The Good Tech Companies - How Bitcoin's Layer-2 Networks Are Transforming The World's Oldest Digital Asset

Episode Date: July 16, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/how-bitcoins-layer-2-networks-are-transforming-the-worlds-oldest-digital-asset. Rootstock, one of the oldest Bitcoin layer-2s, has processed more than 13 million transactions in its lifetime. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #bitcoin, #layer-2-networks, #bitcoin-processing-times, #defi, #bitcoin-defi, #dapps, #bitcoin's-utility, #good-company, and more. This story was written by: @ishanpandey. Learn more about this writer by checking @ishanpandey's about page, and for more stories, please visit hackernoon.com. Bitcoin's ecosystem has grown to 74 Layer-2 networks, including sidechains, rollups and state channels. They're handling an increasing amount of Bitcoin's network traffic. Rootstock, one of the oldest Bitcoin layer-2s, has processed more than 13 million transactions in its lifetime.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. How Bitcoin's Layer 2 Networks Are Transforming the World's Oldest Digital Asset, by Ashan Pondy The Bitcoin blockchain is notorious for its slow transaction processing times, and it was this reality that led to the development of the first Layer 2 networks. Realizing that Bitcoin could never hope to reach the scale required to supplant fiat currency, its developer community hit upon the concept of offloading transactions to other networks, which can. But Bitcoin's Layer 2s can do much more than just speed up transaction processing times. They also enable decentralized finance, or DeFi, on the Bitcoin network, and they're paving the

way for the creation of an ecosystem of innovative DAPPs that significantly enhance Bitcoin's utility. Growing fast, a recent report from the cryptocurrency exchange Bybit shows that Bitcoin's ecosystem has grown to encompass 74 Layer 2 networks, including sidechains, rollups and state channels, with the majority of them launching in the last year. And they're handling an increasing amount of Bitcoin's network traffic. With Bitcoin Layer 2s, transactions can be settled much faster and at much lower costs than is possible on the traditional Bitcoin network. They're gaining in popularity as a result. Rootstock, one of the oldest Bitcoin Layer 2s, has processed more than 13 million transactions in its lifetime, with 670,000 of them occurring in the last three months. Rootstock's appeal is not just its faster settlement times. The sidechain also acts

as a base layer for Bitcoin-native decentralized applications. During that three-month period, more than 25 DAPPs have launched on Rootstock, giving users many different ways to put their Bitcoin to work so they can earn a passive income. In June, the popular decentralized exchange platform SushiSwap made its debut on Rootstock, enabling its community of more than 438,000 active monthly users to pro-vide liquidity on the network that leverages the unparalleled security of Bitcoin's blockchain. More importantly, SushiSwap's users can now leverage BT's sit-self in DeFi applications. Solving challenges, other prominent Bitcoin Layer 2s are also striving to boost liquidity in the Bitcoin ecosystem. For instance, Merlin Chain's Merlin DEX platform has seen its bitmap

and RUNE token liquidity grow to more than $10 million. However, the rise of so many Bitcoin Layer 2s has created challenges around liquidity fragmentation, where digital assets and trading volumes are spread so thinly across multiple networks that they lead to higher trading costs, slippage, slower transaction processing times and reduced opportunities. Fortunately, more innovative Layer 2s are looking to solve this challenge. Exatus building what it likes to call a docking layer that aims to streamline interoperability between Bitcoin's L2 ecosystem so they can interact seamlessly. It acts as a kind of bridge between Bitcoin and every other L2. Saucers can quickly and easily transfer assets across them. To do this, Exat has built a

decentralized state data indexing platform that increases data availability on the Bitcoin network. It leverages RAM resources on the EOS blockchain as the foundation of this data availability layer, and utilizes a hybrid consensus, Bitcoin's proof-of-work and its own, novel proof-of-stake, to synchronize block data across Bitcoin and its ecosystem OFLYER2 networks. In this way, it enables Bitcoin itself to scale while uniting liquidity across every LAYER2. It's also EVM-compatible, which means it can tap liquidity from Ethereum's vast DeFi ecosystem. Accelerating innovation, fixing liquidity fragmentation will remove one of the key impediments to growth within Bitcoin's DeFi community, which continues to innovate at breakneck speed. This month, the interoperability protocol ZKM unveiled the newest BITCOIN LAYER2 on the block, called Goat Network. Its major innovation is

aid-centralized sequencer model, which aims to counter growing fears of centralization within the L2 landscape. ZKM points out that the majority of Bitcoin L2s are controlled by their foundations. GOAT network will instead be controlled by its community of sequence node operators, who are incentivized to secure its network with sustainable yield on their BTC collateral. It sees itself as the first truly decentralized Bitcoin Layer 2, and aims to foster the growth of a dynamic ecosystem of Bitcoin-native DAPPs. Goat Network's launch of a Bitcoin L2 is a powerful first step in ZKM's quest to unite the fragmented Web3 universe, said Goat Network's

contributor Kevin Liu. Meanwhile, the crypto startup Hamilton has just announced the launch of the first tokenized US treasury bonds on Bitcoin Layer 2s like Stacks, Core and Build on Bitcoin. Hamilton CEO Mohamed Elkastawi said that its tokenized treasury bills will provide traditional financial institutions with a more efficient way to manage their treasuries, avoiding the inefficiencies of traditional finance. It represents one of the first instances of tokenized, real-world assets, landing on Bitcoin, and underscores the incredible pace of innovation that's breathing new life into the world's most valuable crypto asset. Don't forget to like and share the story. Tip Vested Interest Disclosure. This author is an independent contributor

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