The Bitcoin network is valued at trillions, yet its ecosystem value is nearly zero. Bitlayer's ambition is to activate this stagnant pool.
“The Chinese community thinks the Bitcoin ecosystem is 'dead', while the European and American markets remain enthusiastic.” Bitlayer co-founder Kevin He pointed out the cognitive disconnect between the Eastern and Western markets regarding the BTC ecosystem in a recent interview.
As an important participant in the Bitcoin ecosystem, Kevin He pointed out that this pessimism stems from overly high expectations for the BTC ecosystem in its early stages. The true value of the Bitcoin ecosystem lies in its **potential for massive off-chain financial activities to migrate on-chain**.
On July 23, 2025, Bitlayer Labs announced the completion of a $11 million Series A financing, becoming the first Bitcoin infrastructure project to receive institutional investment from an ETF-licensed entity. Previously, the project had already secured $5 million in seed funding led by Framework Ventures and ABCDE Capital. 01 Technical Breakthrough: How BitVM Solves Bitcoin’s 'Impossible Triangle'
Bitcoin, as the golden standard of the crypto world, has long faced an awkward situation: **the contradiction between on-chain value storage and off-chain functional scarcity**. Its underlying design is positioned as a payment system rather than a DeFi or on-chain application platform.
“Bitcoin Layer 1 has a block every 10 minutes, and simple programming scripts struggle to support complex applications,” Kevin He pointed out. “Even if we realize exchanges between different assets, we still face price volatility and slippage risks.”
Bitlayer's answer is **BitVM technology**—a Turing-complete virtual machine designed specifically for the Bitcoin ecosystem. This innovation does not require protocol upgrades while enabling the Bitcoin network to support smart contract functionalities.
The core technical architecture includes three main pillars:
- **Layered Virtual Machine (LVM)**: Separates computation and verification, executing complex calculations on Layer 2 while only submitting necessary verification information to the Bitcoin main chain, greatly reducing the mainnet's burden.
- **Dual Bridge Design**: BitVM's permissionless bridge is suitable for fast transactions; the OP-DLC bridge offers higher security, allowing users to choose based on their needs.
- **Optimistic Verification + Zero-Knowledge Proof**: Assumes transactions are honestly executed, with verification triggered only in disputes; combines ZKP technology to ensure privacy and integrity.
“BitVM has broken through the security and programmability trade-off of Bitcoin scalability through OP Rollup and ZK verification,” Kevin emphasized. As the first team to develop bridges and Layer 2 solutions based on BitVM, Bitlayer is promoting the application of this technology.
### 02 Team and Capital: Reassembly of Public Chain Veterans
The founding of Bitlayer stems from Kevin He’s technical due diligence experience. At the end of 2023, while providing technical support to ABCDE Capital, he participated in the technical due diligence of multiple BTC ecosystem projects and conceived the idea: “Instead of watching the Bitcoin ecosystem wave, why not personally assemble a team to create breakthrough projects?”
**The core team consists of two seasoned experts in the public chain field**:
- **Kevin He**: Master of Software Engineering from Peking University, former Senior Technical Director at Huobi and Vice President of Technology at New Huo Technology, who created a daily trading volume of 4 million transactions and a TVL exceeding $10 billion on the HECO chain.
- **Charlie Hu**: Previously involved in public chain projects like Polkadot, Polygon, and Tezos, playing a key role in expanding the influence of Tezos and Polygon.
The technical team once approached 100 people, currently stabilizing at about 60. Among them, the 30-40 person R&D team is divided into research groups (focusing on cutting-edge technologies for 6 months to 1 year) and engineering groups (leading core product implementations).
In the Series A financing of 2025, Bitlayer secured $11 million in investments from several well-known institutions. Notably, **the project became the first Bitcoin infrastructure to receive institutional investment from an ETF-licensed entity**.
Currently, Bitlayer stands out in the Bitcoin Layer 2 space: **The total locked asset value (TVL) on-chain has reached 32.78%**, ranking first in the sector.
### 03 Ecosystem Layout: From YBTC to $50 Million Incentive Program
The core strategy of Bitlayer's ecosystem construction is to **transform Bitcoin from a passive value storage into an actively productive asset**. Its core innovation YBTC (Yield-Bearing Bitcoin) is a reflection of this strategy.
YBTC represents the third-generation technological direction for wrapping BTC:
- Users mint while locking BTC through the BitVM bridge.
- Supports yield strategies such as staking, lending, and liquidity provision.
- Combining transaction income with protocol incentives, the overall yield has strong attractiveness.
“YBTC has significant advantages in security and yield-generating capability, providing stronger support for on-chain applications in the BTC ecosystem,” Kevin stated.
In terms of ecosystem expansion, Bitlayer has launched a **$50 million ‘Ready Player One’ incentive program**, encouraging EVM projects to build on its network. Currently, over 300 teams have registered, covering various fields including DeFi, NFT, gaming, and RWA.
More symbolically, Bitlayer issued the first official Ordinals NFT—Lucky Helmet. With a total of 5,000 NFTs, they not only have collectible value but also grant holders governance rights, airdrop expectations, and ecosystem project points bonuses.
### 04 Industry Turning Point: Institutional Entry and Value Logic Reconstruction
In Kevin He’s view, the BTC ecosystem is entering a critical turning point, with two driving factors that cannot be ignored:
**Changes in Bitcoin Holder Structure** are occurring. This bull market is driven by institutional investors, with more and more publicly traded companies and family offices shifting from passive observation to active participation, focusing on how to purchase, hold, and apply BTC.
**Maturity of Infrastructure** is another driving force. With the iteration of technologies like BitVM, the infrastructure bottleneck of the Bitcoin ecosystem is being broken, and more BTC and trading volume will migrate on-chain.
A more profound transformation lies in the shift of industry valuation logic: “The valuation logic of the crypto market is shifting from ‘market dream rate’ to ‘price-earnings ratio’,” Kevin pointed out.
In the past, the crypto ecosystem relied on vision-driven goals, but as infrastructure improves and performance bottlenecks are resolved, the market demands developers to clarify: **Who to serve, what value to create, and what is the profit model**.
“In the era of full-chain finance, developers should anchor their focus on user needs, especially in the context of Bitcoin yield scenarios,” Kevin emphasized. Bitlayer is deepening its collaboration with ETF issuers and treasury companies to drive institutional funds into the BTC ecosystem.
### 05 Challenges and Future: The Path to Native Verification
Despite the bright prospects, Bitlayer still faces multiple challenges:
**Technical implementation complexity** comes first. The **fund pool model** of the BitVM bridge may not meet users' needs for fund independence, and its usability also needs optimization—such as requiring a large number of alliance members to be online simultaneously and correctly execute pre-signed transactions.
**Market Education** is equally important. The Bitcoin community's acceptance of Layer 2 needs time to cultivate, while the pessimism in the Chinese community sharply contrasts with the enthusiasm in the European and American markets.
On the technical roadmap, Bitlayer is making steady progress:
- **Q3 2024 Mainnet V2**: Introduces Sequencer+DA model to enhance asset security.
- **Q2 2025 Mainnet V3**: BitVM technology fully implemented, truly compatible with various virtual machines.
- Ultimately realize **users can initiate OP challenges, and DLC-Attestors automatically execute forced withdrawals**.
“With the implementation of native verification, Bitlayer will become the first native Bitcoin Layer 2, marking a groundbreaking moment in Bitcoin's history.” This is how a managing partner at an investment firm commented.
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The Bitcoin network carries over a trillion dollars in capital but has long been in a 'dormant' state due to functional limitations. Bitlayer's TVL share has reached 32.78%, ranking first in the Bitcoin Layer 2 space. Hundreds of projects are building DeFi, NFT, and gaming applications on its network, signaling the awakening of the Bitcoin ecosystem.
“**The valuation logic of the crypto market is shifting from ‘market dream rate’ to ‘price-earnings ratio’**.” Kevin He’s observation points to the core of the industry transformation. As institutional funds flow into the Bitcoin ecosystem through ETFs, and YBTC allows static BTC to generate income, the trillion-dollar digital gold is gradually flowing along the channels built by Bitlayer. The awakening of dormant capital could become the main theme of the next decade in the crypto world.
