Bitcoin is evolving at breakneck speed. The world's oldest blockchain is undergoing a renaissance. NFTs, token standards, and staking are now part of its ecosystem.
Dozens of new scaling solutions and "Layer 2s" have emerged.
While price volatility grabs headlines, and millions of struggling investors are on the edge of their seats waiting for the next bull run to come true, developers say the real action is happening behind the scenes.
Who said that Bitcoin is supposed to stay the way Satoshi Nakamoto invented it forever? Layer 2 decisions in the world of Bitcoin are paving the way to new uncharted territories. The implications are simply unbelievable. These technologies can alter the very idea of Bitcoin. And all that can happen sooner than anyone expected.
The most exciting developments? They're just around the corner. Here's the leading five.
BitcoinOS: Pushing Boundaries
BitcoinOS made waves in July. They were the first to verify a zero-knowledge proof on Bitcoin. But last week, they dropped a real bombshell. Their manifesto claims they've unlocked "the ultimate upgrade to Bitcoin" without changing Bitcoin Core.
How's that even possible?
"BitcoinOS aims to be the last platform you'll ever need in the blockchain space," their website boasts. Their goal? Make Bitcoin the foundation for all decentralized innovation.
The team's BitSNARK technology is the secret sauce. It tackles Bitcoin's trilemma of scale, security, and expressivity. BitcoinOS isn't a typical Layer 2 or rollup. It's an infrastructure layer. Multiple rollups with diverse functions can be built on it. They instantly inherit Bitcoin's security and decentralization.
BitcoinOS unifies liquidity and users across its ecosystem. The result? A seamless, single-chain experience. It's Bitcoin, unleashed.
"Our goal is to unite the fragmented blockchain world and drive the next wave of adoption and development," the team declares.
Brollups: A Native Approach
Mid-June saw a new contender emerge. Bitcoin developer Burak Kecli proposed "Brollups". Unlike BitcoinOS, Brollups shun zero-knowledge tech. Kecli claims his design is truly "trustless".
"Brollup allows for unilateral exits," Kecli told Decrypt. "You can settle your coins without permission, unlike BitVM-based rollups where you have to ask."
Brollups use pre-signed transactions. Users swap Bitcoin UTXOs for virtual transaction outputs (VTXOs). These VTXOs enable smart contracts on Bitcoin. Yes, the smart contracts that are driving the innovation in the world of Ethereum.
The system can handle "over 90% of DeFi use-cases", according to docs.
Selling NFTs for Bitcoin? Check. Placing token orders on a DEX? No problem.
Brollups build on the Ark protocol. Ark aimed to fix UX issues in Bitcoin's lightning network, but it had limitations. So now Brollups address these head-on.
Kecli isn't pulling punches. "It does not mean anything to verify [zero-knowledge proofs] on Bitcoin unless users are able to exit," he argued in July. "It is not a layer 2 if [a] unilateral exit path is not available."
Fractal Bitcoin: Familiar Territory
Fractal takes a different tack. This Bitcoin sidechain focuses solely on scaling transactions. Its unique selling point? Familiarity. The code mimics Bitcoin's base layer closely.
For native Bitcoin devs, it's like coming home. And that might be the killer feature that can help Fractal thrive to success.
"Fractal enables plug-and-play continuity," states their website. It's a recursive scaling of Bitcoin Core code. No foreign constructs means native support for existing infrastructure, including wallets.
Fractal's transactions and hashes are traceable. They lead back to the Bitcoin blockchain itself. Fractals can stack, each layer boosting Bitcoin's scale by 20X. All transactions eventually resolve on Bitcoin L1.
Security is robust. Fractal uses a mix of Bitcoin L1 merged mining and native Fractal mining. It supports Ordinals and BRC-20 tokens, just like Bitcoin. UniSat, a BRC-20 marketplace, is a core contributor here.
Fractal's got a trick up its sleeve. It reintroduced OP_CAT, enabling smart contracts. "This is our initial step in providing enhanced Bitcoin scripting programmability on Fractal," said UniSat founder Lorenzo last month.
So, Fractal is something new done in an old-fashioned Bitcoin way. Satoshi would have liked it, wouldn't he?
Babylon: Staking Comes to Bitcoin
Babylon is bringing staking to Bitcoin.
It's a big deal. Staking is the most popular DeFi application on altcoin chains. Millions of users are staking their assets, some to make profits, others to influence the blockchain development.
Now, it's Bitcoin's turn.
Babylon Labs has launched phase one of its staking mainnet. BTC holders can lock up coins on the base layer, prepping for staking. Soon, these coins will secure multiple proof-of-stake networks simultaneously. Stakers will earn yield from each network.
While staking on Bitcoin might sound a bit weird, that's a pretty neat move.
"There is no wrapping or bridging involved," Babylon says. Staking BTC requires no trust in intermediaries, IOUs, or specific layer-2 chains. "Through its modular design and slashing functionality, Babylon Bitcoin Staking Protocol will enable [proof of stake] systems to introduce bitcoin as a staking asset and enjoy higher crypto-economic security than what native tokens can provide."
Babylon co-founder David Tse sees big potential.
Just hear this out. Altcoins could use Bitcoin for economic security without inflating their native assets. You could have best of both worlds simultaneously.
But, wait, there is more.
Bitcoin Layer 2 solutions are the real prize. "Bitcoin staking becomes a mechanism where the L2s can get security from Bitcoin," Tse explained. "They want to get liquidity from Bitcoin, [and] they want to get security from the most secure chain in the world."
With Bitcoin staking on the horizon, projects are already moving. Stacks-based Zest Protocol is enabling liquid staking on Bitcoin. Savers can earn yield while retaining the freedom to trade BTC.
Nubit: The Backbone of Bitcoin L2s
Nubit is aiming to be the unsung hero of Bitcoin's evolution. It's a background service, acting as the spine securing multiple Bitcoin L2s.
This blockchain will be a "data-availability" (DA) layer. It's secured through Bitcoin staking and powered by the Babylon Protocol. Regular security checkpoints are posted to Bitcoin L1. Nubit is optimized for storing massive amounts of data from Web2 and Web3. It inherits security almost on par with Bitcoin itself.
Sounds way too complicated? Wait until you hear this.
"Nubit DA leverages Bitcoin to deliver trustless, scalable data availability across all chains in the ecosystem," wrote Nubit co-founder Yu Feng earlier this month. Data availability is crucial. It ensures all blockchain transactions are faithfully stored and proposed. It guarantees the chain's state can be recovered at any time.
For the plethora of Bitcoin rollup projects, using Bitcoin L1 for DA is cost-prohibitive. Researchers have confirmed this. See? That's why most are eyeing optimized DA layers that inherit Bitcoin's security.
Feng's vision is ambitious.
"We offer an ecosystem solution that not only simplifies the transition from Web2 to Web3 but also empowers an open, collaborative environment where everyone can participate and be rewarded through the Nubit network," he wrote.