übersetze den Title auf deutsch After the Summer of Inscriptions, the Bitcoin Ecosystem Blooms

1. Current Background of the Bitcoin Ecosystem

The Bitcoin network, with its exceptional stability and security, has not only endowed BTC with lasting value but also accumulated impressive capital. The approval of the BTC spot ETF has led to a massive influx of traditional funds, pushing its market capitalization past $1.3 trillion. However, people often overlook the distinction between Bitcoin as a network and BTC as a digital asset. To unlock Bitcoin’s full potential, it’s crucial to leverage the network’s functionality, transforming Bitcoin from a mere store of value into a core infrastructure of the Bitcoin economy. In December 2022, the emergence of the Ordinals protocol brought an unexpected innovation to the Bitcoin ecosystem. The explosive popularity of “Inscriptions” not only drew public and developer attention to the Bitcoin ecosystem but also highlighted the potential to unleash Bitcoin’s enormous capabilities. Within just 12 months, the market capitalization of Bitcoin inscription tokens based on Ordinals exceeded $3.5 billion, demonstrating remarkable growth. Even today, the daily NFT trading volume on the Bitcoin network surpasses that of Solana.

However, the market’s high expectations for the Bitcoin ecosystem have also led to subsequent setbacks. The rapid cooling of the inscription craze, the underwhelming performance of the anticipated “Runes” project, and the dramatic fall in the value of the Merlin project’s token from its TVL peak have all contributed to a sense of uncertainty about the future of the Bitcoin ecosystem. With the rise of Memecoins, market attention has significantly shifted. This volatility in the Bitcoin ecosystem is akin to the “high-temperature annealing” process in semiconductor technology, which aims to release internal stress and increase material ductility and toughness. We believe this principle also applies to the development of the Bitcoin ecosystem. After the FOMO (fear of missing out) effect fades, which projects continue to build actively? What are the development directions and trends for the Bitcoin ecosystem? We will delve into the development trends and representative projects within the Bitcoin ecosystem, analyzing how they are addressing challenges and their roles within the ecosystem.

2. Introduction to BTC Layer

As the first successful cryptocurrency, Bitcoin’s network design primarily focused on security and decentralization, which also led to inherent limitations in programmability and transaction speed. Although upgrades like SegWit and Taproot have somewhat improved these issues, the Ordinals asset issuance craze has clearly exposed the network’s limitations: severe congestion, rising gas fees, and the urgent need for more robust smart contract functionalities. With growing demand for scalability and additional features beyond Bitcoin’s original capabilities, the Bitcoin ecosystem has begun exploring various scaling solutions. Most of these solutions borrow from Ethereum’s scalability experience, using modular layered architectures, giving rise to the concept of “Bitcoin Layer.” This architecture includes L2 layers (such as Lightning Network, sidechains, and Rollups) aimed at increasing transaction throughput by processing transactions off-chain while maintaining secure connections to the main chain; settlement layers, further optimizing performance and functionality for specific applications; data layers, providing data availability and storage solutions; and application layers, developing various decentralized applications based on the underlying infrastructure. This multi-layer architecture enhances programmability, making more complex smart contracts possible; significantly improves transaction processing speed; improves data availability; and expands the ecosystem’s potential. In the competitive Bitcoin Layer2 space, most use the EVM technology stack and cross-chain bridges to address Bitcoin’s scalability issues. While this approach can quickly build ecosystems in the short term, these solutions lack a strong binding relationship with the Bitcoin main chain and are highly dependent on cross-chain bridges, increasing potential security risks. Moreover, using Ethereum’s account model and EVM to scale Bitcoin’s UTXO-based system somewhat contradicts the “Bitcoin Native” philosophy. There are roughly three technical routes for L2: Rollup systems: These solutions focus heavily on Layer1’s verifiability, extending Layer1’s security to Layer2; Sidechain systems: These solutions benefit from relatively mature technology and ecosystems; Client validation: These solutions emphasize utilizing Layer1’s native data availability (DA). Rollup systems ensure security while managing user trust costs through various modular designs. In contrast, sidechain systems, despite their technological maturity, may face more challenges in inheriting Layer1 security. Client validation solutions, while largely ensuring all ledger records occur on Layer1, require users to maintain high trust in the client, a trust cost that is inherent and difficult to eliminate completely.

3. Bitcoin Ecosystem Rollup

The emergence of Ordinals has transformed the Bitcoin network into a highly secure database capable of storing various data, including Rollup proof data. However, merely uploading Rollup proof data to the BTC network is not enough to ensure the validity and correctness of Rollup’s internal transactions. The core issue facing BTC Rollups is verification. Most BTC Rollups may choose the sovereign Rollup (client validation) approach, where validators sync all Rollup data off-chain and conduct checks themselves. This method’s limitation is its inability to fully utilize Bitcoin’s network’s most powerful feature—POW consensus across hundreds of thousands of nodes to secure the Rollup. The ideal state is for the BTC network to actively verify Rollup proofs, similar to Ethereum’s approach, and have the capability to reject invalid block data. Additionally, there must be a secure escape route for extracting assets from Rollups to the BTC network in extreme cases (e.g., long-term downtime of Rollup nodes or sorters or refusal to accept transactions).

1）. Bitlayer

Bitlayer is the first Bitcoin Layer 2 network based on the BitVM solution, aiming to provide the same security as Bitcoin while supporting Turing-complete computing capabilities. The project’s core technological innovation lies in using the latest BitVM computing paradigm and OP-DLC bridge to address three major Layer 2 challenges: trustless two-way anchoring: combining OP-DLC with the BitVM bridge for trustless two-way asset flow between the Bitcoin main chain and Bitlayer; first-layer verification: inheriting Bitcoin’s security through BitVM; Turing completeness: supporting various virtual machines and providing a 100% Ethereum Virtual Machine (EVM)-compatible environment. Bitlayer launched a $50 million ecosystem incentive program on March 29 this year to attract early builders and contributors. Several native projects have joined the ecosystem, including DEX, permissionless lending protocols, and MEME. Recently, Bitlayer announced completing a $11 million Series A funding round led by institutions such as Franklin Templeton, becoming the first Bitcoin infrastructure project to receive institutional investment with ETF licensing. The project has launched a user center with three modules: beginner tasks, advanced tasks, and daily tasks. Users can earn Bitlayer points by completing tasks and receive exclusive racing equipment as racers. In the future, Bitlayer plans to allocate $BTR airdrops based on user points and racing equipment levels. Bitlayer’s innovative technology and proactive ecosystem building strategy make it a noteworthy Bitcoin Layer 2 project.

2）. B² Network

B² Network is an EVM-compatible Layer2 on Bitcoin that offers an off-chain trading platform supporting Turing-complete smart contracts, improving transaction efficiency and reducing costs. By integrating Zero-Knowledge Proof (ZKP) technology with Bitcoin’s Taproot, B² Network enhances transaction privacy and security. The network aims to transform Bitcoin into a dynamic platform for innovative applications like DeFi and NFTs, applicable to both traditional Bitcoin assets and emerging Bitcoin derivatives.

B² Network’s technical architecture includes two layers:

1. Rollup Layer:Utilizes ZK-Rollup and zkEVM solutions to execute user transactions and produce relevant proofs.
2. Data Availability (DA) Layer: Includes distributed storage, B² nodes, and the Bitcoin network, responsible for permanently storing Rollup data, validating zero-knowledge proofs, and executing final confirmations on Bitcoin.

Distributed storage is a key component of B² Network, serving as a repository for ZK-Rollup user transactions and proofs. It enhances network security, reduces single points of failure, and ensures data immutability. Currently, B² Buzz is in its third phase, launching Buzz Farming and partnering with prominent BTCFi projects such as Babylon, Unirouter, Lombard, and Bedrock to offer diversified yield strategies.

Buzz Farming rewards include:
– Daily acquisition of 14,580 B² tokens from the B² network.
– Rewards from BTCFi partner chains and key partners, including Babylon, Aptos, Bedrock, and Lombard.

As a native yield aggregator of B² Network, Buzz Farming will continually offer users additional returns and opportunities, reflecting the project’s innovation in the DeFi space.

3）. QED

QED Protocol is a ZK rollup on BTC, running on zkevm. Unlike other zk rollups, QED does not generate zk proofs for all Rollup transactions but only for withdrawal transactions from Rollup to BTC L1. It verifies these proofs on BTC L1 by composing scripts into logical circuits. Each user’s public key acts as a custom ZK circuit, providing “smart signature” functionality similar to smart contracts. Similar to BitVM, QED Protocol verifies ZK proofs for withdrawal transactions by composing scripts into logical circuits on BTC L1, which includes 1,000 UTXOs, though this direct verification is costly. Decentralized applications built on QED can locally prove transactions, offering users infinite computations with fixed gas fees. Founder Carter Feldman stated that QED can handle over 150,000 transactions per second and plans to launch a testnet in the next 3-4 months, with the mainnet going live after community consensus and introducing native token incentives for high-performance infrastructure.

QED has completed $6 million in seed funding from Blockchain Capital as the sole investor, with a valuation of at least $100 million. It previously secured $3.25 million in pre-seed and $1.35 million in angel funding. The ZK technology used by QED is STARK, making it a pioneering project in the StarkwareBTC partnership, with early investment and support from Starkware.

4）. GOAT Network

GOAT Network, a BTC Rollup Layer2 incubated by MetisDAO and launched by ZKM, is the first decentralized Bitcoin L2 with shared network ownership. It introduces the Optimistic Challenge Protocol (GOAT-OCP), utilizing BTC script locking native security mechanisms to ensure safety and employs ZKM Entangled Rollup as a general settlement layer, enhancing transaction inclusion and finality. GOAT Network supports direct asset deposits without additional cross-chain bridges and protects assets within a decentralized Sequencer network. The development team from MetisDAO, which pioneered decentralized sequencers on Ethereum L2, has brought this technological advantage to BTC Layer2. The decentralized Sequencer network allows any Bitcoin holder to become a node or delegate to existing nodes. GOAT has secured a commitment of 5,000 BTC from five institutional node operators, planning to launch with seven and expand to dozens in the future.

Potential benefits of participating in GOAT Network include:
– Gas fees in BTC form
– Mining rewards of GOAT tokens
– Returns from yBTC (receipt token for BTC locked on GOAT Network)
– Additional yield opportunities unlocked by yBTC within the GOAT Network ecosystem

The first phase of the decentralized sequencer activity is underway, allowing users to bind wallets (requiring 0.001 BTC), social information, and complete social tasks.

5）. Mezo

Mezo is a Bitcoin Layer2 network designed to transition Bitcoin from a “savings technology” to a circular economy. The project employs a unique Proof of HODL mechanism, where users lock BTC and MEZO tokens and verify transactions to protect the network. Mezo uses the CometBFT consensus mechanism, combining it with the innovative concept of Proof of HODL. Users can lock BTC on Mezo, with longer lock times yielding higher HODL scores, contributing to network security and earning rewards when the mainnet launches. The project is developed by the startup studio Thesis, which has extensive experience in Bitcoin ecosystem development, including the tBTC project. According to Mezo’s official website, the current user count is nearly 12,000, with a total of 2,333 BTC staked.

Mezo recently announced a new funding round of $7.5 million, bringing the total funding to $30 million. The new funds will be used to expand network adoption, including integrating additional products such as the Bitcoin staking platform Acre.

6）. Bitfinity Network

Bitfinity Network EVM is an Ethereum-compatible blockchain built on the Internet Computer (IC), developed using Solidity. Developers can deploy Bitcoin, Ordinals, and BRC-20 smart contracts written in Solidity on Bitfinity, aiming to enhance Bitcoin’s utility. Thanks to IC’s unique architecture and Chain Key technology, Bitfinity Network EVM is more efficient than traditional EVM implementations, offering on-chain storage and processing speeds comparable to traditional web services without gas fees. Bitfinity plans to integrate Ethereum and other EVM-compatible chains by running lightweight clients on IC, requiring adjustments to network protocols to interface with and sync entire blockchains from other chains.

The project supports connections between ICRC-1 tokens, ERC777/ERC20 tokens, and Bitcoin as an ICRC-1 token. Earlier this year, it completed a $7 million funding round with a $130 million valuation. The token economics include BITFINITY, the official governance token created by Bitfinity DAO and the native token of Bitfinity EVM, with a total supply of 1 billion, as an ERC-20 token.

7）. Arch Network

Arch Network is an innovative Bitcoin-native programmability solution that directly introduces programmable features into the Bitcoin network, unlike traditional L2 solutions. Arch is a parallel PoS network that uses ZK proofs to enhance Bitcoin’s native programmability. The network comprises a Rust-based zkVM (ArchVM) and a decentralized validator network. Inspired by Solana and the Solana Virtual Machine (SVM), Arch does not rely on any bridging or L2. It features programmability, parallel execution speed, and trustless interoperability and composability. In the Arch network, asset transfers and state changes on the Bitcoin chain occur on Bitcoin L1. Arch uses state chains with ordinals to submit state changes in a single transaction, reducing fees and ensuring atomic execution. The fee model includes infrastructure processing fees for each BTC transaction, such as smart contract deployment, transactions, and NFT minting, and a dynamic pricing mechanism akin to fast lane tips, adjusting based on network congestion and transaction complexity.

Arch Network has completed a $7 million seed round, led by Multicoin Capital, with participation from OKX Ventures, CMS Holdings, and others. The project’s products and roadmap are still under development, with no specific launch timeline announced yet.

4. BTC Sidechains

The sidechain concept, introduced in the 2014 paper “Enabling Blockchain Innovations with Pegged Sidechains” by Adam Back and others, aims to enhance Bitcoin’s capabilities by allowing asset transfers between multiple blockchains. Sidechains are independent blockchain networks running in parallel with the main chain, featuring:

– **Customizability:** Allows for specific rules and features, improving scalability and flexibility.
– **Independent Security Mechanisms:** Maintains its own security mechanisms and consensus protocols, with security dependent on the sidechain’s design.
– **Autonomy:** Offers greater design freedom compared to the main chain.
– **Interoperability:** May have lower interoperability with the main chain but supports cross-chain asset transfers.

The core function of sidechains is to enable asset transfer and utilization from the main chain to the sidechain, typically involving cross-chain transfers and asset locking. This design provides new possibilities for the Bitcoin ecosystem, allowing Ethereum network features to be integrated with Bitcoin but also posing security and interoperability challenges.

1）. Merlin

Merlin Chain, launched by Brc420, is a Bitcoin sidechain and one of the earliest Bitcoin Layer2 implementations, maintaining a large TVL over time. Despite the underwhelming performance of its token post-launch, Merlin Chain still leads other BTC L2 projects with a TVL of $1.28 billion according to BTCEden. Merlin Chain is based on Bitcoin’s L1 native assets, protocols, and products, aiming to empower these through Layer2, such as building user-friendly metaverses with Bitmap and DeFi protocols using BRC-420.

Merlin uses Cobo Wallet’s MPC solution for cross-chain BTC transactions, offering security close to Taproot-upgraded BTC multi-signatures, with MPC having long-standing validation. It employs ParticleNtwrk’s account abstraction technology, allowing users to interact with the sidechain using their Bitcoin wallets and addresses, maintaining user habits and offering a more user-friendly experience compared to using Metamask.

2）. Stack

Stacks is a sidechain closely integrated with Bitcoin, featuring a unique consensus mechanism and smart contract functionality. The project employs an innovative Proof of Transfer (PoX) consensus mechanism, where participating miners do not burn Bitcoin but instead transfer it to a group of participants who secure the network. Stacks plans to introduce the Nakamoto upgrade this year, which will enable it to function as a true Layer2 solution. The upgrade code is complete and is set to be deployed on the mainnet soon. This upgrade aims to significantly increase transaction throughput, achieve 100% finality for Bitcoin transaction confirmations, and reduce confirmation times from 10 minutes to approximately 10 seconds. The Nakamoto upgrade will also enhance Stacks’ security, aligning it with the Bitcoin network. Even in the case of a Bitcoin network reorganization, most Stacks transactions will remain valid, improving overall network reliability.

In addition to the Nakamoto upgrade, Stacks will launch sBTC, a decentralized and programmable 1:1 Bitcoin-backed asset that can be deployed and transferred between Bitcoin and Stacks (L2). sBTC enables smart contracts to write transactions to the Bitcoin blockchain while ensuring security through the entire Bitcoin hashing power.

Stacks currently has a growing ecosystem, with an on-chain TVL of $200 million. For example, Alex is a DEX in the Stacks ecosystem and also includes Launchpad functionality, with a TVL of $30 million. The liquidity staking project StackingDAO has locked $100 million in liquidity. The STX token is the highest market cap token in the Bitcoin sidechain ecosystem and is currently the only one in the Coinmarketcap top 100.

3）. Citrea

Citrea is an innovative Bitcoin scaling solution that uses zero-knowledge proof technology to extend the Bitcoin network while ensuring on-chain verifiability and data availability. The project’s core advantage is its ability to support more complex applications without compromising Bitcoin’s security or altering its consensus rules.

Citrea’s technical features include: batching large numbers of transactions and generating compact validity proofs in zkVM; pioneering the use of validity proof recording and local verification on the Bitcoin blockchain; embedding native ZK proof verifiers in BitVM smart contracts on Bitcoin L1; and creating a modular ecosystem for Bitcoin through sharding while keeping settlement and data availability on the Bitcoin main chain.

The project announced a $2.7 million seed round led by Galaxy in February this year. Citrea’s public developer network is now live, with three one-week testing tasks scheduled from July to August, allowing users to participate in testing and earn NFT rewards from Galaxy.

4）. Fractal Bitcoin

Fractal BTC, developed by the Unisats team, is a Bitcoin Layer 2 solution that uniquely uses Bitcoin core code to recursively scale an unlimited number of layers above the Bitcoin blockchain, with BRC20 tokens (Sats) used as gas fees. Fractal forks Bitcoin’s core code with key adjustments, notably reducing block confirmation times to 30 seconds. The project plans to implement “controversial” opcode proposals like OP_CAT and ZK native verification OPCode faster than the Bitcoin mainnet, potentially enabling smart contracts through scripts. The consensus mechanism mirrors Bitcoin’s proof of work (PoW), allowing miners to use existing ASIC and GPU hardware.

Fractal introduces the innovative Cadence Mining approach, where two out of every three blocks are mined in a permissionless manner, and one through merged mining, balancing decentralization and security. As a native scaling solution, Fractal supports cross-layer secure asset transfers starting from the Bitcoin main chain, including decentralized bridging for assets like BRC-20 and Ordinals.

Key applications include Fractal Swap (a flexible BRC20 exchange mechanism), Asset Bridge (an asset bridge between the mainnet and Fractal network), and UniWorlds (applications integrating real-world transactions).

Unisats completed a Pre-A round funding in May this year, led by Binance, with the specific amount undisclosed. Unisats is one of the most reliable infrastructures in the recent Ordinals wave, with a strong user base and transaction foundation, making the development of this shadow chain a natural fit. The latest funding round demonstrates even stronger resource capabilities, promising more pioneering applications.

5）. Botanix

Botanix Labs is building the first fully decentralized EVM-equivalent Layer 2 on Bitcoin, combining the usability and versatility of EVM with the decentralization and security of Bitcoin. The project utilizes Bitcoin’s proof-of-work (PoW) as the base settlement and decentralized Layer 1 while employing a proof-of-stake consensus model. The staked assets (denominated in Bitcoin) are securely stored on a distributed network called Spiderchain, with protection provided by a randomly selected subset of participants through decentralized multi-signatures.

Botanix allows users to stake Bitcoin directly on the Bitcoin network. When users connect MetaMask, a special Bitcoin deposit address is generated, which encodes the user’s EVM address within Taproot. This innovative mechanism enables users to send Bitcoin directly from major exchanges to this deposit address and then use Bitcoin within MetaMask. The user experience is similar to Ethereum, but all operations are conducted using Bitcoin. This novel approach of combining Bitcoin with EVM compatibility is expected to introduce more use cases and user-friendly experiences to the Bitcoin ecosystem.

In May of this year, Botanix announced the completion of an $8.5 million seed round. The Botanix testnet is set to launch on November 30, 2023. As of June, the testnet has connected over 300,000 wallet addresses and introduced two applications, AvocadoSwap and Bitzy, for interaction.

5. Client-Validated RGB++ Solutions

1）. Nervos

Nervos Network is a Bitcoin scalability solution that modifies the UTXO model to support Bitcoin. It features a layered architecture, including a Layer 1 blockchain (Common Knowledge Base, CKB) that can be extended through payment channels and RGB++. Leveraging Bitcoin’s PoW+UTXO structure, Nervos integrates RGB’s client-validation paradigm into CKB using “homomorphic mapping” technology, creating RGB++. This approach offers significant functionality and flexibility improvements while maintaining strong security with BTC L1, despite a slight loss in privacy. RGB++ enhances the original RGB protocol by enabling on-chain validation of key transaction elements, improving security and data availability. It allows transaction folding, state-sharing without ownership, and non-interactive transfers without cross-chain bridges. As an asset issuance protocol, RGB++ enables the creation of new assets on Bitcoin L1, with assets on CKB being fully Turing-complete and programmable. Assets like Atomical and Rune can also be mapped to CKB for Turing-complete transactions.

2）. UTXO Stack

UTXO Stack is a modular Bitcoin Layer 2 chain issuance platform, akin to a “one-click chain creation” service. Developed by CELL Studio, incubated by the Nervos ecosystem fund, UTXO Stack focuses on issuing Bitcoin Layer 2 chains based on UTXO homomorphic models. It provides technical support and modular services for projects wanting to develop UTXO model Layer 2 chains on Bitcoin. Like Ethereum’s OP Stack, UTXO Stack enables native integration of RGB++ protocol capabilities and utilizes CKB as a data availability layer. This positions UTXO Stack as Bitcoin’s equivalent of OP Stack + EigenLayer, supporting Layer 2 chains that use POS consensus mechanisms and ensure security through staking BTC, CKB, and BTC L1 assets.

6. Restaking Track

The security of many emerging PoS chains is limited by the size of their on-chain economy, posing risks of centralization. Bitcoin staking and restaking protocols offer security guarantees to PoS networks by leveraging Bitcoin’s consensus power. The concept of restaking, especially with the education provided by EigenLayer and similar projects, is becoming well-understood and naturally extending to the Bitcoin ecosystem.

Advantages of Bitcoin restaking include:
– Bitcoin’s unmatched security and trust foundation.
– Generating sustainable returns from approximately $1.3 trillion in Bitcoin value.
– Bridging PoW and PoS blockchain systems, utilizing Bitcoin’s security advantages.
– Significant market potential for Bitcoin-staked derivatives, including stablecoin collateral, lending, and structured products.

1）. Babylon

Babylon is a Bitcoin staking protocol that allows Bitcoin holders to stake BTC on PoS chains and earn rewards while securing PoS chains and their applications. Unlike traditional methods, Babylon uses remote staking, avoiding the need to bridge, wrap, or custody Bitcoin on PoS chains. This method allows Bitcoin holders to earn from idle BTC while enhancing PoS chain security. Babylon extends Bitcoin’s use beyond value storage and exchange, applying its security to more blockchains. It introduces a Bitcoin timestamp protocol that places timestamps from other blockchains onto Bitcoin, providing the same security as Bitcoin transactions. This enables fast staking unbinding, lower security costs, and cross-chain security.

Technically, Babylon includes two main protocols:
– Bitcoin Timestamp: Sends verifiable timestamps of any data (e.g., PoS blockchain) to Bitcoin.
– Bitcoin Staking: Provides economic security for decentralized systems through trustless and self-custodial means.

In May of this year, Babylon completed a $70 million funding round led by Paradigm. The project has concluded Bitcoin Staking Testnet-4. Future testnet phases will open for participation in staking tests and completing related tasks.

2）. Lorenzo

Lorenzo Protocol is a liquidity restaking protocol built on Babylon, designed to enhance Bitcoin’s utility by introducing liquidity staking and privacy features. The project allows Bitcoin holders to convert BTC into stBTC, enabling them to participate in Bitcoin staking and earn rewards without locking up their funds. Lorenzo innovatively divides liquidity restaking tokens (LRT) into liquidity principal tokens (LPT) and yield accumulation tokens (YAT), similar to Pendle’s PT and YT. This separation mechanism offers a flexible solution for liquidity restaking, improving the liquidity and accessibility of Bitcoin restaking.

A key feature of Lorenzo is that it does not require a minimum staking period or an “unbinding” time, meaning investors can avoid the risks of being locked into staking and maintain flexibility during market fluctuations. Lorenzo provides an EVM-compatible Cosmos chain with shared security from Babylon BTC for issuing and settling BTC liquidity restaking tokens. This foundation supports cross-chain operations and broader DeFi applications.

In the future, Lorenzo plans to develop a range of financial products, including interest rate swaps, lending protocols, structured BTC yield products, and stablecoins. The project focuses on creating an efficient Bitcoin liquidity distribution market and liquidity assetization. While specific funding details are not disclosed, Lorenzo has received support from Binance Labs and has already launched its Beta mainnet.

3）. Chakra

Chakra is an innovative Bitcoin restaking protocol powered by ZK (Zero-Knowledge) technology. It introduces the concept of Settlement Consumer Service (SCS) to integrate Bitcoin restaking into PoS (Proof-of-Stake) systems.

Key technical features of the project include:

– **Time-Locked BTC:** BTC is locked using time-lock mechanisms.
– **ZK-STARK Technology:** Uses ZK-STARK technology to generate proof of staking events.
– **Off-Chain Verification:** Allows for off-chain verification, avoiding the need for direct connection to the BTC network.
– **High Security with STARK:** Ensures high security without requiring trusted setups.

Chakra’s ZK proofs design has potential applications across various scenarios, including artificial intelligence, DeFi, and gaming. Users can stake once and extend their staking to multiple applications, earning multiple staking rewards. The project aims to build an L2 network based on staking proofs, allowing stakers to participate in L2 consensus and governance. These L2 networks will share Bitcoin’s security while providing data availability services and execution environments for stakeholders. Chakra plans to integrate with Babylon to extend its application within the Bitcoin ecosystem.

In April 2024, the project announced its investors, including STARKWARE, ABCDE, and several Asian miners. The project’s development progress includes the launch of its testnet and participation in Babylon Testnet-4, where Chakra became the top finality provider, confirming 258 Signet BTC, representing 36% of Babylon’s total TVL, demonstrating strong early performance.

4）. BounceBit

BounceBit is an innovative BTC restaking infrastructure that provides a foundational layer for various restaking products. The project employs a CeFi + DeFi hybrid framework, enabling BTC holders to earn from multiple sources. Its core idea is to advance Bitcoin by using assets rather than changing the Bitcoin blockchain. Key strategies include capital rate arbitrage and creating on-chain certificates for restaking and mining.

BounceBit’s Layer 1 includes two critical components:

– **Dual-Currency PoS:** A hybrid consensus mechanism where validators accept both BBTC and BB tokens.
– **Native LSD Module:** Allows delegation of staking to validators and receiving LST certificates in return.

The CeFi layer of the project includes:

– **Regulated Custody:** Ensures user fund safety through MPC wallets.
– **OTC Settlements:** Safely utilizes CEX liquidity for off-chain transactions.
– **BTC Restaking:** Ensures fund safety through regulated custody services, with users receiving bounceBTC (BBTC) as a staking certificate.
– **BounceClub:** A no-code DeFi experience creation platform.
– **Liquid Custody Tokens (LCT):** Introduces the concept to maintain liquidity of staked assets.

BounceBit completed a $6 million seed round, led by Blockchain Capital and Breyer Capital. The project plans to launch its on-chain brokerage service, Superfast, in Q3 2024. Superfast aims to address liquidity issues for BBTC and BBUSD and initiate a large-scale BB reward campaign. It will combine LCT and CEX concepts for fast on-chain settlement and high liquidity, supporting ultra-liquid exchange of BB, BBUSD, and BBTC.

BounceBit’s innovative model is expected to provide more restaking options and revenue opportunities for Bitcoin holders while expanding Bitcoin’s application in the DeFi space. The project’s hybrid architecture and diverse product line demonstrate its potential for financial innovation in the Bitcoin ecosystem.

5）. Lombard

Lombard is a Bitcoin staking protocol aimed at enabling Bitcoin staking and liquidity release through the Babylon platform. Its core product, LBTC, is a yield-bearing cross-chain liquidity Bitcoin token backed 1:1 by BTC. When users stake Bitcoin via Babylon, Lombard uses LBTC tokens to represent the liquidity and yield of the staked Bitcoin.

The primary innovation of Lombard is allowing yield-bearing BTC to move across chains without dispersing liquidity, potentially acting as a catalyst for introducing new capital into the DeFi ecosystem. Lombard plans to integrate LBTC into Ethereum’s DeFi protocols later in 2024, significantly expanding Bitcoin’s applications and potential in the DeFi space.

Lombard recently completed a $16 million seed round led by Polychain. The project is still in development, and its testnet has not yet launched.

7. DA Layer Introduction

Bitcoin and Ethereum differ significantly in ecosystem maturity, technical features, and mainnet characteristics. Ethereum’s Data Availability (DA) layer enhances its already robust mainnet functionality, whereas Bitcoin’s mainnet has very limited transaction processing capability, handling only about 4 transactions per second. Thus, developing a DA layer for Bitcoin addresses an urgent need rather than a simple functional enhancement. The competition in this area is limited, with Nubit being a prominent example.

1）. Nubit

Nubit is a highly scalable and secure Data Availability Layer (DA Layer) built on Bitcoin’s economic security. It aims to significantly increase Bitcoin’s data capacity without compromising security, supporting applications like Ordinals, layer-2 scaling solutions, price oracles, and indexers. Nubit integrates Babylon’s PoS staking scheme, ensuring the economic security of the DA ecosystem is determined by Bitcoin’s native stakers, allowing Bitcoin holders to participate and strengthen the Nubit system.

In addition to the DA layer, Nubit plans to develop an execution layer based on the Nubit DA framework, which is stateless and efficient, allowing users to reliably verify computational results. This will be widely used in Bitcoin wallets and for users. Nubit announced an $8 million seed round in June, led by Polychain, bringing the total funding to $12 million. The Alpha testnet is now open, with activities including Community Assemble, Light Node Quest, and upcoming Testnet Adventure.

8. Summary of Bitcoin Ecosystem Development

We have provided an overview of some of the developments in the Bitcoin ecosystem from the perspective of the Bitcoin layer. In reality, the Bitcoin ecosystem encompasses a wide range of infrastructure, including cross-chain bridges, wallets, oracles, various asset protocols, and DeFi projects, the scope of which is truly extensive. The development of the Bitcoin ecosystem is facing the challenge of balancing technical native attributes with user needs, reflected in the formation of two main forces within ecosystem development. The native technology faction is dedicated to exploring potential within Bitcoin’s unique UTXO model and scripting language to develop projects that align closely with Bitcoin’s design principles. While this approach is more technically challenging, it better maintains consistency with Bitcoin’s core values. Analysis of numerous projects reveals that native technology projects typically have strong academic backgrounds, highlighting the high difficulty of developing Bitcoin ecosystem infrastructure. Due to the inherent limitations of the Bitcoin network, these projects need to employ advanced cryptographic techniques and other new technologies to address challenges, necessitating a robust academic foundation.

In contrast, the user-oriented faction focuses on rapidly responding to market demands by leveraging existing mature technologies to quickly develop and deploy products for existing user bases. These projects often draw from Ethereum’s experiences, which reduces user education costs. However, the drawback of this approach is a lack of innovation at the application level, with most deployed projects essentially replicating Ethereum’s solutions on sidechains.

Innovation is an essential component in every cycle. In the BTC ecosystem, technological innovation should be more about overcoming existing limitations. The Babylon project is a prime example, demonstrating how native technological innovation can enhance Bitcoin’s utility. By employing innovative techniques such as Bitcoin timestamps, Babylon allows users to earn additional yields while retaining BTC ownership. This approach minimizes additional asset security risks and creates new value for users, making it highly attractive to the market. Based on these observations, we believe that the future development path for the BTC ecosystem may involve continuous native technological innovation and improvements, developing emerging protocols and projects to enhance BTC’s capital utilization. This method not only aims to break through Bitcoin’s existing technical limitations but also to meet market demands while preserving its core values, thus laying a solid foundation for the long-term healthy development of the Bitcoin ecosystem.