Analyzing the five hottest BTC L2 solutions at present, which one has the most Bitcoin native characteristics and practicality?

Today, the BTC Layer2 project BEVM officially announced the completion of its seed round and part of its Series A financing, raising tens of millions of dollars, with a post-investment valuation of 200 million USD, becoming a shining star in the BTC Layer2 track. Since the beginning of 2024, BTC Layer2 has become the biggest hotspot in the crypto market, with various BTC Layer2 projects emerging one after another, each selecting different Bitcoin Layer 2 solutions. Today, we will clarify the differences among various BTC L2 solutions in the market through an article.

Currently, there are a wide variety of BTC L2 solutions in the market, which are complex and diverse. From a technical implementation perspective, they can be roughly divided into five categories: Bitcoin sidechains, UTXO + client validation, Taproot Consensus, multi-signature + EVM, and Roullp. We will analyze the advantages and disadvantages of these five types of Bitcoin L2 solutions from three perspectives: Bitcoin native nature, degree of decentralization, and level of implementation.

Why analyze from the perspectives of Bitcoin native nature, degree of decentralization, and level of implementation?

First: By not making any changes to the Bitcoin code and directly using mature and time-tested Bitcoin native technologies to build BTC L2, we can maximize risk reduction and eliminate uncertainty. The Bitcoin native nature and adherence to Bitcoin's essence here essentially determine whether it can gain recognition from the mainstream Bitcoin community, which has far-reaching significance for the launch and development of BTC L2 projects.

Second: Decentralization is the spiritual core of blockchain. In the Bitcoin community, which has decentralization as its core culture, whether a BTC L2 is sufficiently decentralized almost determines the project's life and death. The decentralization of BTC L2 is directly reflected in whether the management and expenditure of BTC are secure. A BTC L2 that cannot safely manage BTC in a decentralized manner cannot gain the support and trust of BTC users. Therefore, decentralization is a core proposition that all BTC L2 must face.

Third: BTC L2 has undergone 6-7 years of development, and many solutions sound appealing, but the reality of implementation is often harsh. From the early Stack and RSK to the RGB proposed four years ago, and BitVM, which has had no further updates since its white paper release. The level of implementation is essentially the most direct way to test the solution. Therefore, the implementation status of various BTC L2 should be one of the important indicators for measuring their advantages and disadvantages.

1. Bitcoin Sidechains:

Bitcoin sidechains refer to expansion blockchains that can exist independently of Bitcoin, such as Stack and RSK, which are both Bitcoin sidechain solutions. Bitcoin sidechains generally use multi-signature or Hash Lock methods to manage Bitcoin while mapping BTC on the Layer 2 blockchain, allowing BTC to have the capability to expand complex scenarios on Layer 2.

1.1 Bitcoin Native Nature:

Bitcoin sidechain solutions can be simply understood as multi-signature + VM blockchain, and these Bitcoin sidechains can exist independently of Bitcoin, resulting in relatively poor Bitcoin native nature, making it difficult to gain support from the Bitcoin community.

1.2 Degree of Decentralization:

Since Bitcoin sidechains generally use multi-signature and Hash Lock methods to manage Bitcoin, their degree of decentralization is generally poor, and the security of assets completely relies on the multi-signers.

1.3 Level of Implementation:

Bitcoin sidechain solutions have been around for many years, but neither Stack nor RSK has achieved significant results in ecological development. The core reason lies in the unresolved issues of chain decentralization and asset security, making it difficult to gain user and capital trust.

2. UTXO + Client Validation

UTXO + client validation refers to expansion solutions based on the Bitcoin UTXO account model. These solutions generally perform off-chain ledger calculations based on Bitcoin UTXO while using client validation to ensure the authenticity of the ledger, thus achieving both Bitcoin's native nature and the goal of sharing Bitcoin ledger security on Layer 2. The UTXO + client validation solution sounds appealing, but the reality is harsh, and the implementation difficulty is extremely high. This is because, in the inherently simplistic Bitcoin UTXO account model that does not support complex calculations, the "extra task" of ensuring the security of the Layer 2 ledger is forcibly inserted, and the feasibility of this model remains to be verified. Typical representatives of this type of project are RGB and BitVM.

2.1 Bitcoin Native Nature:

UTXO + client validation primarily emphasizes Bitcoin's native nature, completely based on UTXO. However, due to the excessive emphasis on native nature, the implementation difficulty becomes extremely high, seemingly heading towards another extreme. Originally intended to be a Bitcoin expansion solution, it has become increasingly complex. Moreover, client validation essentially shifts the security verification issue back to the user, reverting to the most primitive and least efficient single verification model. Overemphasizing native nature may overlook feasibility and practicality.

2.2 Degree of Decentralization:

Although the UTXO model-based solutions appear to leverage the Bitcoin blockchain to ensure the trustworthiness of Layer 2, they essentially still adopt off-chain client validation methods. While clients can be sufficiently decentralized, this point-to-point verification model is not a decentralization based on network consensus, but rather relies on the distributed verification of client numbers. This model often depends on the verification capabilities of the clients themselves. If certain clients lack sufficient understanding of the verification model or have issues with the verification methods, they may face problems such as asset loss and double spending. It is hard to say this is a truly feasible decentralized solution.

2.3 Level of Implementation:

Currently, RGB has been proposed for four years, and BitVM has been proposed for a year, but both remain at the white paper or theoretical stage. RGB still does not have a testable version, and BitVM has not made any clear progress since the release of its white paper. Some projects claiming to be based on RGB and BitVM have also ceased operations or sought alternative paths. It is evident that the UTXO + client validation expansion solution still faces enormous uncertainty.

3. Taproot Consensus

Taproot Consensus is a Layer 2 solution built on the three major native technologies of Bitcoin and has gradually matured since the Bitcoin Taproot upgrade in 2021. The essence of Taproot Consensus is Schnorr Signature + MAST Contract + Bitcoin Light Node Network.

Schnorr Signature allows Bitcoin multi-signature addresses to expand to 1000, achieving decentralization of multi-signature addresses; MAST Contract realizes the coding of multi-signature management, relying on code rather than human signatures; Bitcoin Light Node Network achieves multi-signature driven by consensus from the Bitcoin light node network, fully realizing decentralized Bitcoin cross-chain and management.

Taproot Consensus is a solution proposed and practically implemented by the BEVM team, which is also a typical use case of Taproot Consensus.

3.1 Bitcoin Native Nature:

Taproot Consensus is entirely built on the three major native technologies of Bitcoin, without introducing or adding any other technologies outside of Bitcoin. It is a solution that integrates multiple core technologies of Bitcoin following the 2021 Taproot upgrade. Therefore, Taproot Consensus has strong native nature and high feasibility. After all, both Schnorr Signature and MAST Contract, as well as the Bitcoin Light Node Network, are mature technologies that have been validated over many years in Bitcoin's history. Notably, the core of Ordinals relies on MAST Contract.

It is worth mentioning that since the nodes of the Bitcoin Layer 2 network based on Taproot Consensus are all Bitcoin light nodes, the Layer 2 network cannot exist independently of Bitcoin and has an inseparable dependency relationship with Bitcoin.

3.2 Degree of Decentralization:

The core of Taproot Consensus is to solve the issues of decentralized access and expenditure of Bitcoin, which is the most critical proposition for all Bitcoin L2. Taproot Consensus can achieve fully decentralized Bitcoin management through a BFT consensus network composed of over 1000 Bitcoin light nodes, thereby solving the problem of introducing BTC into the Layer 2 network in a trustless manner, ultimately achieving Bitcoin's expansion.

3.3 Level of Implementation:

The Taproot Consensus Bitcoin Layer 2 solution was proposed in 2021 and was truly implemented in July 2023. The BEVM pioneer network built on Taproot Consensus has been running stably for 8 months, processing 6 million transactions, with over 100,000 on-chain users and more than 30 ecological projects. Moreover, the BEVM mainnet based on Taproot Consensus has recently gone live. Therefore, Taproot Consensus is currently one of the Bitcoin Layer 2 solutions with a high level of implementation.

4. Multi-signature + EVM

Multi-signature + EVM is a solution adopted by many BTC L2 projects. Whether using MPC multi-signature schemes, threshold signature schemes, or Hash Lock, DLC, etc., they essentially all fall under the multi-signature + EVM solution. Users transfer BTC to a multi-signature address, and then generate new BTC on the EVM chain, allowing BTC activities to be compatible with EVM smart contracts.

This type of solution is the easiest to implement, with a very low technical threshold. However, fundamentally, this type of solution is still a Bitcoin sidechain solution, just simpler and more straightforward in its implementation. A typical project of this type is Melin Chain.

4.1 Bitcoin Native Nature:

Multi-signature + EVM solutions lack native nature. Essentially, they store Bitcoin in a multi-signature address and map a new BTC asset to run on Layer 2. Moreover, the Layer 2 blockchain can exist completely independently of Bitcoin.

4.2 Degree of Decentralization:

The essence of multi-signature is to trust the multi-signers and the multi-signature mechanism, not to trust network consensus. Therefore, the asset security of the multi-signature + EVM Bitcoin Layer 2 solution completely relies on the multi-signers or private key holders designated by the project party. There is not much decentralized consensus.

4.3 Level of Implementation:

The multi-signature + EVM solution is very easy to implement. A multi-signature wallet + a blockchain compatible with EVM is not a very complex technical challenge, and there are many open-source versions available. Therefore, the startup cost is the lowest, leading to a large number of so-called Bitcoin Layer 2 solutions in the market adopting this type of solution. However, this type of solution heavily tests the management capabilities of multi-signers, as the security of assets relies on these multi-signers.

5. Roullp

Whether ZK-Roullp or OP-Roullp, they are originally Ethereum L2 solutions, but many entrepreneurs have borrowed Roullp for Bitcoin L2 solutions. However, is it really feasible to run Roullp on Bitcoin? Ethereum essentially supports smart contract verification and can verify Layer 2 Roullp ledger information. Therefore, Ethereum Roullp Layer 2 can share Ethereum's security, but Bitcoin does not support any form of Roullp verification.

Thus, forcibly introducing Roullp to Bitcoin is essentially ineffective. The BTC L2 of the rollup solution often introduces client validation or builds its own DA layer to verify Roullp. This means that Bitcoin only retains the Roullp ledger itself without verification, and the verification is left to the client or the DA layer built by the BTC L2 project. Therefore, the security of the BTC L2 project itself becomes the key issue. Typical representatives of this type of project include B2 and Bison.

5.1 Bitcoin Native Nature:

The Roullp solution essentially comes from Ethereum's Layer 2 solutions. The essence of Roullp is about how to achieve trustworthiness in Layer 2 ledgers, which is fundamentally unrelated to Bitcoin. The Bitcoin blockchain only serves as a storage role without verification. Therefore, Roullp has poor native nature and is unlikely to gain support from core Bitcoin users.

5.2 Degree of Decentralization:

The decentralization of BTC L2 mainly involves two aspects: the decentralization of asset management and the decentralization of the Layer 2 ledger. Roullp solutions generally adopt multi-signature schemes for asset management on the Layer 1 Bitcoin, while the Layer 2 uses sorting schemes. Currently, most Ethereum sorters are centralized, operated by the L2 project party's own nodes. At present, most BTC L2 projects that rely on Roullp as their core solution have not resolved these two aspects of decentralization.

5.3 Level of Implementation:

Since the Roullp solution is mature in the Ethereum ecosystem, implementing it in Bitcoin Layer 2 is not complex. Many chains use multi-signature methods for Bitcoin management, so the overall implementation difficulty is not high. Currently, projects like B2 have already seen a certain scale of users and TVL. However, this type of project still needs to face two major challenges in the market: the issue of Bitcoin asset management and the trustworthiness of the Layer 2 ledger.

Conclusion:

Analyzing the five major BTC L2 solutions from the dimensions of Bitcoin native nature, degree of decentralization, and level of implementation, each has its advantages and disadvantages.

The development results of Bitcoin sidechain solutions over the years have also verified that it is almost impossible to gain support and recognition from mainstream Bitcoin users. From the perspective of entrepreneurial difficulty, multi-signature + EVM is the easiest solution to replicate, primarily testing the project party's market and marketing capabilities. However, in the long run, due to the low degree of decentralization, it is difficult to gain long-term support and trust from large Bitcoin funds, and the sustainability of project development remains to be observed.

From the perspective of Bitcoin native nature, the UTXO + client validation model is the most native and authentic, but the technical implementation is overly complex, making the level of implementation extremely challenging in the short to medium term. The Roullp solution directly borrows from Ethereum L2 solutions and rhetoric, although it does not solve the fundamental issues of BTC L2. However, the brand communication cost is low, and if long-term development is to be achieved, the decentralization issue still needs to be resolved.

The Taproot Consensus solution, by directly using Bitcoin native technologies to build a decentralized BTC L2 solution, is currently the most noteworthy BTC L2 solution in terms of Bitcoin native nature, degree of decentralization, and current level of implementation.