The April halving event has once again captured the interest of crypto enthusiasts in Bitcoin. However, it is also important to note that the hardware-intensive proof of work architecture of Bitcoin limits its scalability potential.
Like other layer 1 blockchain networks, Bitcoin also faces congestion, which restricts its ability to process a high volume of transactions per second, making it unsuitable for P2P exchange. Yet, the landscape is evolving, with auxiliary Bitcoin layer 2 solutions emerging to address the network’s inherent limitations.
This blog covers detailed information about the top Bitcoin layer 2 projects that play a vital role in enhancing the scalability and functionality of the network.
Remember the scalability trilemma referring to no network can be decentralized, secure, and scalable, all at once. Bitcoin was initially designed to be extremely decentralized at the tradeoff of processing no more than 3 to 4 transactions per second. When Bitcoin was created, the transaction rate seemed to be sufficient.
Not only this, but Satoshi Nakamoto also proposed a 10-minute block generation time as an example to strike a balance between network latency, computational efficiency & propagation time. Later, the SegWit upgrade expanded the blockchain size, however, it didn’t make a huge difference as Ethereum was already ahead in the race with the block creation time of 20 seconds.
Despite the L2 upgrades, the rise of BRC-20 and Ordinals also led to an increased strain on Bitcoin infrastructure, resulting in increased congestion and transaction fees. No doubt, the external competition from Ethereum and the constantly evolving Bitcoin landscape is pushing hard, demanding better scalability solutions that can cover the gap Bitcoin is lacking.
This is where Bitcoin Layer 2 solutions play a crucial role.
Bitcoin layer 2 solutions refer to secondary protocols or frameworks that are built on Bitcoin’s base layer. Bitcoin L2 projects process transactions off the mainchain to alleviate congestion and improve the overall functionality of the network. These secondary solutions aim to enhance the network’s scalability, and throughput and reduce transaction costs without altering the fundamental structure of the Bitcoin network.
Image via Spartan Research
Stacks, Lightning, RSK, and Liquid are often referred to as the “Big Four” as these Bitcoin Layer 2 solutions represent key advancements and extensions to the network’s ecosystem. Each of these entities collectively conducts the majority of L2 transactions and contributes to expanding Bitcoin’s functionality beyond its original design.
Let’s delve more into how these Bitcoin layer 2 solutions build a better future for the network.
Stacks stands out as one of the big fours of Bitcoin Layer 2 solutions, created by computer scientists – Ryan Shea and Muneeb Ali to facilitate smart contracts on the Bitcoin network. Built on the most secure base layer, Stacks activates the Bitcoin economy, running its own consensus algorithm of POX or Proof of Transfer, a hybrid of Poof of Burn and PoS consensus algorithms. POX allows miners to connect on the Bitcoin blockchain and stackers on the Stacks network.
The network is secured with ‘Stacking’ in which Stack token (STX) holders commit their tokens to validate the transactions, earn rewards in BTC, and add an extra layer of security. Stacks employs the Clarity programming language for enhanced smart contract security.
Key Benefits
Stack transactions benefit from Bitcoin’s robust security. It ensures the same immutability and resistance to tampering as Bitcoin, making it highly reliable and secure.
Stack utilizes a decidable smart contract language, Clarity, designed with a security-first approach, providing clear visibility into Bitcoin’s state. These smart contracts enable developers to code essential business login on blockchain and reduce risks of bugs and vulnerabilities.
Developers can build experiences for Bitcoin’s extensive and largely untapped user base, offering innovative applications and experiences, and leveraging the established trust and reach of the Bitcoin network.
Stacks provides a comprehensive set of tools, tutorials, and active developer community support to enhance your building experience, making development on the network more accessible and collaborative.
Released in 2018, the Lightning Network is another Bitcoin layer 2 crypto project that facilitates instant micropayments across the network, allowing for swift and cost-effective transactions anywhere. The network claims to process up to a million transactions per second with near-zero fees.
“On average, Lightning Network is processing at least 47% of Bitcoin’s on-chain transactions daily”
The network achieves this by establishing payment channels between senders and receivers using multi-signature transactions and time locks. These channels function as deposit boxes, storing funds for off-chain transactions between users. Transactions on the Lightning Network hop through these channels between nodes to reach their destination, employing onion routing to facilitate the process. Such an approach ensures maximum anonymity on the Lightning Network. These network improvements underscore the reason behind its increased adoption.
Key Benefits
Payments on the Lightning Network can be completed at lightning speed, typically measured in milliseconds to seconds, without the need to wait for block confirmations. The network ensures security through smart contracts, eliminating the need to create on-chain transactions for each payment.
Lightning Network can process millions to billions of transactions per second across the network, distinguishing it from other traditional payment systems. Seamless payment-per-action/click is also possible without intermediaries or custodians.
The Lightning Network conducts transactions and settlements off-chain that facilitate exceptionally low fees and support emerging use cases such as instant micropayments.
Cross-chain atomic swaps are possible off-chain straight away with heterogeneous blockchain consensus rules. As long as these chains share the same cryptographic hash function, transactions can occur across them securely without third-party custodians.
Founded by RSK Labs, Rootstock is an EVM-compatible smart contracts platform designed to build a more decentralized world. Connected through sidechain technology, Rootstock (RSK) allows developers to create secure and functional decentralized applications (dApps) on Bitcoin. The primary purpose of one of the Big Fours or Bitcoin layer 2 solutions is to extend Bitcoin’s abilities, improve Bitcoin transaction times, and enable the use of smart contracts.
For every BTC sent to RSK, it generates a token called RBTC (Rootstock Smart Bitcoin), maintaining the 1:1 peg. The network’s major focus on smart contracts differentiates it from the Liquid network. As Rootstock is EVM-compatible, hence, it can host common DeFi apps.
Key Benefits
Rootstock harnesses the computing power that secures Bitcoin. It also allows individuals to mine on Bitcoin and Rootstock at the same time without any additional effort or resources.
For every BTC sent to RSK, an RBTC token is generated, maintaining a 1:1 peg to Bitcoin. This token enables the seamless interaction with DeFi protocols and dApps on Rootstock.
Rootstock enables seamless token conversion from Ethereum to Rootstock and vice versa via the RSK-ETH token bridge. Being EVM-compatible, Rootstock supports the direct deployment of Ethereum smart contracts on the network.
You can utilize RBTC to engage with a wide range of dApps built on Rootstock or create your own. All smart contracts on Rootstock are Turing complete and compatible with the Ethereum Virtual Machine (EVM).
Launched in 2018 by Blockstream, the Liquid Network is a Bitcoin layer 2 solution that enables the faster, secure, and confidential settlement and issuance of digital assets (e.g.; security tokens, stablecoins, and other financial instruments) on the Bitcoin network. The native asset of Liquid is a wrapped version of BTC – Liquid Bitcoin or L-BTC. A globally distributed federation of members (including financial institutions, exchanges, and Bitcoin-focused companies) operates, and manages this Bitcoin layer 2 solution.
Bitcoin on the Liquid Network is fully backed 1:1 by Bitcoin on the Bitcoin mainchain, ensuring transparent equivalence. Once Bitcoin is transferred to Liquid, users can enjoy the network’s improved speed and confidentiality for transactions. Moreover, users can issue new assets on the network, such as stablecoins and security tokens.
Key Benefits
The Liquid Network employs Signed Blocks, reducing transaction validation and processing times to approximately two minutes. Liquid’s swift transactions are ideal for arbitrage traders seeking quick cross-exchange trades to maximize profits.
The amounts and types of assets transacted on the Liquid Network are hidden by default, which safeguards users’ sensitive financial information and ensures the network’s security.
The Liquid sidechain allows for the issuance of new tokens, representing fiat, securities, or other digital assets.
Integrating with Liquid supports both L-BTC and Issued Assets. All tokens adhere to the same standard, enabling users to leverage features, such as atomic swaps & Bitcoin-style multi-sig.
Here’s a quick overview of Bitcoin L2 projects–
The Merlin Chain, launched in 2024, is a new project from Bitmap Technology (a company founded by Jeff Yin). It is one of the top Bitcoin Layer 2 projects that integrates several advanced technologies: the decentralized oracle network, the ZK-Rollup network, Data Availability, & on-chain BTC fraud-proof modules. The primary goal of Merlin Chain is to enhance and empower Bitcoin’s native assets, protocols, and products on Layer 1 by taking advantage of its Layer 2 network, and ultimately achieving the goal to “Make Bitcoin Fun Again.”
Dovi Bitcoin Layer 2 protocols are community-driven Bitcoin Layer 2 and EVM-compatible smart contract platforms, designed to improve scalability, cut down transaction costs, and build a secure & decentralized financial ecosystem. It stands out as one of the prominent Bitcoin Layer 2 protocols that enhances Bitcoin capabilities, introducing Schnorr signatures for enhanced Bitcoin security, supports various asset types (including BRC-20 and ARC-20) for faster cross-chain asset transfer, and enables client-side verification for transaction privacy, and off-chain processing for increased scalability. Future plans for this one of the popular Bitcoin layer 2 projects include launching the Testnet, building a developer community, and rolling out Dovi V1 to further advance its ecosystem.
MAP Protocol is a Bitcoin layer 2 solution that encourages peer-to-peer cross-chain interoperability. Such BTC layer 2 projects provide the necessary infrastructure and components for dApps and projects to work smoothly and interactively between Bitcoin L2 projects and other public blockchains. MAP protocol stands out among Bitcoin layer 2 protocols that are built upon ZK light-client technology. Hence, its interoperable cross-chain solutions enable peer-to-peer interactions without the need for intermediaries or centralized authorities to ensure trust and security. This interoperability makes the development of permissionless & seamless Bitcoin Layer 2 applications possible.
SatoshiVM is a decentralized Layer 2 solution built on top of Bitcoin, utilizing ZK Rollup technology. This EVM-compatible sidechain allows developers to seamlessly deploy renowned Ethereum smart contracts on Bitcoin. The zk-rollup technology ensures enhanced security and scalability for Bitcoin layer 2 transactions. Additionally, off-chain transaction processing with cryptographic proofs significantly reduces gas costs and addresses transaction delays on the main Bitcoin network. This innovation opens up infinite possibilities for the evolution of a new ecosystem.
In today’s crypto landscape, several top Bitcoin Layer 2 projects are emerging as robust solutions to address Bitcoin’s longstanding challenges, such as scalability, transaction speed, and cost-efficiency. Embracing these advancements is crucial for navigating Bitcoin’s complex terrain, and in this journey, Antier Solutions stands ready to simplify your path forward.
Here’s why choosing Antier for your top Bitcoin Layer 2 projects is a strategic move.
Blockchain talents at Antier possess a deep understanding of Blockchain and Bitcoin Layer 2 solutions, including the Liquid Network, Rootstock, and Lightning Network. The wealth of knowledge and hands-on experience of our seasoned experts ensure you can make the most of the technology for your project.
We don’t believe in a one-size-fits-all approach and this is what sets us apart from others. Whether you’re looking to integrate Lightning Network for faster transactions or deploy smart contracts on RSK, Antier provides tailored solutions that align with your specific business needs.
Our commitment to your success extends beyond deployment. Antier provides ongoing support and maintenance for your top Bitcoin Layer 2 projects and ensures your dApps operate seamlessly and efficiently. We are dedicated to helping you navigate any challenges and maximize the benefits of your investment.
With a proven track record of successful implementations, Antier has established as a trusted company you can hire to leverage the power of Bitcoin Layer 2 solutions. Our portfolio of satisfied clients and successful projects are testament to our capability and dedication to delivering exceptional results.
With a global presence, we are equipped to cater to clients around the world. Our extensive network and understanding of international markets make us an ideal partner for businesses looking to expand their reach and leverage Bitcoin Layer 2 solutions on a global scale.
As the demand for efficient and scalable Bitcoin transactions continues to grow, Bitcoin Layer 2 solutions are emerging as pivotal innovations in the cryptocurrency space. In 2024, the landscape of Bitcoin Layer 2 solutions is set to be more dynamic and promising than ever. From Lightning Network’s instant transactions to peer-to-peer interoperability of SatoshiVM, these Bitcoin layer 2 solutions are transforming how we interact with Bitcoin. Staying informed about these cutting-edge advancements will be crucial for anyone involved in the cryptocurrency ecosystem, ensuring that you can take full advantage of the opportunities that these BTC Layer 2 projects present. Keeping an eye on these top Bitcoin Layer 2 projects in 2024 in our guide ensures that you can take full advantage of the opportunities that these advancements offer. For an in-depth discussion on these Bitcoin layer 2 solutions, reach out to our Blockchain experts today!
