What are the problems in the Bitcoin ecosystem?
1. Bitcoin has risen too quickly; the ecosystem hasn’t kept up
Bitcoin has soared and become synonymous with 'digital gold', which is a double-edged sword for ecosystem development. On one hand, it strengthens the narrative of 'store of value'; on the other hand, this narrative makes Bitcoin no longer 'usable', but rather 'to be watched'. L2 or other related tokens, no one is willing to exchange for Bitcoin because the risks are too high, and the price fluctuations might cause people to miss out on wealth.
2. VC has hijacked the pace of ecosystem development
You mentioned that VCs are throwing money around madly, but I think this has led the Bitcoin ecosystem into a 'high valuation trap'. As soon as a project starts, it has a valuation of $300 million, which means that the token issuance must bear tremendous expectations, making it impossible to outperform Bitcoin's price increase in the short term. The logic of capital and the logic of Bitcoin begin to hedge against each other.
3. The initial benefits of inscriptions have disappeared
ORDI and SATS initially had low liquidity, relying on the 'digital collectibles' approach with inscriptions to trigger a wave of FOMO on DEX. However, as prices soared, this approach became less attractive. Why? Because high prices mean that new capital inflows require a higher threshold, while Bitcoin users themselves tend to be more conservative and lack the speculative ecosystem support seen in Ethereum.
What are the solutions and future directions?
1. Transforming 'institutional use cases' and repositioning the Bitcoin ecosystem
The scarcity of Bitcoin makes it 'the asset loved by whales', which is actually a potential advantage. If projects in the BTC ecosystem can shift their focus from 'individual users' to 'institutional users', such as on-chain funds or on-chain strategy trading, this path may align better with Bitcoin's character. Just like you mentioned Solv, or the on-chain version of MSTR, they have captured the appetites of institutions.
2. Embrace the Ethereum and Solana ecosystems, and pursue cross-chain integration
The liquidity of the Bitcoin ecosystem is not as good as Ethereum, and it won't catch up in the short term, but that doesn't mean it can't leverage its strengths. For example, deeper cross-chain collaborations can be made, integrating BTC ecosystem projects into Ethereum or Solana's L2, allowing projects to enhance activity through a multi-chain model. Funds are liquid; there's no need to cling to Bitcoin itself.
3. Properly packaging the story of token issuance
Looking ahead, Q1 next year will be a significant test for Bitcoin ecosystem projects in terms of token issuance. If these projects cannot present a clear narrative—such as growth data for ecosystem funds or improvement in on-chain activity—they are likely to be quickly eliminated by the market. But if the narrative succeeds, these L2 projects might regain the initiative in the capital market.
The potential of the Bitcoin ecosystem is actually huge; it's just that its pace has been slowed by the narrative of 'digital gold'. Finding a balance between storing value and functional expansion, and instilling confidence in both institutions and retail investors, is key to determining whether it can truly thrive in the future.
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