To start with: Initially, it was intended as a simple activity, but after a long period of information gathering, it became evident that this project is indeed quite valuable. If there are any inaccuracies in the information, please forgive us.
1. Under the wave of Wall Street institutions and publicly traded companies leading Bitcoin, the Bitcoin Layer 2 sector has entered a new phase of technological breakthroughs and ecological explosions. Bitlayer, as a core developer of the BitVM alliance, recently released the 2.0 white paper and launched the first Beta version of the cross-chain bridge mainnet based on the BitVM paradigm, attempting to redefine Bitcoin's layer two infrastructure with a 'Bitcoin security equivalent' Rollup architecture and a decentralized 'challenge mechanism'. ChainCatcher interviewed Bitlayer co-founder Charlie Hu, who was involved in early investments in Polkadot and led the expansion of Polygon's Asia-Pacific ecosystem. In 2023, he and another co-founder went 'all in' on the Bitcoin Layer 2 sector. The project has cumulatively secured $25 million in financing and formed strategic partnerships with three major mining pools that account for over one-third of Bitcoin's total hash power.
2. Regarding the reasons behind Bitlayer's choice of the BitVM route, Charlie Hu stated that BitVM does not require soft forks or hard forks of the Bitcoin network. It optimizes existing Bitcoin scripts to achieve secure and efficient transactions through fraud proofs and Rollup technology, showing significant advantages in decentralization and security, and it does not need to wait for Bitcoin network upgrades, making it more feasible. As a core member and developer of the BitVM alliance, Bitlayer has contributed a substantial amount of code and work, which is its advantage among many players choosing this route.
3. Bitlayer's recent technical updates focus on two core products: BitVM Bridge and Bitcoin Layer 2 Rollup. The Beta version of the BitVM Bridge mainnet introduces a new mechanism optimized based on Bitcoin scripts, similar to the fraud proof mechanisms of Optimism or Arbitrum. The designed 'challenge mechanism' allows operators to initiate challenges to handle malicious transactions, offering improvements in security and degree of decentralization compared to WBTC; the Rollup architecture of Bitlayer Network aims to achieve high-performance, Bitcoin security-equivalent transactions, with transactions ultimately verified on the Bitcoin blockchain.
4. Compared to other Rollup models on the market, Bitlayer Network's Rollup has two core differences. Technically, it possesses Bitcoin-equivalent security, higher than sidechains; in terms of the economic model, sidechain fees do not benefit Bitcoin miners, while Bitlayer aims to align with the miner economic model, allowing miners to participate in layer two construction and provide liquidity. The project is currently waiting for the validator module code audit, which will allow it to go live afterward.
5. In terms of business expansion, Bitlayer's core goal is to activate Bitcoin liquidity through a decentralized cross-chain bridge, allowing YBTC holders to gain more benefits. It has partnered with multiple public chains like Base and Starknet, with some providing investment and grant support; it has also formed strategic partnerships with the three major mining pools, Antpool, F2Pool, and SpiderPool, leveraging the pools to accelerate the packaging of non-standard BitVM transactions and enhance user experience.
6. In the second half of this year, Bitlayer has several important dynamics and goals. It is about to launch the V2 mainnet and TGE, with Binance-related activities already commenced; technically, it continues to implement BitVM technology and promote the development of V3 high-performance Rollup infrastructure; in business, it collaborates with large DeFi protocols and ecosystems to expand YBTC scale and encourage adoption by large holders, and it will also work with institutions like 21Shares and Franklin to issue related products, exploring partnerships with Tether and others to deepen existing ecosystem collaborations and achieve business profitability.
7. Regarding whether the Bitcoin ecosystem narrative development initiated in 2023 meets expectations, Charlie Hu believes that the Bitcoin ecosystem infrastructure is still not perfect, user experience needs improvement, and while the development speed is generally in line with expectations, there remains room for growth. The development of Bitcoin requires time to improve infrastructure, ensure security and stability, and the technology's implementation requires strict auditing and optimization. The last two years have seen many changes in the Bitcoin ecosystem, and overall progress is satisfactory.
8. Reviewing the development of the BTCFi industry, the Bitcoin ecosystem progressed slowly before 2021. The Taproot upgrade in November 2021 improved Bitcoin's address format and scripting capabilities, laying the groundwork for subsequent protocols like Ordinals. The spring 2023 surge in inscriptions made people realize the potential for an evolving Bitcoin ecosystem, and miners' attitudes also changed. Today, the crypto ecosystem has entered an era dominated by institutions, with an increase in large on-chain transfers, a decrease in exchange-held Bitcoin, and significant market influence from large whales.
9. In response to the skepticism regarding the 'pseudo-demand' faced by BTCFi, Charlie Hu pointed out that there is a clear market demand. Institutions in Europe and the United States wish to obtain annual returns while holding Bitcoin principal; miners, after the instability of traditional financial models, are more inclined towards on-chain yield products; retail demand is complex, covering professional investments, short-term speculation, and following airdrops.
10. Wall Street institutions and publicly traded companies significantly influence Bitcoin's impact on the BTCFi industry, generating a demand for compliance and security. Institutional compliance participation in DeFi will greatly promote BTCFi development; institutional holdings make Bitcoin market fluctuations converge, providing a stable environment for BTCFi; related layer two solutions and protocols inject new functionalities into Bitcoin, and institutional participation will enrich application scenarios. If compliance legislation is passed in the next year and a half, it will provide a legal basis for institutional participation, benefiting BTCFi. Bitlayer's goal is to create foundational infrastructure that activates dormant Bitcoin assets at scale and achieves high-performance, security-equivalent transactions, striving to become the industry leader.
