Over the past year, Bitcoin has evolved at an unprecedented pace.
A so-called “Bitcoin Renaissance” has ushered in NFTs, token standards, staking, and dozens of new scaling solutions and “Layer 2s” built upon the oldest, most popular blockchain. In fact, while Bitcoin’s recent price action has been volatile, developers say the network’s biggest stories are unfolding under the hood—and that its most exciting times are likely just months away.
Here’s a look at five projects that are redefining what’s possible on Bitcoin.
1. BitcoinOS
BitcoinOS said it was the first project to verify a zero-knowledge proof on Bitcoin in July. Last week, the team published a manifesto claiming they’ve unlocked “the ultimate upgrade to Bitcoin” without requiring “any consensus changes to Bitcoin Core.”
“BitcoinOS aims to be the last platform you’ll ever need in the blockchain space,” reads the BitcoinOS website. “By enabling Bitcoin to do anything, we’re creating a future where the world’s most trusted and valuable blockchain becomes the foundation for all decentralized innovation.”
As early as January, BitcoinOS and similar projects have celebrated the possibility of “rollups” on Bitcoin—a powerful layer-2 scaling solution that’s grown highly popular in the Ethereum ecosystem.
Using its unique BitSNARK technology, BitcoinOS said that true Bitcoin rollups were possible, presenting one of the best solutions yet to Bitcoin’s trilemma of scale, security, and expressivity.
Speaking to Decrypt, the team explained that BitcoinOS is neither a “layer 2” nor a “rollup.” Rather, it’s an infrastructure layer where any number of rollups with any functionality can be built while instantly inheriting Bitcoin’s security and decentralization.
It also unifies the liquidity and userbase of all rollups within its ecosystem, making the user experience feel like a single chain: a fully unleashed Bitcoin.
“Our goal is to unite the fragmented blockchain world and drive the next wave of adoption and development,” the website states.
2. Brollups
In mid-June, Bitcoin developer Burak Kecli proposed an alternative Bitcoin-native rollups design called “Brollups.”
Unlike BitcoinOS, Brollups don’t use zero-knowledge technology. Also, while BitcoinOS and other “optimistic” rollup systems still have very small trust assumptions around Bitcoin bridging, Kecli claims his rollup design is truly “trustless.”
“Brollup allows for unilateral exits, meaning you can settle your coins without needing permission, unlike BitVM-based rollups where you have to ask,” Kecli told Decrypt.
To create this trustless bridge, Brollups use pre-signed transactions whereby users deposit their Bitcoin unspent transaction outputs (UTXOs) in return for virtual transaction outputs (VTXOs).
Introducing Brollups: a Bitcoin-native rollup design that works with a native Bitcoin peg and requires no changes to the Bitcoin protocol.https://t.co/OW2y0xJrg0
— Burak (@brqgoo) June 21, 2024
Within the Brollup system, VTXOs can be swapped for call data that executes a payable condition in a smart contract. In other words, Brollups can enable smart contracts on Bitcoin in a way that, according to the documentation, “covers over 90% of DeFi use-cases”—including selling NFTs for Bitcoin, or placing a token sell order on a DEX.
Brollups are an extension of the Ark protocol, which was initially designed to solve some of the UX problems of Bitcoin’s lightning network. Ark still has some limitations, however—including certain trust and liquidity assumptions surrounding Ark service providers, or “ASPs.”
“It does not mean anything to verify [zero-knowledge proofs] on Bitcoin unless users are able to exit,” argued Kecli in July. “It is not a layer 2 if [a] unilateral exit path is not available.”
3. Fractal Bitcoin
Fractal is a Bitcoin sidechain purely focused on scaling Bitcoin transactions. Its model stands out because its code is meant to mimic Bitcoin’s base layer as closely as possible so that building on it feels familiar to native Bitcoin developers.
“Fractal enables plug-and-play continuity,” the website stated. “Recursive scaling of Bitcoin Core code itself without any foreign constructs enables native support of current infrastructure, such as wallets.”
The team says that all Fractal transactions and hashes can be traced back to their source on the Bitcoin blockchain itself. Fractals can be built upon other fractals, with Bitcoin’s scale increasing 20X with each layer, and all transactions boiling back to Bitcoin L1.
The system is secured through a mix of Bitcoin L1 merged mining and native Fractal mining. It also supports Ordinals and BRC-20 tokens (much like Bitcoin itself) and boasts UniSat—a BRC-20 marketplace—as one of its core contributors.
Unlike Bitcoin mainchain, however, Fractal reintroduced OP_CAT to its implementation, enabling smart contracts. “This is our initial step in providing an enhanced Bitcoin scripting programmability on Fractal,” said Lorenzo, founder of UniSat, last month.
4. Babylon
Babylon is introducing staking—the most popular DeFi application on altcoin chains—to Bitcoin.
Babylon Labs has already launched the first phase of its staking mainnet, allowing BTC holders to lock up their coins on the base layer in preparation for staking. Soon, those coins will be used to secure multiple proof-of-stake networks at once, and will earn stakers yield from each of those networks.
“There is no wrapping or bridging involved,” Babylon explained to Decrypt, meaning staking BTC requires trust in no intermediaries, IOUs, or any 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.”
During a recent interview, Babylon co-founder David Tse said altcoins would be able to economically secure their systems with Bitcoin without needing to inflate their native assets. However, he also highlighted Bitcoin L2s as a primary source of demand for Babylon’s service.
“Bitcoin staking becomes a mechanism where the L2s can get security from Bitcoin,” he 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, multiple projects such as the Stacks-based Zest Protocol are already enabling liquid staking on Bitcoin so that savers can earn yield but still have the freedom to trade BTC.
5. Nubit
Nubit will be a background service that acts as the spine securing multiple Bitcoin L2s.
The blockchain will be a “data-availability” (DA) layer secured through Bitcoin staking and powered by the aforementioned Babylon Protocol, which regularly posts security checkpoints down to Bitcoin L1. The chain will be optimized to safely store large amounts of data from the Web2 and Web3 worlds while inheriting security very similar to Bitcoin itself.
“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 the assurance that all transactions on a blockchain are faithfully stored and proposed in a network, and that the state of the chain can be recovered at any time.
For a multitude of Bitcoin rollup projects that “roll up” their transaction to Bitcoin, using Bitcoin L1 itself for DA will be far too expensive, researchers have found. That’s why most are aiming to use optimized DA layers that inherit Bitcoin’s security instead.
“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,” Feng wrote.
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