The Bitcoin Ecosystem Emerges: 4 Layer2 Projects Worth Watching

With the significant “enrichment effect” generated by Inscription, it has brought funds and attention to the Bitcoin ecosystem. Just as Ethereum built its ecosystem, serving as a developmental template, Bitcoin is beginning to demonstrate its path towards ecosystem development.

Jademont, founder of Waterdrip Capital, stated that at least 10 Bitcoin Layer 2 networks will be launched next year, marking a significant step forward in boosting the infrastructure development of the Bitcoin ecosystem.

However, engaging in development activities on Bitcoin remains a contentious choice at present.

Two Expectations and Community Structures

BTC has always been the barometer for the

cryptocurrency

market. One reason is that it was the first widely recognized cryptocurrency, possessing a sense of “consensus.” Another reason is its highest market share. In the upcoming period, two factors will drive the price surge of BTC: 1. BTC is facing halving of its production. 2. The expected approval of BTC spot ETF.

The rising price of BTC generates a strong “enrichment effect” for BRC-20. The potential funding volume and the attention BTC has already garnered are driving forces behind the development of the BTC ecosystem.

Compared to other public chain projects like Solana and AVAX, the Bitcoin holder community comprises not only investment institutions, project teams, and individual investors but also miners. The mining community holds over 1.7 million BTC and controls nodes, thus having significant influence over BTC's development direction and price.

Therefore, despite some node developers, such as Bitcoin Core developer Luke Dashjr, not recognizing Inscription—for instance, Dashjr referred to Inscription as a “bug” exploiting the Bitcoin network—and dismissing the Ordinals protocol as a scam, whether it is necessary to build an ecosystem based on BTC still depends on whether the mining community supports it.

Four BTC Layer2 Projects

MAP Protocol

MAP Protocol is a Bitcoin Layer 2 solution for peer-to-peer cross-chain interoperability. On December 7th, MAP Protocol announced a strategic investment from Waterdrip Capital.

Utilizing Bitcoin's security mechanisms, MAP Protocol enables seamless interaction between assets and users from other public chains with the Bitcoin network. This enhances network security while facilitating cross-chain capabilities for BRC-20 assets. Through MAP Protocol's cross-chain extension protocol, BRC-201, BRC-20 and ORC-20 assets on the Bitcoin network can interact with tokens on other public chains.

MAP Protocol has native tokens named MAP and MAPO. They are the same tokens but are distinguished by different codes indicating the respective chains they belong to. On December 18th, MAP Protocol announced a significant token burn totaling 133,886,020 MAP/MAPO tokens, accounting for 5.9% of the circulating supply.

Dovi

Dovi is a Bitcoin Layer 2 solution compatible with EVM smart contracts aimed at enhancing scalability, reducing costs, and fostering a more secure, decentralized financial ecosystem. On December 11th, KuCoin Labs announced strategic investment in the Bitcoin Layer 2 solution Dovi and established a partnership. Its native token, DOVI, was listed on the KuCoin exchange platform on December 12th.

According to the recently released whitepaper, Dovi's use cases primarily include high-speed transaction capabilities allowing users to conduct quick micropayments, suitable for everyday shopping and online services. Developers can design and deploy complex smart contracts on the network without worrying about transaction speeds and costs. Enterprises can utilize Dovi for large-scale asset transfers and management. Educational institutions and researchers can explore new applications of Bitcoin and blockchain technology in fields like economics, computer science, and sociology.

As per the official website, Dovi's next steps include the release of a testnet, establishing a developer community and ecosystem support, as well as the launch of Dovi V1.

x. TAI

x.TAI Network is a Bitcoin Layer 2 scaling solution based on AI encryption algorithms, integrating technologies like AI, DeInfra, Layer 2, among others, aiming to establish a development environment and ecosystem in line with Inscription's development.

On December 8th, x.TAI revealed the live demonstration of the XRC 20 protocol encryption process. It is the first protocol to introduce the GRU (Gated Recurrent Unit) and the Lorenz Hyperchaotic System into the Bitcoin Layer 2 scaling network. x.TAI achieved a highly private, low-cost interaction Layer 2 network environment through witnessing compression technology. Additionally, x.TAI disclosed having secured $1.2 million in funding for subsequent technical development and expansion.

DFS Network

DFS Network is an upcoming Bitcoin Layer 2 project that aims to enable various inscriptions issued on the Bitcoin network to be transacted on the DFS Network, facilitating the development of DeFi, gaming, and more.

As per official information, DFS is the mainnet token of DFS Network, with a total supply of 10 million. Among these, 1 million DFSN has been fairly distributed on the BTC chain, and 2.5 million DFS on the EOS chain. The remaining 6.5 million tokens will be fairly released through liquidity mining. The relationship between DFSN and DFS tokens is as follows: 1 DFSN = 1 DFS + 1 meme (BRC-20), and 1 DFS equals 1 DFS.