1. Previous life of Bitcoin Layer2
In fact, the controversy of Bitcoin Layer2 It is not something that exists now. It has been discussed from 2015 to now. There used to be fierce disputes in the BTC community.
The upper limit of the BTC blockchain capacity is 1M. This 1MB block greatly limits the number of transactions that can be accommodated in each block. These quarrels gradually formed two factions: expansionists and core (conservatives).
Core believes that a side chain should be developed outside the main chain. The technical solution is to build a second-layer network protocol (such as Lightning Network). This is This led to the emergence of various alliance chains, private chains, cross-chains, etc.
The current status quo is that BTC continues to operate in small blocks. Since it is a small block, there is a ceiling for the total number of transactions for miners, and there is also a ceiling for the income from each transaction. , for example, a user’s acceptable range for a transaction is a few hundred Gas. No matter how high the price is, users will choose to trade off-chain or on alternatives such as Bitcoin Layer2, which will lead to less income for miners in Gas.
The expansionists believe that the 1M block capacity is too small, and there is a ceiling for gas fee income. When the gas fee is too high, users will go to the Lightning Network to wait for Bitcoin Layer 2 to come up. transactions, resulting in reduced miner income.
This is not possible, the capacity must be expanded, and the block capacity must be expanded to 8MB, 32MB or even higher capacity, so that users can all trade on the main network, so that miners can To make money.
So the biggest fork of BTC came out, and the first fork was BCH, which led to the first wave of popularity after the ICO in 2017. Various forked coins of BTC were flying all over the sky. Many people became rich overnight, and even more people lost all their forked coins overnight. Looking back on that year, I also invested bad Bitcoins in various forked coins, and ended up with nothing!
The expansion community is not so united, and internal quarrels continue. On November 16, 2019, BCH hard forked into BCH SV and BCH ABC.
To sum up:
Bitcoin aims to be on-chain To expand the network, its community members believe that Bitcoin Cash will continue the vision of "peer-to-peer electronic cash" proposed by Satoshi Nakamoto.
The Bitcoin project initiated by Satoshi Nakamoto, under the leadership of the Core development team, embarked on payment channels (such as Lightning Network) and other off-chain ( Offchain) expansion path, that is, through Segregated Witness (Segwit, 2017) and Lightning Network (Lightning Network) to achieve off-chain expansion.
2. Development of Bitcoin Layer2
There were many Bitcoin Layer2s in the early days, such as Lightning Network Network), Rootstock, Stacks, Liquid Network…
We will not explore today The market performance of classical Bitcoin Layer2 technology has been mediocre because of many relatively strong technical concepts (such as EOS).
As for the second-layer protocol, there is an illustration in a book I am preparing to publish in 2018. This illustration shows that around 2018, BTC, The second-layer concept of ETH is the Lightning Network and the Thunder Network...
After 2019 The prosperous development of the Ethereum ecosystem (after removing the ICO) has led to the emergence of many Ethereum Layer2 and the huge wealth effects brought by NFT in the following years. Some people in the BTC community seem to realize that the history of Ethereum can also be repeated in Bitcoin. .
So in January 2023, the NFT protocol Ordinals on Bitcoin was born. On March 8, Yuga Labs auctioned 288 BTC nft on Ordinals. NFT auctions totaled $16.5 million.
This Ordinals protocol released by Casey Rodarmor in January 2023, An idea was put forward:
Can we arrange these "Sats" in a certain order, assign them an ordinal number between 0 and 2,100,000,000,000,000, and then , connect them to other information: pictures, text, videos or even a string of code. Each Satoshi thus becomes unique and irreplaceable.
This is equivalent to giving Bitcoin the native ability to create NFTs.
Doesn’t it sound amazing? In fact, this protocol relies heavily on Segwit in 2017 and Taproot upgrades in 2021.
Taproot upgrade brings new levels of privacy, security, and scalability to the Bitcoin network. While it has always been possible to attach data to Bitcoin through technical means, you could basically only pump 4Mbs of data, and no more.
Ordinal NFT is based on Ordinal theory, but the current Ordinal NFT can also be realized Lai's technical updates to the Bitcoin protocol in 2017 and 2021 for Segregated Witness (SegWit) and Taproot.
It is important to note that these updates were not developed with the purpose of enabling these new types of NFTs.
However, since both updates have increased the amount of data stored in one block - meaning there is now room to store images, videos, and even games - — Inadvertently made the deployment of Ordinal NFT possible.
3. Analysis of several new Bitcoin Layer2 on the market
With the popularity of Inscription , many Bitcoin Layer2 related projects have been released. Today we will not comment on the Bitcoin Layer2 ecosystem that has been released. We will select a few from several projects this week to analyze.
This article does not make any investment recommendations, it is just an opinion on new projects. Since new projects are very risky, please do your own research. The project may run away after I send it out, so please be prepared to go back to zero at any time.
Since new projects require the participation of many users, before each project is implemented, the technological innovations mentioned in the project are all available in white papers or PPTs. If you want to attract more Users pay attention to marketing, so we write the next content from the perspective of strong marketing and weak technology.
(1) BL2 (@BL2_official)
This week at Turtsat (Little Turtle) The platform issued Launch and gained great popularity through whitelist gifting.
Technical aspect:
BL2 is built on the VM universal protocol and BTC security layer , aims to build a dynamic BTC Layer 2 ecosystem by creating dApps and smart contract platforms.
The project will be compatible with EVM, introduce Ethereum ecological assets through cross-chain bridge applications, and fully integrate the BTC ecology with the ETH ecology.
Personal opinion:
BL2 is a basic protocol and plans to make one compatible with EVM The BTC smart contract platform will take some time to develop technically. The project is not open source yet, and there is no financing information yet. Currently, it is just preparing to issue its own token. The marketing is relatively good, but there are certain market risks.
(2) B² Network (@BsquaredNetwork)
B² Network is preparing to build a Rollup based on Bitcoin's zero-knowledge proof and compatible with EVM, which is a blockchain platform.
In terms of marketing:
B² Network is also doing a good job, but it is not so eager for quick success. , I sent a "Christmas NFT" to test the waters, and the effect was good. Currently, instead of using IDO to attract users, we have developed a task system and are preparing to launch tokens through airdrops. The project also launched a million-Grant plan to attract more Dapps to settle in.
Personal opinion:
B² Network follows the Ethereum Layer2 approach in terms of operations , while using airdrops to attract users, attracting project parties to settle in, and then financing (it seems that financing has already been obtained).
(3) ZTC Global (@ZTCGlobal)
Technically:
ZTC Global utilizes various technology protocols such as BRC-20/BRC-Y and BRC -420, etc., to develop a Bitcoin Layer2 platform without low gas fees. The platform plans to develop two games and a SocialFi first to host users, while attracting other Dapps to join the development and complete the ecological deployment.
Current progress: ZTC has currently issued a set of inscriptions (nearly 80U each), and nearly 70% of them have been cast. The official tweet shows: ZTC will end minting at 24:00 UTC-8 on January 7, and then develop secondary transactions. After the inscription MINT is completed, there is no need to pay gas fees for placing orders and engraving.
Inscription purpose:
According to the official white paper, inscription holders will receive tokens, NFTs, and WL airdrops before the game is launched.
Marketing:
ZTC Global is not the kind of project party that is very good at marketing, so The popularity is not very high, and the mint period is too long. This leads to peers taking advantage of the situation and attacking the weakest points of the project, causing the market to present two different views on the project, that is, mixed praise and criticism.
Personal opinion:
ZTC is still very organized, and the project team has destroyed 70% of tokens. The currency will end mint tomorrow and then be listed for trading. However, the specific development of the project in the later period mainly depends on the progress of the project's technical development. If you hold the project party's inscription, you can decide whether to stay or leave it based on the situation after the inscription is opened for trading.
4. Full text summary
Bitcoin Layer2 is not a new concept.
Many second-layer technologies have appeared in the past 10 years, and many technologies have achieved great success. It’s just that those protocols were top-down projects before the emergence of the Ordinals protocol.
19 years later, the Bitcoin community saw the great success of the Ethereum ecosystem. The community believed that the narrative on Ethereum could be repeated on BTC. At that time, It’s some exploration and trial phase.
The emergence of the Ordinals protocol makes the idea of Bitcoin Layer 2 possible. Therefore, it has attracted the attention of community developers, entrepreneurs, VCs, and institutions.
More hot money will follow, bringing a more prosperous ecological market, which will have a great deposit effect on the development of BTC and will subsequently promote A high BTC market value may revitalize the L2 of BTC.
There are many new Bitcoin Layer2 projects now. I am more optimistic about this track, so I have been studying this direction. Currently, I only include 3 of the more popular projects this week. Conduct personal point of view analysis on each project.
The project must have certain risks, so the analysis does not represent investment advice. You are welcome to correct us or give us some other BTC L2 concept projects in the message area. We welcome comminicate!
