I just recently learned that the valuations of several Bitcoin ecosystem projects that the fund had previously invested in were all between $100 million and $300 million. If you don’t ask, no one will mention this, which is really speechless.

But looking back, during the FOMO period in the first half of the year, everyone felt that the Bitcoin ecosystem would be the trend and the future, just like Ethereum, and everything that was achieved on Ethereum would be achieved on Bitcoin.

In fact, the biggest problem with the Bitcoin ecosystem is that Bitcoin has risen too fast. In this cycle, there is basically no BTC L2 or related tokens that have outperformed Bitcoin. Moreover, the general valuations of these unissued projects are above US$300 million. Binance can say goodbye this time.

You might ask, what about ORDI and SATS at the beginning of the year? The answer is that initially, their liquidity was low, and the inherent properties of inscriptions make them comparable to low-circulation small-cap NFTs being valued in DEX.

In the early stages of the market, even small amounts of funds can have a dramatic impact on their prices. However, as the price of a single coin rises higher and even the universe gets involved, it will require a larger capital volume to keep up with subsequent increases.

But this capital is currently mainly on Ethereum and Solana, where there are many speculative institutions and long-term investors.

Unfortunately, as Bitcoin prices rise, this seems to be a bad thing for on-chain prosperity because it reduces people’s willingness to exchange it for other coins.

Currently, the outside world is packaging Bitcoin as digital gold, but very few institutions package Ethereum as digital silver because the former's scarcity value is widely discussed, while the latter resembles a programming currency or future world circulating asset.

So, looking back at this wave of market narrative, you will find that the external interpretation and impression of Bitcoin are all directed towards value storage, and there is basically no mention of its potential in on-chain L2 use cases.

Simply put, this description of direction gives people a deeply ingrained impression that once you buy BTC, you must store it and not touch it; if you do, it’s over.

Solv's on-chain micro-strategy is indeed a way to position itself as a fund company, targeting whales and institutions, so they can talk about the on-chain version of MSTR. This is actually quite appealing for large holders.

However, as the issuance time approaches, this narrative may waver at the moment the coin price appears, because the output ratio will then be easy to calculate.

Bouncebit has completely followed Binance to do CeDefi. After all, the founder of the PayPal investment back then was very optimistic, and it’s indeed a pity that it collapsed. So they hope to replicate an on-chain and controllable version; this path might be feasible, but what about other ecological L2s?

All institutions are tied to the vehicle.

This autumn, I was fortunate to have discussions in Tokyo with founders of BTC L2 teams with good financing backgrounds. They hope to gain some Bitcoin funding support from major players in Japan, as Mentougou is compensating everyone, which is valued at around 9.2 billion according to that Bitcoin price.

But I retorted: what about the Bitcoin OGs or miners in the Chinese-speaking community? The response from everyone was surprisingly unanimous: it’s hard to find, and those that can be found seem to have been snatched by big players like Babylon and Solv, or they require signing additional terms, such as extra TVL annual commitments, at rates above 25%.

I was shocked by this, because in the first half of the year, when not many people were doing BTC L2, these commitments weren’t this high... I didn’t expect them to be exceptionally high now.

Currently, there are about 20 BTC L2s or sidechains in the market that have obtained financing, and this is just what I know this year, as there are many that have not been disclosed or have already received support from investors and are on their way.

Such a large amount of infrastructure is a big problem, because next door, Ethereum has L1 infrastructure and active funds, which arose first and then developed L2. But it seems that this wave of Bitcoin ecosystem has been somewhat sluggish in L1 and inscriptions, resulting in L2s being even more numerous than those of neighboring Ethereum.

Currently, pushing the construction of this wave of Bitcoin ecosystem is mainly VCs. Everyone is taking LP's money and throwing it at these projects, which in turn need to maintain high technology costs, spending money to buy Bitcoin for testing, and many costs have already been incurred.

With the establishment of the altcoin season, many institutions seem to be unable to wait any longer. This wave of market will be a major test for these projects regarding issuing coins, focusing on Q1 of next year. After Q1, the usual post-investment support may turn into rights protection.

After all, the market is here, and no one wants to wait; no one wants to be tied to the vehicle.

The above is my perspective and insights on this matter. Due to some subjective factors, I hope it won't offend anyone and that the content is helpful to you.
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