BEVM has been honing its skills for seven years. How to create a masterpiece of BTC Layer 2?

Recently, the crypto exchange Bybit released a report indicating that BTC will continue to outperform other major cryptocurrencies in 2024, and it is expected that the results of BTC projects in this bull market will become increasingly prominent.

Indeed, the success of projects like Ordinals and Runes on BTC demonstrates that opportunities and innovations can drive community development. However, with the current dominance and popularity of the BTC network, challenges related to scalability and transaction efficiency have also emerged.

BTC Layer2: Challenges and Future Landscape

Returning to the fundamental issues of blockchain, achieving an efficient and smooth experience on Layer1 blockchains requires not only core decentralization and security but also consideration of network scalability, throughput, and low gas fees. However, it is currently difficult to achieve a balance among these three aspects, which is often referred to as the "Blockchain Trilemma."

Therefore, a set of Layer2 solutions built on Layer1 chains is needed to enhance blockchain performance. The popular BTC Layer2 solutions are scalability solutions built on the base layer of BTC (Layer1), aimed at addressing the throughput limitations and high transfer fees of the Bitcoin network.

In contrast to Layer1, which focuses on the operation of underlying blockchain technologies such as consensus mechanisms, data immutability, and network incentives, Layer2 emphasizes expanding around the "application layer" and "contract layer" of Layer1, thereby improving blockchain scalability without being constrained by the Layer1 platform framework. Bitcoin is also a relatively unique case among Layer1 public chains because it does not support smart contracts, which has limited its ability to develop a mature ecosystem. The development of Layer2 technology has brought new hope to Bitcoin.

Layer2 solutions are no longer a novel concept; their development can be traced back to the BTC Lightning Network proposed in 2015, primarily aimed at solving payment scenarios for BTC, but it does not support smart contracts. To meet the demands for efficient operation of smart contracts and higher transaction speeds, BTC sidechains were born, allowing some of the workload from the main chain to be transferred to the sidechain.

Subsequently, the explosion of the ETH ecosystem shaped a plethora of applications, such as Web3 games, NFTs, and social applications. However, it also brought bottlenecks to the Ethereum network itself, which urgently needed to scale. Therefore, some scaling solutions inspired by Bitcoin were adopted, leading to the creation of the Lightning Network and Plasma. The Lightning Network is characterized by its similarity to the Lightning Network, supporting transactions of all ERC20 tokens, while Plasma is another scaling framework aimed at increasing Ethereum's network throughput.

After that, the development of Ethereum's Layer2 has been ahead of Bitcoin's scaling efforts. Currently, the relatively new Ethereum Layer2 technologies mainly include Rollups, OP Rollup, and Zero-Knowledge (ZK) Rollup, which have brought higher security and performance improvements, and also allow the use of smart contracts on the scaling Layer2. Ethereum's Layer2 has finally gained widespread market recognition and has rapidly developed.

Following the successful validation of Layer2 solutions like Ethereum's, the BTC Taproot upgrade in 2021 provided better solutions for BTC scaling and bridging, allowing Ethereum's successful experiences to be practically applied to Bitcoin. The current market trend has returned to the original intention of blockchain—building the infrastructure for BTC Layer2.

Looking at the market scale of Ethereum Layer2, its financing valuation starts at approximately $3 billion, and its market cap has reached several tens of billions of dollars. The market caps (FDV) of OP, ARB, and Starknet have exceeded $10 billion, while most Layer2 total locked value (TVL) is generally over $200 million. Additionally, the total market cap of Ethereum Layer2 has reached about $100 billion, with a TVL as high as $10 billion. According to investment firm VanEck's predictions, by 2030, the market cap of Ethereum Layer2 is expected to reach $1 trillion.

In contrast, BTC Layer2 is still in its infancy. Since 2023, many projects have emerged, such as the leading Merlin chain, which has attracted considerable attention and investment, with a maximum locked value of about $3.5 billion. However, in terms of the overall market cap and TVL of BTC Layer2, it remains relatively low, indicating that there is still significant market potential.

Currently, nearly a hundred projects have emerged in ETH Layer2, while BTC Layer2 projects are just beginning to build their ecosystems. However, considering Bitcoin's leading position in the cryptocurrency space and the importance of Layer2 technology in enhancing transaction speed and reducing costs, it is foreseeable that the future story is also very promising.

From the perspective of investors and entrepreneurs, BTC Layer2 is currently the best opportunity. First, as the leader in the cryptocurrency space, BTC has a massive market foundation and user base, providing a great entry point for capital inflow. From a technical perspective, compared to creating a new public chain and a new consensus mechanism, innovating on the existing Layer1 consensus mechanism is more credible and practical.

The current survival strategies for Layer2 can be summarized into four mainstream models. The first is the ecological business closed-loop model, such as the multi-asset GMX derivatives created by Arbitrum, which allows users and the community to spontaneously drive its sustainable development. The second is a narrative of brand building, such as OP Chain's one-click deployment of ETH Layer2 based on OP Stack, which has already been laid out in multiple fields. The third is a technical narrative model, such as the zk technology of Starknet and zk Sync, which attracts users and funds through technological innovation. Additionally, there is the aggressive locking strategy to increase TVL, such as Blast and Merlin, which enhance total locked value by locking funds.

While ETH Layer2 has already flourished in the previous bull market, BTC Layer2 has only been evolving over the past year. For builders and the community, the substantial market cap of BTC gives confidence in the landing and expansion of BTC Layer2.

From Strategy to Ecosystem: Who Will Be the Next Leader of BTC Layer2?

In the current development of BTC Layer2, various solutions are emerging. The aggressive locking strategy derived from Blast aims to boost community enthusiasm and user sentiment, demonstrating strong effectiveness as the bull market approaches. In addition, there are projects like BitVM and RGB protocols that focus on technological innovation, but such projects often require maturity and time to settle, perhaps only truly growing and landing in the next bull market cycle.

Of course, many people hope that BTC Layer2 can create a myth of expansion and applications like ETH. Currently, there are many BTC Layer2 solutions that mimic Ethereum's Layer2. But have we ever considered why not use BTC's native technology to achieve Layer2 expansion?

Currently, the only representative project seems to be BEVM— a Layer2 that is entirely based on the BTC Taproot technology stack and compatible with mainstream blockchain technologies. The core of BEVM is to combine the Mast contracts, Schnorr signatures, BTC light node network, and other Bitcoin native technologies from the BTC Taproot upgrade with the most widely used virtual machine, EVM, into a single solution, thus achieving a decentralized BTC Layer2. Additionally, BEVM adopts a brand narrative similar to OP— BEVM-Stack allows for one-click deployment of BTC Layer2.

As the BTC Layer2 ecosystem is about to explode, the BEVM mainnet was launched in March this year, providing one-stop services for over 100 BTC Layer2 projects. Furthermore, BEVM Stack can customize gas, supporting various currencies as gas, such as BTC, Sats, etc., providing more possibilities for the development of BTC Layer2.

BEVM aims to create an ecological closed loop like Optimism and build a commercial empire for BTC's ecosystem similar to Ethereum. Currently, the BEVM ecosystem has two important applications: the BTC liquidity staking protocol Bido and the BTC stablecoin protocol Satoshi Protocol.

Bido allows BTC holders to stake BTC on Bido to support the operation of BEVM network nodes, similar to Lido on ETH, providing more re-staking options for stakers. On one hand, the staking model can maintain the security of Layer2, and on the other hand, BTC stakers can earn gas fees on the Layer2 platform— currently, users staking on Bido can receive 50% of the gas revenue from the entire BEVM network.

Meanwhile, the Satoshi Protocol is a decentralized stablecoin for BTC, utilizing BEVM's decentralized staking to generate stablecoins, which can solve the volatility issues of BTC payments on the Lightning Network, while being compatible with the USDC CCTP full-chain protocol, allowing BTC decentralized stablecoins to circulate on any public chain VM platform like USDC.

Based on BTC, How Does BEVM Stand Out?

Due to space limitations, the previous text only briefly mentioned the differences between BEVM and other BTC Layer2 projects. Recently, BEVM has also attracted widespread capital attention, announcing in April that it secured tens of millions in financing from many well-known institutions, including Bitmain, bringing its valuation to $200 million.

After launching its mainnet, BEVM launched an on-chain airdrop event with the Binance Web3 wallet and became the first BTC Layer2 project integrated by Binance. According to the official data released, this event had 160,000 participants and provided generous rewards.

All these eye-catching figures indicate that the first BTC Layer2 network built on Taproot Consensus, using BTC as gas and compatible with EVM, seems to have great potential, allowing BEVM to stand out among many BTC Layer2 projects. What unique advantages does BEVM have?

1. Strong Technical Accumulation and Development History

Perhaps related to its unique technical advantages and project background, BEVM's seven years of technical accumulation and continuous development have provided significant support in this bull market.

The earliest form of BEVM can actually be traced back to the Polkadot cross-chain project ChainX developed in 2017. At that time, ChainX could be considered the first chain of Substrate, combining BTC decentralization with the Polkadot framework, achieving Bitcoin rust SPV light nodes.

During the period from 2018 to 2020, Bitcoin SPV light nodes were integrated into the Substrate's Auto + Grandpa BFT consensus, allowing the governance module of Polkadot to be utilized by BTC SPV light nodes. At that time, ChainX had already achieved over 100,000 BTC cross-chain transactions, but the industry focus and narrative had not yet concentrated on BTC, so ChainX did not achieve the expected development.

In 2021, the BTC network underwent its largest upgrade since the SegWit in 2017— Taproot. The main features of this update included the introduction of Schnorr signature algorithms, MAST contracts, and the latest BTC scripting technology, each of which enhanced the privacy, scalability, and composability of the blockchain.

BEVM recognized the future landscape of the BTC ecosystem and successfully registered and obtained a patent for BTC Taproot around 2022, shaping BEVM's Taproot Consensus Layer2 technology through native Taproot technology. By this time, BEVM had already laid a solid technical foundation for the scalability and decentralization of BTC.

Since 2023, with the explosion of BTC protocols like Ordinals and inscriptions, BEVM has seen opportunities and demands in the BTC ecosystem, officially promoting the BEVM brand. It has now launched its mainnet, providing services for over 100 BTC ecosystem projects.

2. Innovation of Taproot Consensus

The Taproot Consensus technology seems to be a unique underlying technology created by the BEVM project, currently only utilized by them. It is a set of technologies based on the Substrate framework, integrating three major Bitcoin native Taproot technologies: Schnorr signatures, MAST contracts, and SPV light node networks.

Specifically, Schnorr signatures provide a more efficient and private Bitcoin signing algorithm, allowing Bitcoin multi-signature addresses to expand to 1,000, achieving decentralization of multi-signature addresses; MAST contracts enable multi-signature management through coding, enhancing network security and privacy; while SPV light nodes allow users to verify payments more conveniently.

Therefore, Taproot Consensus not only helps improve the scalability and privacy of BTC, but the BEVM network can also ensure the security of on-chain transaction assets. Additionally, BEVM has a unique positioning in technological innovation, such as integrating the privacy communication protocol Signal.

3. BEVM Stack: One-Stop Solution

BEVM Stack, as a new technology stack service, provides a one-stop solution for the deployment of BTC Layer2. By integrating innovative languages such as EVM, WASM, Cario, and Move, BEVM Stack enables BTC to connect with various blockchain technologies, bringing safer and more efficient solutions for BTC ecosystem construction. As mentioned in BEVM's white paper: BEVM Stack aims to allow developers and projects to easily and cost-effectively deploy BTC Layer2, enabling more projects to fully enjoy the security of Bitcoin network consensus and the convenience of EVM deployment applications.

Furthermore, BEVM Stack can integrate scalability solutions like Zkstark, XCMP, and other multi-chain blockchain technologies, as well as full-chain messaging protocols like LayerZero and Wormhole, achieving seamless connections between BTC and other blockchain technologies. This one-click solution is similar to OP Stack, and BEVM will primarily promote its Taproot solution, laying the foundation for the widespread application and construction of BTC in the future.

4. Making BTC a "Full-Chain Asset"

BEVM technology provides a new solution for the decentralized asset full-chain circulation of BTC. Through BEVM's intermediary, BTC can achieve full-chain circulation to any innovative blockchain platform.

Currently, BEVM has already enabled low-cost and fast BTC cross-chain transactions through its ecological application Omni BTC, supporting various underlying protocols like LayerZero and Connext for any cross-chain transactions. BEVM can integrate various full-chain liquidity aggregation protocols and utilize underlying full-chain interoperability messaging protocols like LayerZero and Wormhole, providing users with a broader range of asset utilization scenarios.

Although the underlying technical logic may seem complex, BEVM makes it clear to users that they only need to use BTC as gas to complete any interoperability experience with major innovative chains, such as ETH, SUI, Starknet, OP, BSC, etc. Similar to the World Wide Web in the internet, users only need to enter a domain name to access any network connected to www. With multi-chain interoperability, all blockchain technologies and BTC as a decentralized currency merge into one.

The Rise of BTC Layer2

Looking back at the development history of BTC Layer2, many projects have already demonstrated extremely rich technical details and unique market observations, but I believe that the emergence of Merlin and BEVM is just the beginning.

Returning to the original intention of Crypto, looking back at BTC— the first and most famous cryptocurrency, which has completely changed the landscape of traditional finance since its inception in 2009. With the first batch of BTC ETFs approved by the US SEC last year and Hong Kong also approving BTC ETFs last month, terms like decentralization, DeFi, GameFi, and cross-chain have become less niche.

As developers and a broader community continue to innovate and adopt new solutions, BTC Layer2 solutions will play a key role in creating explosive applications in the future.

We are standing at the forefront of a new era, like a ship setting sail. With the push of technology and the excitement of the community, we will witness more innovations and breakthroughs for BTC and Crypto in the future.