Last month, GFX Labs released a fork of Uniswap v3 on that network—Oku. According to data from DeFi Llama, Rootstock currently has a total locked value of $130 million.

In January 2021, Stacks also launched its own "Layer 1.5" network, providing smart contract execution through its Clarity Virtual Machine. Stacks currently has a TVL of $51.2 million.