When it comes to Layer 2 networks on public blockchains, perhaps the most actively engaged are those on Ethereum’s Layer 2 (abbreviated as Layer2). Projects such as Arbitrum, Optimism, zkSync, and Stark have successively released tokens, causing mixed reactions. However, Layer 2 is not exclusive to the Ethereum ecosystem; Bitcoin’s Layer 2 shows even more potential for meticulous cultivation.
**Table of Contents**
1. **Why Layer2 is Needed?**
2. **The Development Path of Bitcoin Layer2**
3. **Overview of Cutting-edge Bitcoin Layer2 Projects**
– Merlin Chain
– B2 Network
– AILayer
– Bitlayer
– BEVM
4. **Conclusion**
**Why Layer2 is Needed?**
Since the advent of blockchain, whether in the early Bitcoin network or the Ethereum network, despite leveraging advantages such as peer-to-peer payment systems and smart contracts, the issues of slow transaction speeds and high miner gas fees have been prominent, revealing the shortcomings of Layer1.
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To address and potentially resolve these issues inherent to Layer1, technologies and projects related to Layer2 have emerged. In essence, Layer2 is an independent blockchain network built on top of Layer1, aimed at offloading most transactions from Layer1 to reduce pressure and expand capacity.
During the early stages of blockchain development, decentralization, security, and scalability formed an impossible trinity. While this trinity remains unbroken, complementary Layer1 and Layer2 solutions enable decentralization, security, and scalability within different layers of the same network.
**The Development Path of Bitcoin Layer2**
Firstly, let’s consider why Bitcoin Layer2 is gaining renewed attention in 2024. While Ethereum has thrived with smart contract issuance and DeFi, the Bitcoin ecosystem has seen relative quiet. Starting from 2023, protocols like BRC20, Atomical, and Runes have emerged, along with popular tokens like ORDI and SATS, and well-known NFTs such as Bitcoin Frog and Runestone.
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Behind each phenomenon-level token/NFT lies a significant Gas War. Over time, assets on Bitcoin have indeed increased. However, due to the lack of smart contract support, the Bitcoin network cannot expand into more meaningful application scenarios beyond tokens or NFTs.
Thus, developers may feel an urgent need in 2023 and 2024 to construct infrastructure and networks for Bitcoin Layer2. As the saying goes, “Good meals do not fear late arrival”; the construction of Bitcoin Layer2 began long ago. The following section will review its development path.
In December 2015, Bitcoin Core developers, Ciphrecx CTO Eric Lombrozo, Bitcoin enthusiast Johnson Lau, and BlockStream co-founder Pieter Wuille jointly proposed Segregated Witness (SegWit), a Bitcoin scaling improvement proposal (BIP141). Implemented in 2017, SegWit introduced a soft fork to the Bitcoin network, significantly increasing block capacity.
In January 2018, Bitcoin Core developer Greg Maxwell proposed Taproot. Following SegWit, Taproot was a major upgrade aimed at enhancing privacy, simplifying transaction verification, improving efficiency, and enabling more complex smart contract capabilities.
These two critical upgrades paved the way for Bitcoin Layer2, with mainstream solutions primarily focusing on State Channels, Sidechains, Rollups, and PoS extensions.
**Overview of Cutting-edge Bitcoin Layer2 Projects**
**Merlin Chain**
Merlin Chain, developed by the team behind Bitmap Tech (formerly Recursiverse), is a Bitcoin Layer 2 solution that leverages Bitcoin’s unique properties to unleash its untapped potential. Technically, Merlin Chain integrates zero-knowledge proofs, decentralized oracles, and on-chain BTC anti-fraud modules to support native Bitcoin assets, users, and protocols.
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Simultaneously, the introduction of $MERL tokens provides a mechanism for community members to participate directly in network governance and development, while also offering economic incentives to promote user and developer engagement. However, following the recent token release by Merlin Chain, delayed BTC unstaking operations led to significant losses for some users. Additionally, a decrease in active users and a community hacking incident have shaken user confidence, resulting in a TVL drop to $2.4 billion.
[Official Website](https://merlinchain.io/)
**B2 Network**
B2 Network is a leading Layer 2 project on BTC, also an EVM-compatible ZK Rollup. Rollup data and ZK proof validation commitments are recorded on the BTC network and confirmed through a challenge-response mechanism. The project adopts a modular design architecture, including the Rollup layer and the Data Availability (DA) layer, known as B2 Hub. Cleverly, zk Rollup dramatically reduces transaction costs and combines fraud-proof-like methods to allow zk commitment proofs to be challenged by users, thereby addressing the limitation of BTC layer one’s inability to verify contracts.
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It ensures security through Babylon’s pledging and timestamp protocols, effectively preventing remote attacks. Recently, it announced a collaboration with Polygon Labs to create the first BTC use case integrated with Polygon CDK, allowing developers in the future to choose the “Polygon CDK + B2 Hub” combination to launch their BTC rollup.
[Official Website](https://www.bsquared.network/)
**AILayer**
AILayer is the first L2 project on Bitcoin to incorporate AI concepts, officially defined as a BTC Layer 2 network that adopts Web 3.0 + AI applications and supports Rune protocols. Under the aura of AI, AILayer is the first BTC Layer 2 to support innovative assets like runes and narratives, with flexible staking funds that can be pledged and withdrawn at any time, facilitating user operations. The latest official website data shows nearly a million on-chain users and a TVL exceeding $700 million.
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Among them, tokens pledged to AILayer can become PoS verification nodes. Many PoS verification nodes will be responsible for maintaining the stable operation and normal block production of the Layer 2 network, thereby earning continuous block rewards. Meanwhile, in the AI domain, AILayer provides a decentralized AI infrastructure, offering developers and enterprises technical tools and resources for building and deploying decentralized AI applications.
In terms of strategic cooperation, AILayer has signed a strategic cooperation agreement with the Digital Development Department of Kyrgyzstan, becoming the world’s third Web 3.0 project to sign a contract with a Central Asian national government after Binance and Tether.
Regarding ecosystem development, over 100 ecosystem applications and developers have joined AILayer, with AI Odyssey activities scheduled to launch on the main network and developer incentive programs aimed at ecosystem construction soon to follow. Recently, AILayer collaborated with BitFi to launch its first joint airdrop campaign, offering participants the chance to obtain exclusive BitFi OG passes and multiple exclusive incentives such as AILayer TVL points. Furthermore, AILayer has now integrated with the OKX Web3 wallet, allowing users to stake and earn points on AILayer via the OKX Web3 wallet.
[Official Website](https://AILayer.xyz/)
**Bitlayer**
Bitlayer is the first Bitcoin Layer 2 built on the BitVM paradigm, providing secure scalability equivalent to Bitcoin and Turing-complete, aimed at bringing diversity of assets and stimulating innovation to the Bitcoin ecosystem to offer a faster, safer, and more flexible user experience.
Compared to other Bitcoin Layer 2 projects, Bitlayer’s main technical innovation lies in its use of the latest BitVM computing paradigm and OP-DLC bridge, establishing a dual-channel bidirectional locked asset bridge to achieve security equal to Bitcoin’s Layer 1.
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The latest official website data shows that Bitlayer’s current on-chain total lock-up volume (TVL) has exceeded $500 million. Nearly a hundred ecosystem projects have been deployed on Bitlayer, with over a million active on-chain transactions, making it the fastest-growing Bitcoin Layer 2 in terms of ecosystem speed. In terms of market operation activities, Bitlayer has held two head mining festivals, providing users with multiple project token airdrop rewards and more opportunities to obtain lucrative rewards.
[Official Website](https://www.bitlayer.org/)
**BEVM**
BEVM is a fully decentralized BTC Layer 2 project using BTC as GAS and compatible with EVM, with the core goal of expanding Bitcoin’s smart contract scenarios to surpass the limitations of Bitcoin blockchain non-Turing complete and lack of smart contract support, enabling BTC to build decentralized applications on BEVM Layer 2 with BTC as the native GAS.
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Based on the Schnorr signatures and Mast contracts brought by the Taproot upgrade, BEVM achieves decentralized BTC cross-chain with over 1000+ BTC light nodes, enabling BTC to freely circulate between L1 and L2 without trust. Meanwhile, the BEVM network uses BTC as GAS and is compatible with EVM. Recently, to better connect the Ethereum and Bitcoin ecosystems, the BEVM team is building an OP-Rollup-compatible relay chain based on OPtimism’s OP Stack, which will serve as a fully decentralized intermediary layer, introducing mainstream assets on Ethereum (WBTC/ETH/USDC/USDT, etc.) into the BEVM network.
[Official Website](https://www.bevm.io/)
**Conclusion**
From the above-represented projects, Bitcoin Layer 2 networks appear heterogeneous. While many adopt mature Layer 2 technologies like EVM compatibility, Rollups, and cross-chain, each project focuses differently. For example, BEVM emphasizes cross-chain experiences, Merlin Chain pioneers a new staking paradigm, and AILayer seizes and integrates with AI, bringing more AI application solutions.
The initial purpose of Bitcoin Layer 2 was to indirectly break the impossible triangle. However, catalyzed by various events and changing times, it has been endowed with greater significance, attracting more attention to jointly build a prosperous Bitcoin ecosystem akin to Ethereum Layer 2. Will Bitcoin Layer 2 experience a summer like Ethereum Layer 2? Perhaps