52 mins ago
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On February 12, Bitlayer, the first Bitcoin layer two-layer solution built on the BitVM paradigm, invited Lao Bai, ABCDE Investment Research Partner, May, Senior Researcher of Web3Caff, and Chain Catcher BD head raychief.eth, developer WongSSH and CH999.eth, vice chairman of the Peking University Blockchain Association, conducted a Bitcoin expansion on the theme of "Bitlayer Finality Bridge: The Road to Minimizing the Trust of BitVM-based Bitcoin Bridge" , in-depth conversations between BTCFI and future opportunities.
The topics discussed in this Space include:
Bitcoin price fluctuations and Bitcoin ecological predictions in 2025, as well as sharing of key tracks and opportunities
About Bitcoin L2 Discussion on different solutions, especially the analysis of security and scalability trade-offs
BitVM Technical Paradigm: BTC Bridge Classification and Progress of BitVM Bridge Implementation
Bitcoin L2 development trends and market opportunities.
Users who are interested in this Space can view the playback: https://x.com/BitlayerCN/status/1889644298108387839. The following is the sorted dialogue content, which has been slightly deleted and modified for readers' reference.
raychief.eth: Hello everyone, I am Ray, the host of this Twitter Space event. Today is the Lantern Festival of the Lunar New Year. First of all, I wish you a happy Lantern Festival. Thank you for participating in our Twitter Space event on such a wonderful day. Our topic today is to explore the path to minimizing trust based on BitVM. Very honorableLet me introduce today's guests. The guests participating in this sharing include Kevin He, co-founder of Bitlayer, Mr. Lao Bai, ABCDE investment research partner, Mr. May, researcher of Web3Caff, developer classmate WongSSH, and vice chairman of Peking University Chain Association CH999. Please start the microphone in turn and introduce yourself, thank you.
Kevin: First of all, thank the host and wish you all a happy Lantern Festival. I am Kevin, co-founder of Bitlayer. We are committed to implementing BitVM on Bitcoin. We have good news to share with you at the moment, thank you.
Lao Bai: Hello everyone, I am Lao Bai, an investment research partner of ABCDE. ABCDE is a relatively active fund in the Bitcoin ecosystem. In addition to Bitlayer, there are also projects such as Solv, Unisat, Babylon and Lombard, which are our layout in the Bitcoin ecosystem. BMAN and Mr. Du are both Crypto OG, and we are relatively optimistic and optimistic about the entire Bitcoin ecosystem. Thank you everyone.
May: Hello everyone, I am a researcher at Web3Caff May. I mainly study the expansion of L2 and the research on public chain ecology. Recently, I have focused on the two fields of chain abstraction and AI Agent. I am very happy to communicate with you today to discuss the latest progress in the Bitcoin ecology.
WongSSH: Hello everyone, I am WongSSH. I am a Solidity engineer myself. I learned about Taproot and Lightning Network in the second half of 2024. I have also been paying attention to the BTC L2 ecosystem. Currently, I mainly focus on the progress of the DeFi field and the underlying Ethereum chain. Thank you everyone.
CH999: Hello everyone, I am CH, vice chairman of the Peking University Blockchain Association and a researcher at Talkchain. We will output research reports and make research reports analysis into videos and publish them on YouTube. I personally have a lot of research on on-chain application products and have some experience in the field of DeFi. Thank you everyone.
Bitcoin's 2025 development forecast and layoutraychief.eth: Thank you very much for your wonderful opening. I'm Ray from ChainCatcher and RootData, and as the event host, I hope to ask some questionsGuide the discussion. Recently, Bitcoin price has experienced large fluctuations, pullbacks and rebounds. What are the views or layouts of Bitcoin’s performance in 2025 and the development of the entire BTC ecosystem? You can also talk about the tracks and opportunities you are paying attention to.
Kevin: From a technical perspective, after the past year of development, the projects that have previously completed financing have been implemented in the direction or promised. For example, the BitVM we promoted finally made good progress a year later. I think many business models have emerged in the past year, including various asset management needs of Bitcoin, which have actually been implemented.
For Bitlayer, our strategy is to ensure that BTCFI occurs in a decentralized world by implementing technologies like BitVM. The focus is to solve the asset management needs of BTC coin holders, including obtaining income, risk management, obtaining liquidity and other investment needs. These already exist off-chain, and what we want to do is to make it happen on-chain with the latest generation of security extension technology. Thanks.
raychief.eth: Thank you Kevin. In general, it is also the original intention of the entire Bitcoin ecosystem to make off-chain technology happen on the chain. Next, I would like to ask you what you think about Bitcoin in 2025, starting with Mr. Bai.
Lao Bai: To be honest, I have been mainly watching AI recently, because in October, November and December, the AI Agent track dominated. . In January, this track was a bit destroyed by the crash and the entire bear market. But AI is still the biggest track at present. As for BTC, we have just mentioned that we have invested in many projects in our portfolio, so in 2025, our view on the BTC ecosystem is more about observation and waiting.
I personally may focus on three lines. One is BTCFI represented by Solv, which may be a major direction with the BTC ETF and TradeFi in the US stock market, that is, the combination of tradition and on-chain. The second direction is the on-chain technology of BitVM represented by Bitlayer to see if it can stimulate transactions on the Bitcoin chain. Because in the long run, it is impossible for BTC to maintain such security costs, or security budgets, completely after halving. We have made countless attempts on how to activate transactions on the chain, including previous large blocks, including last year's Ordinals, runes, and inscriptionsText and so on. At present, the third attempt may be BitVM. From the long-term perspective of Bitcoin’s century-old plan, this is something that must be paid attention to.
The last line Taproot Assets, I have been paying attention to Taproot and RGB before, but the latter is still very slow at present, but the RGB++ of UTXO Stack is relatively done Much faster. Recently, Tether decided to use Taproot Assets to issue USDT, which is also a relatively good thing for Taproot Assets itself. In summary, I personally or ABCDE is currently focusing on the three major directions of Bitcoin: BitVM, Taproot Assets, and BTCFI.
May: From a regulatory perspective, we can find that Bitcoin has become increasingly influential, and has risen from a niche investment target to a level of reserve assets . Supervision in various countries is gradually improving, especially in compliance. Bitcoin may face stricter regulation in 2025, which also means it will become more mainstream. Regulatory clarity helps eliminate market uncertainty and attract more institutions to participate. Bitcoin prices will also be more stable.
Next, we discuss the market ecology. Bitcoin will not only be a store of value asset in 2025, but as BTCFI accelerates, Bitcoin will gradually transform into a financial instrument. The rise of decentralized platforms has driven liquidity and efficient financial tools, allowing Bitcoin to be used not only in areas such as store of value, but especially in areas such as lending. As the compliance process accelerates, income derivatives will greatly enrich the financial ecosystem of Bitcoin. Bitcoin’s market value accounts for half of the Web3 currency circle. If it can liberate its liquidity, I am optimistic about the development of the future track.
WongSSH: I have been paying attention to the Bitcoin ecosystem since 2024. There were various technical solutions at that time. I think BitVM is a very good solution. But since I haven't paid attention to it for a while, I recently watched BitVM and found that BitVM has made great progress compared to before. I once thought that BitVM could not be implemented, but by the time the BitVM2 version was truly implemented.
I think the Bitcoin ecosystem will have another round of development in 2025. Because in my opinion, many technical solutions in 2024 do not have a very high technical height. I personally value Bitcoin’s cross-chain bridge, and of course there is another direction that is Bitcoin CDP, which can release Bitcoin.Liquidity, such as building a real micro-strategy on the chain, can use Bitcoin as collateral to contact more stablecoins, print stablecoins, and then use stablecoins to continue to buy Bitcoin, so as to leverage Bitcoin with stablecoins. strategy. This is my point of view.
CH999: Hello everyone, I have participated in the Bitcoin ecosystem a lot before, but I haven't participated very much recently, because locking in liquidity for too long in the bull market is not a wise move . So my personal strategy is to use BTC for option operations. Regarding the entire Bitcoin ecosystem, I personally take a wait-and-see attitude, because the bull market of Bitcoin is not equivalent to the bull market of the Bitcoin ecosystem, and the two have not yet formed a strong binding state.
Whether the Bitcoin ecosystem, including the second-layer network and other applications, can it be finally implemented, or is it just a bubble? It depends on the data on the chain, whether there are real applications and real Revenue and real users. We hope to see more innovative or different application systems than Ethereum and Solana. Whether the Bitcoin ecosystem can have representative applications and attract more users is my personal focus. If there are no real explosive applications, I might be on the wait-and-see sidelines, because the market does not seem to pay for the decentralized concept during this cycle. Of course safety is important, but safety no longer seems to be the main theme of this cycle. For example, we can see the rise of Solana, which is more in-central than Ethereum; taking Hybrid Liquid as an example, it is ridiculed as a stand-alone chain, but can attract more users and earn more fee income. So for me personally, I would like to play other cards other than decentralization and security in the Bitcoin ecosystem, so that I can revitalize the entire ecosystem and change from a wait-and-see attitude to a more optimistic attitude. This is my current point of view, thank you.
Bitcoin expansion: a trade-off between security and scalabilityraychief.eth: Indeed, the security of the Bitcoin ecosystem is the basis of its expansion. Next, the guests’ views on Bitcoin expansion, especially the relationship between security and scalability. The Bitcoin Layer 2 solutions that are currently available include sidechain, RGB, Lightning Network, and BitVM we are discussing today. Please share your views on the potential of these different solutions and your choices for future development directions. For example, from the perspective of investors, how do you evaluate the pros and cons of these plans? Thanks.
Kevin: I want to respond to the previous guests' views first. Let's first look at some of the observed phenomena. The market's FUD of WBTC, including the removal of MakerDAO, Coinbase, etc., shows that the market's security and BTC underlying packagingConcerns about means still exist, and the market still has demand for safer and more trustworthy Bitcoin packaging solutions. The first implementation of BitVM is to solve this problem.
Another phenomenon is that in this round of market-related agreements with Bitcoin, the number of on-chain staked significantly increased, including many that have not been pledged on-chain before. Bitcoin. Whether it is native Bitcoin or Bitcoin in the Yield protocol, it may add up to 100,000. These Bitcoins appear on the chain is a trend. In the past, users put BTC in cold wallets because they did not have usage scenarios, and on the other hand, they also because people do not want to store Bitcoin on exchanges through KYC. But now, some protocols allow users to stake Bitcoin on the chain to earn a portion of their profits. Judging from the communication with large investors, it is acceptable to allow them to change their previous positions in cold wallets from 10% to 5%.
Combining these two points, we believe that it can solve the basic security problems and give users some benefits. We have the hope of activate this part of Bitcoin and put it on the chain. superior. At the same time, we have also seen new buyers entering this round of market. These positions on Wall Street essentially treat BTC as a mass commodity, and they have a very strong urge to obtain profits. Among our clients, including our investor Franklin, MicroStrategy is also one of them. Whether on-chain or off-chain, they have a strong need to seek profits. Based on such user needs, we believe that the Bitcoin ecosystem will perform well in the next year.
The relationship between the security and expansion of Bitcoin expansion is a common topic. There is a certain contradiction between its security and application scenarios around Bitcoin. For example, you can choose to have a rich application scenario sidechain, or you can only make simple transfer applications such as Lightning Network or Taproot Assets. There is a trade off here: either you feel it is safe but has limited functionality, or you have enough application scenarios but have doubts about security. The problem we want to solve is how to combine these two features, or how BitVM Combine, so that it can not only require trustless or minimize trust-minimized, but also support programming (programmable) . This is very critical. We can also see that there are many expansion plans in the Bitcoin community. I just came back from Satoshi roundtable, and this issue is also a controversy among hundreds of schools of thought.
From a developer or user's perspective, I think anythingThe benefits of a chain or solution must be perceived by users or developers. If you cannot perceive it, it may be a waste of effort, or investing in asymmetric resources. For example, as the user scale increases, people's insistence on decentralization may no longer be so strong, which has led to high-performance chains like Solana being sought after. So, I concluded that it is very critical that both users and developers can be perceived by scaling or anything else.
Let's look at it again. Among the many expansion solutions, we need to understand what users and developers really need. Developers want their existing work to be seamlessly migrated, both on SVM and EVM, and unlimitedly migrated to new underlying libraries and security practices. If developers need to learn a new model, they need to inform them in advance what the benefits are, so that they are willing to invest time to learn this new model.
In the current era of hundreds of chains contending, it is completely different from 2010 when a product is developed and someone will use it. In this cycle, it is obvious that everyone is pursuing the wealth effect, and it is difficult for everyone to perceive technology or technology. Based on these observations and conclusions, we chose the BitVM route from the beginning because it is the most developer-friendly. It is only used as a verification component, and the difficult things are left to our teams that implement BitVM.
This friendly approach means that the application can be compatible with any virtual machine and can theoretically support any VM, including EVM and SVM, which is for developers Said very friendly. For users, this means that they have safer means and opportunities for profit, so they are naturally more willing to invest their funds on the chain.
Finally, to summarize, there is indeed a trade off between security and application scenarios. BitVM is to solve this trade off. We thought from the beginning , BitVM can solve these problems well while allowing both users and developers to perceive. This is why we chose this route.
Lao Bai: I will share it from the perspective of investment opportunities. We initially invested in Merlin as a bet on a short-term expansion solution, because Merlin was similar to Polygon. To put it bluntly, it was simply a side chain, but it was an EVM, so it was very easy to migrate and expand. This was the short-term solution at that time. Taproot Assets, as well as RGB and RGB++, we think it is moreThe tcoin native solution may take longer to verify or market PMF exploration than BitVM, so we invested in UTXO Stack, which is also based on RGB++, and is a layout on this ultra-long-term Bitcoin solution. The core of the medium-term layout is to explore or bet on Solv and Bitlayer. Solv is mainly in the BTCFI field, and we are not 100% sure about Bitlayer.
In response to Kevin's statement, we need a better WBTC, or to use BitVM technology to build a bridge to safely bridge BTC to other places, whether it is Web2 is also the various links of Web3. Can this be based on BitVM technology, or should we imitate Ethereum and Solana, and make a pure expansion solution based on BitVM, so that a chain or L2 can run, support various DApps such as lending, Dex, and stablecoins, and then simply use bits The security of Coin Layer 1. To be honest, I still don’t have 100% accurate judgments, so I can only say that I can take one step at a time. But no matter which path, BitVM technology is the most important direction worth exploring, because no matter which path, you need such a BitVM method to ensure security, or give users confidence to run the application ecosystem, or simply Pack BTC into XXBTC and bridge it elsewhere. This is my view on this issue from the perspective of investment institutions.
May: I want to emphasize the security issues that Kevin just mentioned. In the BTC field, many EVM sidechain solutions initially emerged, which essentially use EVM chains to unlock Bitcoin liquidity through cross-chain bridges. My personal opinion is that this model has obvious security problems and seems more fragile compared to the BitVM we discussed earlier. I think BTCFI is more important than BTC L2. BTC L2 needs to first solve the security problem. Only by solving the security problem can more funds be attracted, so that BTC's assets that occupy half of the Web3 field can be valued on the chain. This is crucial. Although some EVM sidechain projects have developed rapidly in the ecosystem, their life cycle may be short. In the long run, we need to find a balance between security and ecology, which is a question I want to emphasize.
WongSSH: As a developer, when I first saw some Bitcoin's EVM strategy expansion solutions, I found that these solutions were safe when I was looking at their documentation. Nothing veryGood solution, so I didn't participate in any Bitcoin EVM sidechain project. RGB++ and Lightning Network are what I have studied before. I was working on Taproot at the time, so I also learned about these technologies. From the developer's perspective, these theories are very complex and contain a lot of terms that I am not familiar with. Since I was mainly engaged in EVM smart contract development at that time, I was not particularly familiar with the UTXO system, so I made up a lot of lessons at that time. To better understand RGB++ and Lightning Networks.
I feel that they are more solid than the development of the Ethereum Foundation, without very radical innovation, and many do not even have a credit star, and can only see it The theory is that if I want to run something myself, there is no very good development framework for me to do these things. For BitVM, I first came into contact with BitVM0 and found it very complicated. I spent a long time studying various types of designs of BitVM0, but I still didn't fully understand it. Later, when I looked at it, it was BitVM2. Compared to BitVM0, I can at least understand a lot, and it may be because I understand UTXO better. So for BitVM2, I feel like it is starting to have the possibility of practical application. Later, I learned that the Bitlayer team announced in the blog that they had solved most of the technical issues in BitVM2, and in my opinion, BitVM2 became a more interesting direction. The above are my observations and experiences as a developer.
CH999: When we first looked at the so-called L2 of the Bitcoin ecosystem, we thought it was an easy-to-make product, and we made it into a public account with a multi-signment wallet. Chain quickly attracts developers to make exchanges, lending agreements, etc. on it, but its life cycle is destined to be relatively short. After all, to serve Bitcoin users, everyone must still value security, but if you just use a public chain made with a more signed wallet, security is not enough. If these sufficient and necessary conditions are not sufficient, it will be more difficult to go further. I agree very much with what a guest mentioned just now, RGB and BitVM. Both are RGB, and its RGB may be longer. If you bet on RGB, it is a bet on the long-term Bitcoin ecosystem. I have indeed seen BitVM technology recently. There are more breakthroughs. I think these two are solutions to the more mature and secure Bitcoin ecosystem. The current development progress of BitVM is quite exciting, which is my personal understanding of these different technical solutions. Thanks.
Implementation and prospects of BitVM technology paradigmraychief.eth: The guests just discussed itAfter a lot of details and outlooks about BitVM, our next question will continue to revolve around the topic of BitVM. All guests, including our audience, should pay great attention to the BitVM technical paradigm. You can start talking about how you view the prospects of BitVM and its implementation applications, and what changes it can bring to the entire industry. Let's start with Kevin.
Kevin: Before we decided to join the Bitlayer project, we had been helping ABCDE to look at projects. At that time, we thought that if we built a layer two network on Bitcoin, According to our experience in L2 over the past few years, the core is that the calculations or state transfers performed off-chain need to be verified on the chain. In theory, no matter which layer or main chain is obtained, and the corresponding actions are driven, such as redemption in Slash or emergency mode, this escape pod mode means that the chain theoretically inherits the security of the mother chain. sex. This model has been widely understood and time tested.
Based on this concept, we look for the possibility of implementing verification on Bitcoin. There was indeed no solution at the beginning. Fortunately, around October 2023, we noticed Robin Linus' paper, whose white paper proposed a way to implement fraud proof or OP on Bitcoin, which is essentially a verification. means.
We believe that its greatest value lies in several aspects: first, it does not require forking, which is the most important feature. If forking is needed, then achieving this goal will be in a long way, and a large number of protocols based on these opcodes will be difficult to implement. I may be more optimistic at the beginning. According to historical experience, the time for Bitcoin fork upgrades is almost here, but a year has passed, and I have done Research and published it in the community and found that things are not optimistic. So our initial judgment—the importance of the non-fork-free characteristic—is correct. The OP model or model that implements fraud proof on Bitcoin is very clear and easy to understand. Since you have been educated for many years, you don’t need to re-understand what concepts are rollup, OP, Validity Proof, etc., which is relatively easy for developers and users to educate. This is an important reason why we choose this direction.
Next, let's consider what changes it can bring. Since it is a means of implementing verification without fork on Bitcoin, any calculations performed off-chain can be verified theoretically. The first is the bridge we discuss, whether it is now or withdrawing funds, especially when withdrawing funds, you need to verify whether you are eligible or capable of regaining funds on the first floor. User funds are enteringWhen entering, it has been stored in a certain address. So why does this address have the authority to give funds to the user when the user withdraws funds, and how much money is left? Legality also needs to be verified. The BitVM mentioned just now is to be implemented in this scenario.
Go deeper into a layer, since it can be verified, then layer two networks or on-chain computing can also be verified theoretically. That is, state transfers performed in a layer 2 network can be used to perform challenging Fraud Proof verification on Bitcoin through the BitVM framework. In this way, the Layer 2 network can obtain relative Ethereum security similar to OP in this way. This is the second application scenario.
The third category is some more native or clear application protocols, such as staking, lending, stablecoin CDP, etc., which will benefit from this verification capability. For example, in staking, the slash behavior that occurs off-chain can be verified on the chain and triggered the corresponding slash. Similarly, lending, filing and other behaviors can also be verified on the chain and triggered corresponding actions. The implementation of BitVM will bring new opportunities to these native protocols. Based on the security improvement of layer 2 network and bridges of these native protocols, I believe that more capacity BTC will be transferred from centralized exchanges or off-chain to on-chain, which is very worth looking forward to, thank you.
Lao Bai: I am not a purely technical person, and my understanding of BitVM is not as deep as Kevin. From the perspective of investors, BitVM is a bit like Ethereum’s initial ZK rollup. It wants to achieve a complete trustless, which is essentially similar to Ethereum’s ZK rollup, because OP is considered a temporary solution, and after ZK, everyone will It can be fully verified, and it becomes fully trustless. When you have a fully trustless environment, what do you want to do on it? Or we can't do some things today due to trust, or we can't do them on a large scale, just understand this from this general direction.
I just said that BitVM is the third attempt on the Bitcoin chain, and it is likely to be the last attempt, following the failure of the large block and the chain The premise for the failure of the asset is that the third attempt is now likely to be the last attempt to stimulate transactions on the chain. I was wondering, if BitVM fails, what other means do we have? Whether it is technically or other ideas and directions, I personally can't think of it for the time being.
We can understand inscriptions and runes as one-click issuance of coins in Ethereum. Basically, the two most common things in a public chain are issuance of assets and expansion. BitVM is a way to expand capacity and add trustless, and inscriptions and runes are used as assets. After a year of hype about the issuance of assets, everyone has become desensitized to it. But in the end, there may be listeners who think that Bitcoin does not need anything, just do Bitcoin and its digital gold. But what if we look at it from a 20 or 50 years later, if there is no block reward, what exactly will our Bitcoin do? It is impossible to expect miners to use Ai to generate electricity, without block rewards or only a few bitcoins per block, and build such a large amount of computing power to ensure the security of Bitcoin. At that time, if it is not BitVM, or BitVM-based applications or other things to guarantee the miner's handling fee on the chain, and the miner's handling fee triggered by these transactions, what should be to guarantee these fees for Bitcoin? To put it bluntly, who will pay the bill and who will pay the miners to maintain the security of Bitcoin. Apart from converting Bitcoin into POS, I can only see the idea and direction of BitVM at present. Applications may not necessarily be the application we imagine now, but their inevitability is actually a more worthy of consideration.
raychief.eth: Mr. Lao Bai's viewpoint is relatively high-level. You can even look forward to the future. After Bitcoin is continuously reduced by halving, the block reward may be reduced to only What should I do when I was a few people, then what should I do with the entire Bitcoin ecosystem? What should I do with the miners on the chain? BitVM may also be a very understandable endgame battle. So, if we talk more deeply from a technical and technical perspective, what do those developers have?
May: One of the landing scenarios of BitVM is the cross-chain bridge that is trusted. We can imagine that now DeFi is still dominant. If there is a BitVM bridge, can we make Bitcoin liquidity the core of a new DeFi development path, so that Bitcoin can become the dominant position of DeFi and reduce people's dependence on centralized derivatives such as WBTC. This is a more practical implementation scenario for BitVM, and BTCFI can be activated in the future.
WongSSH: As a developer, I read some papers and parsing articles of BitVM0 very early. At that time, I thought it was a bit too complicated and it was difficult to think it was It became a reality, and I haven't been following BitVM all the time since. I recently saw BitVM2, which is simplified compared to BitVM0, and I can probably understand its overall operating principle. Compared to BitVM0, it is more about specific implementations than telling youSend an expectation and let everyone realize it. It is currently felt that BitVM2 may soon enter reality, and I think it may bring great changes to this industry in the future.
Bitlayer Differentiation of BitVM Bridge Solutionraychief.eth: We must look forward to this change and embrace this change. Everyone mentioned the bridge. Our next question is to invite Mr. Kevin to briefly introduce the Finality Bridge based on BitVM, as well as the advantages or highlights it has compared with some BTC bridges on the market.
Kevin: Simply put, we are the first to land BitVM on a bridge scene. Before doing it, we also had some thoughts. First of all, there are market pain points in Bitcoin packaging. The second is its model. A guest mentioned earlier that as a relatively good landing scenario, it is very suitable to become the first milestone. , because we are also working with the community to promote this direction. Our product test network has been online for more than a month, and it is expected that the main network will be online within the past one or two months.
We believe that as of now, Bitcoin packaging or bridging technology has developed to the third generation. The first two generations of technologies are mainly based on the user's trust model for most nodes or most controllers. The third generation technology, the BitVM-based model we currently adopt, is that it requires the trust of only a few people. Specifically, it only requires one of the operators to remain honest, which is an important difference from the previous two generations of technologies. .
Specifically, the first generation of technologies include common MPC and centralized hosting methods, and the representative of which is WBTC. The second generation of technology appears around 2021. The method of using POS network to determine the multi-signal behavior of Bitcoin layer one will ultimately rely on network consensus. Whether it is through threshold signatures or aggregate signatures, they are essentially based on the basis of majority security and majority honesty, that is, they need to trust that most nodes or most staking tokens in the POS network are basic assumptions that are honest.
The third generation of technology is the BitVM we are currently doing, adopting fraud proof or challenge model. As long as there is an honest operator, the entire bridge system will be It can ensure safety and activity. Therefore, from the perspective of safety and model, the third-generation technology has achieved a qualitative leap. This is the main difference between BitVM bridge and previous solutions.
We also noteI realized that there are several teams dedicated to the implementation of BitVM, and we have also done a lot of work in differentiation. Including us as core contributors to BitVM, we provide a large number of components. In addition, we have also invested a lot of work in project implementation, product user experience and funding efficiency. There is a lot of gap in the process of a product from white paper to final product implementation, which involves liquidity efficiency issues, the friendship of multi-chain expansion, and the friendship to retail investors. These are all issues we need to solve. It is also our differentiation and highlight. Thanks.
Bitcoin L2 development trends and potential opportunitiesraychief.eth: Thank you, Mr. Kevin. Next, you can start talking about how you view the development of L2 and Bitcoin in the future. Trends and opportunities to pay attention to.
CH999: I have a deep participation in Ethereum L2, but I feel a little confused at the moment. I think this is a problem facing Ethereum L2 and Bitcoin L2 together. The current market problem is that there are too many infrastructure and insufficient applications. There are many public chains, but the public chain is an empty city and lacks users. As for expectations for the Bitcoin ecosystem, I think at least we must be able to fully utilize the mature models in the Ethereum ecosystem or the Solana ecosystem, and then give full play to the advantages of latecomer advantages. For example, can the Bitcoin ecosystem have successful imitation trading similar to Ethena, and can the interest rate exchange agreement similar to Pendle appear? Because in the Bitcoin ecosystem, yield is a very important point for everyone, and DeFi products such as interest rate exchange agreements have demands for users and big-name institutions.
In addition, I am looking forward to more innovations in Bitcoin L2, rather than simply copying DeFi's "three-piece set", not too big significance. In addition to the two projects mentioned just now, I am looking forward to whether there will be more DeFi innovations in the Bitcoin ecosystem. If anything, I will pay special attention.
May: I think there is a difference in eco-culturality between Ethereum L2 and Bitcoin 2. The Ethereum L2 ecosystem is relatively prosperous, with dozens of already represented, including Arbitrum and Optimism. The developer community is active, the capital background is strong, and the project iteration speed is fast. Bitcoin L2 is relatively conservative because the Bitcoin community culture focuses on security and the main network protocol changes are cautious. For example, OP_CAT has not been approved so far, resulting in the development of Bitcoin L2 relatively slow. This is the cultural and ecological difference between the two. As Bitcoin L2 draws on the experience of Ethereum L2, its speed is also increasing. If we focus on the direction in the future, as Bitcoin gradually becomes the mainstream investment target, Bitcoin financialization will be promoted.Institutional-level products such as compliant stablecoins and yield derivatives will become the key to activate BTCFI.
Kevin: Let me add that as the founder of the public chain team, we are deeply thinking about the development direction of BTC L2 every day. We can explore the mission and implementation path of BTC L2 based on the observed phenomena. During this cycle, we observed a further expansion of Crypto user size, both retail and institutional clients. In this case, users’ fundamental requirements for Bitcoin are actually relatively weakened, because decentralization is not an absolute description, it is a very vague or universal description, and different people have a decentralization The demands are different, and the requirements for decentralization of different applications are also different. This explains why the high-performance public chain represented by Solana in this cycle gained popularity after sacrificing decentralization for performance, because users have no perception of decentralization and attach more importance to the wealth effect. What big players or institutions need is Income or asset management needs. The further weakening of decentralization brought about by the expansion of user scale and stratification.
In this situation, Solana is so strong and has a siphon effect, how should Bitcoin L2 be positioned? What is its mission? We can go back to the original point of view that BTCFI happens in a decentralized world, which includes several things we need to do. First of all, we need to understand the business model and really need to have a business, rather than relying solely on the traditional three-piece set. In the environment of pursuing wealth effect, three-piece sets cannot satisfy users. We need to solve real problems or meet the needs of these users who are chasing the wealth effect.
Whose needs do we want to meet and whose problems should we solve? The answer is BTC coin holders, whether they are institutions or retail investors, their needs are nothing more than asset management needs, moving off-chain assets to the chain. The first step is to understand business models, such as Trading, Lending, Staking and other applications. Because these needs exist, all we have to do is to move them to the chain through technology. There are real advantages on the chain, such as self-hosting, KYC exemption, and centralized risks.
The second step is to solve the security problem. An important mission of Bitcoin L2 is to solve how to allow BTC to participate in DeFi in a programmable environment through a secure or trustworthy way. This problem has not been solved yet. The problem that BTC L2 must shoulder and needs to be solved is also the reason why BitVM is implemented.
The third solution is definitely related to Trading. We think it needs to have a high-frequency environment for users to do transactions, and most sustainable BTC Yield applications have to go CeDeFi. The reason is that only by obtaining risk-free arbitrage opportunities through Trading, plus some on-chain strategies, can a stable Yield source be achieved. This is why we believe that both high-performance characteristics must be used, and all public chains are High-performance characteristics must be standard. If not, they will basically be swept into the garbage dump.
These missions correspond to the initial settings of our Bitlayer The first stage is to open the business model and find the PMF. At present, there are already some interest generation categories, options, as well as Perp and Dex; the second is the V2 we are working on, focusing on solving security issues. Including bridges and side chains becoming Rollup; the third is high-performance expansion, which is our focus of work in the second half of the year.
Summary, in the current user In the case of layering, head public chains such as Solana, Base, BNBChain, etc. will inevitably have a very strong network effect. BTC L2 has its own unique mission, which is to access the business model on the chain, solve security problems and provide a A high-performance environment. Every public chain must find its own position and business to be done, rather than being large and complete. The era of making a chain will be used by users, and you must find its own position and In specific areas, then form network effects in these areas, and solve specific problems will have a chance. Thank you.
raychief.eth: Kevin summarized it very well . When you listen to our hardcore sharing today, don’t forget to follow Bitlayer Chinese, ChainCatcher and the X accounts of all guests. Thank you for taking the time to listen to this issue of Twitter Space during the Lantern Festival. I hope that the Bitcoin ecological project based on BitVM can be used. Going further and further, you can find your own place in the ecology. This is the end of our Space today. I wish you all a happy Lantern Festival and goodbye.
