Bitcoin’s L2 Landscape: Understanding Bridges and Their Futures

As we embark on a new chapter of Bitcoin development, understanding the complexities of the L2 debate has become increasingly challenging for most people, along with the technical jargon that accompanies it. From sidechains and rollups to sequencers, multisig, and ZKPs, it can feel overwhelming. In this report, we aim to clarify these concepts by presenting the UTXO thesis regarding Bitcoin L2s and addressing the following questions:

Contents

Assessing the Need for Bridges The Present Landscape of Bitcoin Bridges Understanding the Tension Between Addressing Technical Challenges and Cultivating a Sustainable User Base.The Future of Bitcoin Bridges (BitVM and Beyond)The Argument for Bitcoin Rollups and Bridge Advancement

Is there a need for Bridges in Bitcoin?
What distinguishes sidechains (e.g., BOB, Botanix) from rollup designs (e.g., Alpen, Citrea)?
What tactics are used to persuade Bitcoin users to bridge their BTC?
What are the various implementations of BitVM, and how do they innovate Bitcoin Bridges?
Can rollups rival existing L2 options like Lightning?

Table of contents:

Assessing the Need for Bridges

The Present Landscape of Bitcoin Bridges

Examining the Tension Between Addressing Technical Challenges and Cultivating a Sustainable User Base.

The Future of Bitcoin Bridges (BitVM and Beyond)

The Argument for Bitcoin Rollups and Bridge Advancement

Essential Insights:

Realizing the potential of Bitcoin Season 2 necessitates significant funding and research into bridge design, blockspace dynamics, and interoperability.
Sidechains represent a spectrum, and the marketing of Bitcoin “L2” often overlooks numerous innovative bridging systems that offer viable alternatives to rollups.
Rollups will likely have a greater impact on Bitcoin than on Ethereum, with the capability to achieve over $133 billion in TVL within the next five years.
Research into BitVM and ZKPs is leading Bitcoin innovation and will become a critical topic in this cycle.
Investing in firms equipped to tackle the challenges associated with Bitcoin rollups is crucial, covering areas such as MEV research, data availability, decentralized sequencing, attestation chains, and user experience.

Assessing the Need for Bridges

When discussing Bitcoin scaling, we are frequently reminded of the scale of the challenge at hand. The topic of whether to scale the Bitcoin base layer was settled during the Blocksize Wars: Bitcoin must scale in layers.

However, layers come in various forms, with numerous mechanisms available for building them.

One of the oldest and most straightforward approaches to scaling Bitcoin involves sidechains. Yet, sidechains don’t technically qualify as a true “layer” of Bitcoin, often lacking the unilateral exit component that provides trustlessness for users, meaning they don’t exhibit the same trust assumptions as the base layer. Consequently, following the introduction of SegWit, much of the Bitcoin community focused on developing the Lightning Network (a reliable L2 that relies on Bitcoin’s security for unilateral exit options) rather than on sidechains.

To access a sidechain, users must initiate a “peg-in” transaction (or “peg-out” for exit)—essentially moving their BTC to an address controlled by the sidechain’s operators. This system is secured by a mechanism known as a bridge.

The complexity of bridges arises from their typical dependence on a multisignature wallet to hold all the sidechain’s funds, necessitating user trust that a majority within the multisig will collaborate on withdrawal approvals. For instance, if a coalition of 20 companies set up a bridge contract requiring at least 12 (though potentially less or more) to validate a withdrawal transaction, this security model raises concerns and provides a significant incentive for companies or individuals to collude and misappropriate user funds.

Some notable sidechain designs, such as Liquid (a federation of companies) and RSK (a merged-mined sidechain), have surfaced, but none have managed to achieve substantial scale.

Before proceeding, let us clarify some definitions from researchers deeply invested in this topic—Bitcoin Layers.

Sidechain refers to an L1 that exists to enhance BTC’s functionality. L1s have a sovereign technical structure but usually operate as subsets of the Bitcoin ecosystem. It’s common for sidechains to integrate a BTC bridge within their consensus mechanisms or to involve Bitcoin miners in consensus—through merged mining or fee-sharing.

Rollup operates as a modular blockchain reliant on a parent blockchain for data availability. It retains its state root and sufficient transaction data to reconstruct its blockchain state from inception, thereby functioning as an L2.

Two-way pegs are systems allowing for the minting and burning of BTC-backed tokens on a Bitcoin layer or alternative L1. They are also recognized as bridges.

But if bridge designs have existed for ages without significant traction, what is the current need for them?

While the Lightning Network held sway in the L2 realm for an extensive period, 2023 brought forth a disruptive concept: BitVM. In essence, BitVM enables greater programmability for Bitcoin, potentially ushering in new L2 designs like rollups. These developments hinge on a familiar component from sidechains: the bridging mechanism, permitting user transition from the base chain to the sidechain. The promise surrounding BitVM lies in the ability to decentralize bridges beyond traditional sidechains by introducing a challenge mechanism to penalize dishonest behavior within a federation.

Thus, while rollups on Bitcoin may not be entirely devoid of trust concerns, they can be trust-minimized. Users would still rely on an honest participant (we will explore these specifics later in this report) to exit the chain (rollup), but many may accept this trade-off considering the scalability and programmability advantages.

BitVM (alongside Robin Linus) has effectively reinvigorated the concept of Bitcoin bridges and bestowed a greater legitimacy upon them as a scaling solution for Bitcoin. Bridge design has now become a focal point of every scalability discussion, with numerous Bitcoin companies dedicating efforts to innovate these systems.

Having established the resurgence of bridges as a credible scaling method for Bitcoin, one might argue that rollups facilitated by BitVM are likely to face similar challenges to Liquid or RSK—potentially attracting only a limited user base. While this may be true, the success of rollups on Ethereum reflects a strong consumer demand and considerable investor interest.

Data from the leading ETH rollup analytics platform L2Beat indicates that the top 10 rollups on ETH have collectively amassed nearly $40 billion in bridged assets. Arbitrum, Base (Coinbase), and Optimism command over 71% of the market share. Additionally, in just the past year, the value of ETH locked in rollups surged from $6.1 million to $13.1 million—an impressive 114% rise.

*Source:* *https://l2beat.com/scaling/tvl*

Indeed, rollups are poised to make a greater impact on Bitcoin than they ever could on Ethereum. Assuming equivalent rollup utilization (10.4% for ETH) and considering the market caps from July 2024—$383 billion for ETH versus $1.276 trillion for BTC—the total addressable market for Bitcoin rollups is estimated to be roughly $133 billion. While this figure is substantial, one might even argue that Bitcoin’s scaling needs could surpass those of ETH, as it aspires to become the settlement network for all economic applications, suggesting that rollups might have even greater potential.

Recognizing this potential, a wealth of developer talent has gravitated back to Bitcoin, igniting a genuine renaissance in the space. As anticipation grew that Bitcoin users seek increased utility (yield) from their assets, a wave of over 70 new projects emerged at the end of 2023 and the start of 2024, each promising to decentralize their bridging designs once the technology becomes viable, while others are crafting innovative bridge solutions.

The no-bridge meta. Though not the primary focus of this report, it is essential to acknowledge that multiple projects in the L2 arena aim to scale Bitcoin without relying on intricate bridge systems. These initiatives will be crucial in the quest for Bitcoin scalability, offering valuable alternatives for users who prefer to avoid specific trade-offs.

Arch: The Arch Network employs a pioneering approach to state management within Bitcoin’s layer 1, utilizing ordinals through a distinctive “state chaining” process. State modifications are executed in one transaction, minimizing fees and promising atomic execution. Designed to enhance programmability without compromising self-custody, Arch enables Bitcoin users to create and engage with decentralized applications without extra trust requirements. Its innovative architecture consists of a two-part execution platform: The Arch zkVM and the Arch Decentralized Verifier Network.

QED: QED addresses the core scaling challenge of blockchains by leveraging zk-PARTH, an advanced state model that allows for significantly parallelized transaction verification and block creation. This approach enables QED to achieve millions of transactions per second while ensuring security through mathematical proofs.

RGB++: The RGB++ protocol offers native Turing-complete capability on Bitcoin’s layer 1 without being BitVM. It operates without requiring new OP codes or hard/soft forks and directly allows programmability on layer 1. This protocol does not function like an EVM or a rollup; it simply enhances Bitcoin UTXO with extra data. Each Bitcoin UTXO links to an off-chain data cell (or Turing-complete UTXO), allowing the transfer of additional assets from one UTXO to another while executing scripts, thus creating off-chain transactions with off-chain state transfer.

The Present Landscape of Bitcoin Bridges

Having established that novel bridge designs bear revolutionary potential for Bitcoin as a settlement network, let’s examine the current framework of Bitcoin bridges, their architectures, optimizations, and various variants.

We will explore several L2/sidechain designs and how their developers are addressing specific trade-offs associated with their bridging mechanisms.

In summary, we can categorize four distinct types of bridge designs:

Traditional Bridges: Standard bridges as outlined above.

Reinforced Bridges: These bridge designs incorporate an additional security layer to alleviate centralization risks. For instance, BOB (Built on Bitcoin) plans to move away from reliance on (centralized) sequencers by equipping Bitcoin miners to run full nodes of BOB, thus ensuring the sequencer produces valid blocks. This transition will utilize an alternative version of merge-mining known as Optimine.

*Source:* *https://docs.gobob.xyz/docs/learn/bob-stack/roadmap*

Optimized Bridges: These bridge designs innovate by distributing trust among multisig participants. A notable example is Botanix, whose bridge multisig is distributed among various users and can adapt and shift between blocks. The Botanix bridge is also augmented with a proof-of-stake (POS) system that complements its FROST-based architecture.

Trust-Minimized Bridges: Under development by rollup teams, these bridges will operate under near trustless assumptions, allowing participants beyond the multisig to engage in the protocol.

Understanding the Tension Between Addressing Technical Challenges and Cultivating a Sustainable User Base.

1. The emergence of an L2: selecting the optimal go-to-market strategy.

For Bitcoin developers in 2024, two strategic pathways are apparent within the Bitcoin L2 paradigm:

Focusing on technical challenges around bridging architecture and rollup design to build a trust-minimized layer with complex zero-knowledge proofs and BitVM optimizations—this is the Technological strategy.
Pursuing the fastest go-to-market strategy through calculated trade-offs in bridging architectures and execution environments, with intentions to decentralize once the technology is available. To stand out against current competitors and shield against future ones, businesses must offer incentives in the form of points or tokens to attract users—this is the Community Moat approach.

Within the Community Moat approach, the trade-off is straightforward: prioritize user acquisition and TVL in the short term at the expense of decentralization in the medium term. While this strategy may face criticism from hardcore Bitcoin proponents, it reflects a pragmatic, business-first mindset often lacking in projects that ultimately fail despite their technological superiority. Execution is CRUCIAL.

These differing methodologies have complicated intellectual discussions around Bitcoin L2s recently. There’s a tendency for people to confuse the objectives of companies targeting a Technological solution with those aiming to tackle a User Acquisition challenge. Each group has fundamentally distinct go-to-market strategies and therefore employs different techniques to illustrate their superiority in Bitcoin L2 (or their status as the first).

2. Sidechains vs rollups: recognizing their spectrum. That’s the crux of the issue. There will be Bitcoin sidechains, Bitcoin rollups, and everything in between. Bitcoin L2s exist on a spectrum, with one end typically characterized by builders pursuing the Technological route while the other end is represented by the Community Moat approach. Let’s explore this spectrum.

As Janusz from Bitcoin Layers puts it, “Not every Bitcoin layer is created equal,” and many in the space tend to dismiss companies favoring the more rapid go-to-market sidechains approach while admiring the intricate contributions of researchers within BitVM/ZKP.
(Refer to earlier definitions of sidechains and rollups if you’re uncertain about their distinctions.)

While this perspective may make sense from a Bitcoin Maximalist angle, it represents a fundamental misunderstanding from a free-market standpoint. Although the technological approach may be intellectually rewarding, and the allure of a truly decentralized L2 appealing, actual users tend to prioritize other factors.

While this spectrum serves as a valuable tool for deciphering the trade-offs made by companies, ultimately, users will determine their own priorities regarding user experience, cost-effective fees, rapid settlement, and protocol security.

Analyzing the current state of the cryptocurrency market, it remains unclear whether a technology-first approach can contend with the memetic strength of protocols like Solana. How many individuals worldwide are aware of Solana in contrast to the number familiar with the term rollup?

At UTXO, we recognize value in both rollups and sidechains, particularly provided sidechains fulfill their promises to decentralize over time. While historical evidence may suggest otherwise for other chains, we anticipate that once reliable technology is established, Bitcoin users will demand trust-minimized solutions as a standard, rather than merely a preference.

3. Is your goal to generate profits or to be correct? The incentive structures for new Bitcoin layers. We will take a closer look at the go-to-market strategies of existing projects and assess the potential opportunities available for early users and liquidity providers. The strategies discussed next are not exclusive to any individual project, but we will emphasize the most defining aspects of each.

A) Point system (BOB): The BOB point system represents the most successful approach we’ve seen within the Bitcoin ecosystem. BOB Fusion serves as the official points initiative of BOB, enabling users to accrue BOB Spice (points) based on their on-chain activities on the BOB mainnet.

B) Ecosystem-first (Botanix): Botanix has adopted a wise strategy by opting not to release a token upon launch. Their application-first approach allows projects built on Botanix to thrive, ensuring that partners are supported with TVL from day one. Speculators will only gain exposure to Botanix’s launch by investing in its ecosystem applications. As we know, establishing a real and engaged user base is vital for the long-term sustainability of L2s, and Botanix is employing an innovative strategy to guarantee this.

C) Research (Bitlayer): With a highly skilled team, Bitlayer has differentiated itself through a research-focused approach, unusual outside the realm of rollup-only initiatives. Since the inception of BitVM, the Bitlayer team has actively contributed to refining our understanding of its underlying concept, producing extensive research papers on the subject. They are continuously exploring ways to enhance current BitVM designs and are poised to become one of the leading L2 teams once their research yields results.

The Future of Bitcoin Bridges (BitVM and Beyond)

In reviewing bridge designs, it is clear that the most decentralized variations will arise from adaptations of BitVM. BitVM, however, isn’t merely a singular entity; instead, multiple teams are developing competing (and synergistic) versions following the initial proposal by Robin Linus.

The primary differences among these BitVM variations hinge on a few key factors:

Trust assumptions: How decentralized is the bridge regarding users’ ability to exit the rollup in a trustless manner? In the context of BitVM and optimistic rollups, who has the authority to challenge the rollup’s state? The range of assumptions spans from anyone (favorable) to only a majority within the multisig (less favorable).
Challenge response: Once a challenge is initiated against the optimistic rollup, what are the requirements in terms of time and resources (number of transactions + transaction size at a given fee rate) for “justice to be served”? This range can extend from months involving multiple on-chain interactions (less favorable) to hours with a single interaction (more favorable).

From the Snarknado whitepaper:

“BitVM, is, however, not without overhead. Like optimistic rollup, the proof requires a withdrawal period to allow challengers to step in. Be aware that a fully on-chain challenge-response might necessitate numerous back-and-forth transactions between the prover (designated as Paul in BitVM) and the challenger (referred to as Vicky), and given Bitcoin’s 10-minute block time, this could be a lengthy process. Additionally, it remains uncertain how the system would respond if multiple challengers attempted to challenge concurrently, and whether this would influence latency and finality.”

Capital efficiency: What are the capital prerequisites for rollup operators? What amount of BTC must they maintain to ensure all users can withdraw funds and perform transactions unobstructed? While there’s no straightforward metric to gauge this, we can conceptualize a combination of “costs of capital necessary to lock funds for X duration” plus “a multiple of BTC deposits by users that operators must secure.” The spectrum of assumptions may vary from “high capital costs with high BTC multiples” (negative, implying that operating a rollup isn’t favorable) to “low capital costs with a BTC multiple of 1” (enabling rollups to compete with Lightning and Ark).

“An operator will initially meet user withdrawal requests from their own funds and then aggregate the requisite proofs into a single submission to the network. Should other operators suspect deceit, they can issue a challenge to the submission. Successful challenges will result in the dishonest operator forfeiting their initial bond and being ousted from the network. If the operator’s submission faces no challenges, they can reclaim the amount disbursed to users from their original deposits.”

Despite these innovations at the bridge level, the bridge cannot be separated from its foundational layer, and in the context of rollups, the foundational design choices are paramount. For all the security and trust-minimization benefits of BitVM bridges, to make a fair comparison between sidechains and rollups, we must evaluate them in their totality.

One monumental decision that teams will face is the issue of data availability (DA):

“The publishing of transaction data required to verify transactions, satisfy proving schemes, or otherwise progress the chain. Specifically, a node verifies data availability when it receives a new block adding to the chain. The node attempts to download all the transaction data for the new block to validate availability. If the node can successfully download all the transaction data, it demonstrates that data availability has been verified, confirming that the block data was indeed published to the network.”

There are only two strategies for ensuring data availability: posting directly on Bitcoin or utilizing alternate platforms. In terms of Bitcoin rollups, it would be expected that DA would consistently be posted on Bitcoin by default. However, this entails significant costs that could adversely impact both user transaction expenses and the rollup teams’ capacity to generate profit margins. As a result, some teams are inclined to sacrifice security in exchange for lower transaction costs and enhanced scalability.

The DA dilemma:

Once again, the choice between security and user experience may be deemed a moral failing by Bitcoin purists, yet we’ve observed that certain users prefer this approach in the context of sidechains or specific ETH rollups.

In this regard, the DA dilemma transcends mere technical complexities and poses a significant social question. Yes, relying on Bitcoin for DA is essential to qualify as a legitimate Bitcoin L2, but does that still hold weight if only the rollups that forgo Bitcoin DA attract users?

Let’s clarify a few more terms before proceeding:

Optimium: Optimium refers to an optimistic rollup that retains transaction data on-chain. This guarantees both availability and security but leads to increased costs and decreased scalability compared to off-chain alternatives. Users do not need to trust third-party data providers.

Validium: Validium serves as an optimistic rollup variant that stores transaction data off-chain. This facilitates high scalability and low costs, although it introduces risks linked to potential data censorship or unavailability without on-chain backups. Users must trust that data providers are both honest and resilient.

An intriguing investment opportunity emerging from this scenario is the creation of a potential DA layer closely tied to Bitcoin—essentially the Celestia of Bitcoin. While we are not at that juncture yet, examining various strategies to mitigate consensus failures for rollups is a key area of focus for UTXO, which in part influenced our investment in CHAR by Jeremy Rubin (a Bitcoin Core developer, BIP-119 author).

CHAR operates via attestation chains, where nodes commit to signing a unique, unconflicted sequence to organize transactions.
This functions as a layer 2 for scalability and capability, providing new security for BitVM through L1 bonds, while incentivizing operators by distributing rewards.
This novel approach to protocol security (consensus orchestration) will enhance the efficiency and incentive alignment of on-chain resolutions for challenges on BitVM.

While the Lightning Network seeks to achieve scalability through peer connections, leading to liquidity challenges, rollups handle transaction execution off-chain; however, the current architectures render Bitcoin a costly DA layer for utilization. Ultimately, all systems will probably adopt centralized solutions to enhance user experience, making it difficult to discern which trade-off might be less favorable.

Looking ahead, Citrea aims to launch volition, a hybrid model that reconciles on-chain security with off-chain cost efficiency. This allows applications to select their preferred data storage method based on specific needs. This novel concept deserves significant attention in relation to the DA dilemma for Bitcoin rollups.

“Depending on your application, if you’re set to launch a gaming application, you can opt for off-chain data. It’s economical and swift while maintaining Bitcoin’s interoperability. Conversely, if you’re developing a Bitcoin-backed stablecoin application, on-chain data is preferable for enhanced security and Bitcoin backing. Although this may incur higher costs, you simultaneously retain interoperability between the gaming app and the stablecoin application.”

Additional challenges related to Bitcoin as a DA layer. To understand this thoroughly, we recommend reviewing the latest Galaxy Research report that explores Bitcoin as a DA layer. However, one notable challenge that warrants further exploration is blockspace demand and fee rate dynamics.

Blockspace scarcity may drive centralizing trends among rollups and ultimately pools. Due to the considerable quantity of data required for settling rollup activities on Bitcoin, rollup operators might be inclined to streamline their transaction processes by utilizing the services of pools like Marathon with slipstream features. Such out-of-band (OOB) agreements with miners introduce centralizing elements, as they offer additional revenue avenues to pools that aren’t transparently accessible on-chain. Nevertheless, seeking differentiation within a competitive market underscores the normalcy of this behavior and does not pose an inherent threat to Bitcoin by modifying mining game theory (i.e., only the most efficient miners persist in the long term).

Fee rate dynamics will shift with the emergence of a new blockspace buyer of last resort, but this situation will differ from past experiences. The persistent demand for blockspace, regardless of fee rates, reflects a new pattern in Bitcoin’s historical context. In the case of ordinals, degens minting JPEGs have an incentive to perpetually conduct transactions as long as blocks are not filled, acting as a natural buyer of last resort for blockspace. However, ordinall and Runes/BRC-20 can choose to wait and pay lower fees or opt for high fees for prompt inclusion, while rollup operators cannot afford that. Their proofs will be submitted at a predetermined frequency, irrespective of the current fee situation. This kind of insatiable demand will likely have a pronounced effect on fees since it competes not only for inclusion in blocks (4MB x mempool size) but also for the next block only (limited to 4MB). As Bitcoin cements its position as the settlement chain for all economic activities, we can anticipate these demands to increase, inevitably raising fees, casting doubt on the economic viability of rollups as they struggle to compete with the Lightning Network in terms of transaction costs.

In SOTB_2, the forthcoming part of this research series, we’ll explore how the activation of various opcodes could enhance the efficiency and decentralization of Bitcoin rollups. In the interim, we leave our readers with a salient point:

Debates surrounding governance are always challenging; however, I believe they are essential, particularly concerning Bitcoin rollups. It appears to me to represent a classic chicken-and-egg dilemma: we aspire to have rollups to scale and introduce functionality to Bitcoin. The only way to actualize this is by reactivating OP_CAT, yet OP_CAT also enables functionalities beyond what’s needed for rollups while being inefficient in validating zero-knowledge proofs.

Should we demonstrate sufficient demand for optimistic rollups without activating a new opcode first, subsequently enabling a dedicated opcode to refine them? Or should we proceed by activating OP_CAT to affirm demand for rollups, even at the risk of operational inefficiency, potentially discouraging users? We don’t have a definitive answer, but hopeful that rollup teams will provide clarity as the year progresses. Meanwhile, proposals for other covenants such as LNHANCE (including CTV) or TX_HASH may offer pathways for Bitcoin to scale outside the scope of rollups.

The Argument for Bitcoin Rollups and Bridge Advancement

In this evolving Bitcoin L2 landscape, the competition between sidechains and rollups will intensify. As we have shown, a common fallacy within the community is the view that sidechains lack interest due to their greater centralization compared to L2s, while rollups merely represent a new variant of sidechains.

The positive outlook for sidechains hinges on their capacity to introduce EVM compatibility within the Bitcoin ecosystem, thereby igniting defi activity among Bitcoiners seeking yield opportunities. Currently, over $9.3 billion is locked in WBTC, as reported by DeFillama. It is crucial to re-engage this activity with more Bitcoin-native solutions if Bitcoin is to prosper as a settlement network for economic activities. Additionally, we believe that innovations arising from new sidechain models can assist in resolving certain centralization drawbacks that plagued previous designs. Both Optimized and Reinforced Bridge frameworks possess intriguing value propositions that may entice sufficient users and institutions to join these ecosystems.

When discussing Bitcoin sidechains, it is imperative to grasp that their primary purpose remains disintermediated economic activities, rather than peer-to-peer cash censorship resistance. Consequently, participants in these networks will likely prioritize different aspects, with economic benefits taking precedence.

For rollups, BitVM’s innovation may facilitate their evolution toward true Bitcoin L2s, with trust minimization at their core. Undoubtedly, Bitcoin rollups will confront a multitude of obstacles; however, they are being constructed in line with the ideals of the Bitcoin cypherpunk philosophy. Teams employing zero-knowledge proofs present a significant opportunity for Bitcoin to enhance its scalability while safeguarding privacy and cryptographic integrity.

The skepticism surrounding these innovations can be attributed to what we term “low fee rate bias.” Recently, Bitcoin fees have been artificially suppressed, partly because adoption has lagged and off-chain exchanges are used for transactions. However, this bias will likely vanish as fees escalate to unsustainable levels for the majority. This moment of realization will prompt users to seek alternatives, thus spotlighting the constraints of the base layer. Once that occurs, we predict a rush toward sidechains and rollups as users look to exit.

With reference to his article titled “The bridge race is on. Godspeed my friends,” Janusz from Bitcoin Layers aptly observes that the contest between sidechains and rollups is now underway—a race for harnessing all the capital that either resides in Bitcoin wallets or within altcoin protocols.

“Thus, I conclude that, based on our investigative work on sidechains and L2s, Bitcoin benefits from discussions about improved bridging methods. I contend that the most successful Bitcoin L2s, in the long run, will either stem from a variation of BitVM2, proposed opcode modifications, or a combination of both. It’s worth noting from my experience in Nashville that these systems may even complement each other.”

The resurgence of sidechains arises from projects striving to preempt what promises to be a significant narrative for Bitcoin in the coming years. This new narrative will likely be accompanied by billions in fresh capital searching for appealing investments within the most secure and largest digital asset—Bitcoin.

Revolutions are inherently disorderly, tumultuous, and tend to catch the unprepared off guard. The L2 movement on Bitcoin follows this same trajectory. While it may seem difficult to comprehend the evolving landscape, the revolution’s direction has never been clearer. We are progressing towards the next phase of the journey towards hyperbitcoinization.

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