Since the launch of Bitcoin in 2008, its currency BTC has revolutionized the world of digital finance, being the first decentralized cryptocurrency based on blockchain technology. However, despite its established status, Bitcoin faces significant challenges regarding transaction speed and high fees, especially with its increasing use and the spread of applications built on it such as BRC-20 tokens and Ordinals. To address these challenges, what is known as Bitcoin Layer 2 has emerged — innovative technologies aimed at enhancing the capabilities of the Bitcoin network without compromising its security.
In this article, we will explore the concept of Bitcoin's Layer 2, how it works, its main benefits, and the most important leading projects to know in 2025.
What is Bitcoin's Layer 2?
Bitcoin Layer 2 is a technology or network built on top of the main Bitcoin blockchain (Layer 1), aimed at improving network efficiency by processing transactions off the main chain and then recording the results later on the original blockchain.
These layers aim to alleviate pressure on the Bitcoin network, which suffers from slow transaction confirmations and high fees during peak times.
How do Bitcoin Layer 2s work?
Bitcoin Layer 2s rely on different principles such as:
Payment Channels: Where a certain amount of Bitcoin is reserved between two parties off-chain, and transactions are exchanged directly between them, then the channel is closed later, and the final result is recorded on the blockchain.
Sidechains: These are separate chains linked to Bitcoin via a bidirectional transfer mechanism, using Bitcoin as a primary asset or issuing custom tokens, and providing additional features such as smart contracts.
Rollups: A technique that aggregates a large number of transactions off-chain, providing a single encrypted proof that is later recorded on the Bitcoin network.
The primary condition is that these layers derive their security from the Bitcoin blockchain, ensuring trust and security in transactions.
Benefits of Bitcoin Layer 2s
High scalability: By processing thousands of transactions off-chain.
Lower fees: Allowing the use of Bitcoin for daily and fractional payments.
Introducing smart contracts: Despite the limited programming language in Bitcoin, some layers allow for the execution of decentralized applications.
Opening the door for decentralized finance (DeFi): By providing greater liquidity and broader uses for Bitcoin.
The most important Bitcoin Layer 2 projects in 2025
1. Lightning Project
The Lightning Network is the most famous Bitcoin Layer 2 solution, relying on financial channels that allow for instant transfers at almost no cost. It has become a practical option for paying with Bitcoin in cafes, stores, and online platforms.
2. Stacks Project
The Stacks project enables the building of decentralized applications and smart contracts on the Bitcoin network using a programming language called Clarity. What distinguishes Stacks is that it maintains Bitcoin's security while offering features similar to Ethereum such as DeFi and NFTs.
3. Merlin Chain Project
Merlin Chain is a relatively new project that enhances Bitcoin's capabilities by introducing modern technologies such as Rollups and zk-proofs, allowing for the development of scalable decentralized applications on Bitcoin without sacrificing security.
4. Rootstock Infrastructure Framework Project abbreviated as $RIF
RIF is an infrastructure framework developed on the Rootstock network, which is a sidechain compatible with smart contracts on Bitcoin. It offers services such as file storage, connectivity, decentralized finance, and decentralized digital identities.
5. Nervos Network Project
Nervos CKB is an open programmable network that provides a multi-layered working environment.
uses $CKB as an encrypted storage layer and can be linked to Bitcoin via bridges, giving it the ability to merge the security and liquidity of Bitcoin with programming flexibility.
Summary:
Bitcoin Layer 2s have become a fundamental element in the future of this digital currency, providing innovative solutions to overcome technical constraints and expand use cases. Projects like Lightning, Stacks, and RIF are expected to play a pivotal role in driving mass adoption of Bitcoin in 2025.
