Bitlayer is trying to turn the 'potential of BitVM' into practical DeFi infrastructure for Bitcoin: using the BitVM bridge to mint YBTC (yield-bearing bridged BTC) and an EVM-compatible Bitcoin rollup to run dApps quickly, cheaply, but still tethered to the security of L1 Bitcoin through fraud-proof + hybrid ZK mechanisms.
⸻
1) Core architecture & technology
• Bitcoin rollup (V2): Bitlayer V2 positions as 'Bitcoin-native rollup'. L2 states are batched and settled on L1 Bitcoin; unlike Ethereum, the proof uses BitVM2 (not verifying ZK directly on-chain but 'assuming valid' unless contested). The challenge window is ~7 days for any party to dispute.
• Combining ZK + Fraud-proof: Prover creates ZK proof for state transition; if challenged, a 'dispute game' occurs to prove incorrect/correct. This method reduces settlement costs on Bitcoin.
• Sequencing & performance: The PoS validator layer handles transaction ordering, providing soft finality under 1 second, while hard finality is achieved when batches are confirmed on Bitcoin. There is a decentralized/rotating sequencer and parallel execution targeting throughput of 'tens of thousands of TPS'.
• Data Availability (DA): Allows Bitcoin-native DA or third-party (depending on needs/cost).
• Limitations stated in the whitepaper: Currently still assumes 'honest-majority' of validator/attesting committee for bridge & settlement – meaning there are still additional assumptions beyond Bitcoin's PoW (a point to note regarding the trust model).
2) BitVM bridge & asset flow
• BitVM bridge (mainnet): Aiming for trust-minimized. The front-and-reclaim process with a pre-signed transaction graph uses fraud proofs on L1 to optimistically verify bridge state transitions. This bridge is the only mechanism to mint YBTC on Bitlayer V2.
• Peg-in/peg-out:
• Peg-in: Users broadcast requests → committee responds with pre-signed TX → users self-verify → deposit BTC into multisig L1 → mint YBTC on L2.
• Peg-out: Burn YBTC on L2, the broker returns BTC L1 to users, then reclaims through a transaction with ZK proof.
• Deployment status: The BitVM bridge launched mainnet in July 2025 according to CoinDesk/Yahoo Finance.
3) YBTC & YBTC.B (how Bitlayer 'makes BTC yield-bearing')
• YBTC: 1:1 bridged BTC through BitVM Bridge (trust-minimized), designed for multi-chain (Ethereum, other L2s…) for use in DeFi (lending, DEX, staking). Backed 1:1 by BTC locked in BitVM-style contracts on Bitcoin; BTC can only be withdrawn after YBTC is burned, and the security model relies on attesters – only one honest individual is needed to prevent fraud.
• YBTC.B: The wrapped cross-chain version of 'Bitlayer Native BTC', used as a multi-chain liquidity standard (Bitlayer, EVM, and even non-EVM like Sui/Starknet). Can be deposited into Vault CeDeFi/DeFi to generate yield calculated in BTC (LP, lending, RWA…). The docs list the contract address on each chain.
• Note: This is yield from DeFi/CeDeFi strategies, not the base-layer yield of Bitcoin; risks depend on strategy, partners, and bridge/rollup infrastructure.
4) Execution environment & compatibility
• EVM-compatible: EVM dApps can be deployed directly; Bitlayer emphasizes 'Bitcoin-equivalent security' thanks to settlement + fraud-proof on L1.
• Experience: The whitepaper describes soft finality <1s, decentralized sequencing, parallel execution → UX close to popular EVM L2s, aiming for high throughput for DeFi/game.
5) Token & system economics (summary)
• BTR is used to stake for validators/sequencers in the PoS layer, potentially playing a role in incentivizing the ecosystem (subsidy/vault…). (According to docs/whitepaper.)
6) Brief comparison & positioning
• Compared to federated multisig-style sidechains, Bitlayer tries to reduce trust assumptions through BitVM + fraud-proof on L1. However, there are still committees/validators → not 'trustless like Bitcoin L1'; this is a practical intermediate step for scaling.
• Compared to other BTC L2s, the distinguishing feature of Bitlayer is the bridge + rollup with the same BitVM security model, EVM-compatibility, and multi-chain ambition for YBTC liquidity.
7) Key risks to pay attention to (straightforward)
1. The honest-majority assumption among attesters/validators still exists (as stated in the whitepaper).
2. Challenge risks: slow hard finality (≈7 days); if fraud is detected, it could lead to halt/social consensus to restore.
3. Strategic yield risks of YBTC/YBTC.B (CeDeFi/DeFi partners, smart contracts, liquidity).
4. Early stage: BitVM/Bitcoin rollup technology is still new → deployment risks, protocol updates.
8) How to 'try out' (practical suggestions)
• Bridge: Use BitVM Bridge (with small/large mode, 'Bridge' and 'Bridge Pro') to transfer BTC ⇄ YBTC. Read the limits, fees, and warnings carefully.
• Using YBTC: Lend/LP/stake or transfer to supported chains (YBTC/YBTC.B). Check the official contract address in docs before proceeding.
⸻
Quick conclusion
Bitlayer is assembling three pieces (BitVM bridge, yield-bearing YBTC, Bitcoin-rollup EVM) into a full-stack DeFi infrastructure for Bitcoin. The advantage is the 'Bitcoin-nested' security design and high-performance EVM experience; the consideration is the honest-majority assumption and the novelty of the technology. If you want to leverage BTC into DeFi but are wary of old wrapped/custodial models, Bitlayer is an approach worth trying – but should start small, checking contracts & strategic risks thoroughly.