Bitlayer Eco-project Exclusive Review: Everything You Need to Know

May 11, 2024

Bitlayer aims high as the core support in Layer2

As a leader in BTC Layer2, Bitlayer adopts Layered Virtual Machine technology, combined with zero-knowledge proof (ZKP) and optimistic verification (OP) mechanisms, to support a wide range of computing tasks. Additionally, Bitlayer, through its innovative OP-DLC and BitVM bridge technologies, constructs a dual-channel bidirectional locked asset bridge, inheriting the security of Bitcoin’s first layer.

Bitlayer’s main technological innovations lie in the adoption of the latest BitVM computing paradigm and OP-DLC bridge.

Compared to other Bitcoin Layer2 solutions, Bitlayer aims to address three core issues faced by Layer2 and proposes corresponding solutions:

Trustless 2-Way Peg — By combining OP-DLC with BitVM bridge, a new model surpassing traditional multi-signature modes is proposed, achieving trustless bi-directional asset flow between the Bitcoin main chain and Bitlayer.

Layer 1 Verification — BitVM inherits the security of Bitcoin.

Turing-Completeness — Support for multiple virtual machines, achieving 100% compatibility with the Ethereum Virtual Machine (EVM) environment.

Prospects of Bitcoin Layer2

Bitcoin was initially envisioned for use in electronic payment systems, hence the design limitation of a non-Turing-complete scripting language for security and stability restricted Bitcoin’s ability to execute complex computations. Bitcoin existed more as a digital gold for value storage. With the explosion of ecosystems on public chains like Ethereum and Solana, developers have been exploring scalability solutions for the dormant trillion-dollar assets in the Bitcoin ecosystem. However, technical limitations of solutions such as sidechains and Lightning Network still persist, keeping the exploration subdued.

In 2023, the emergence of Ordinals’ Inscription Wave expanded new asset forms in the Bitcoin ecosystem and further triggered market considerations and explorations of Bitcoin’s scalability and programmability. A series of new Layer2 solutions like Merlin and B² Network emerged, creating a range of DeFi applications such as swaps, lending, and liquidity mining to expand new application scenarios in the Bitcoin ecosystem.

Currently, most Layer2 solutions on the market bridge liquidity to the Ethereum ecosystem to participate in DeFi and other on-chain scenarios by coupling with the Ethereum ecosystem. However, many withdrawal bridges of Layer2 are essentially multi-signature bridges, and bridging schemes managed by multi-signatures often pose trust risks, unable to allow users to withdraw assets in a trustless manner. For many BTC holders, they have no incentive or confidence to bridge BTC assets to the Ethereum ecosystem for speculative gains, as the security of funds is the cornerstone of all gains. Therefore, the ideal Bitcoin Layer2 should inherit the security properties of Bitcoin and build a scalable and programmable on-chain financial infrastructure.

Bitlayer Token Airdrop (Ready Player One)

In addition to underlying technology, the prosperity of on-chain ecosystems is crucial for the development of a chain. In order to encourage DEX, Wallet, NFT Marketplace, Lending, LSD, Bridge, Stablecoin, and other projects to be built on Bitlayer, on March 29, Bitlayer officially announced a series of ecosystem incentive plans. The inaugural event, Ready Player One, will distribute $50 million worth of on-chain tokens to ecosystem builders and project teams. According to official data, as of now, Ready Player One has attracted over 800 projects to sign up. Before the voting ends on May 10, users can actively participate in voting to earn “Head Player” activity points. Meanwhile, registered project teams can accumulate popularity points, which will help them occupy a favorable position in the Bitlayer official leaderboard rankings to compete for more developer airdrop rewards and grants.

Overview of Native Projects in Bitlayer Ecosystem

Native definition: Exclusively for Bitlayer, cross-chain and multi-chain projects are not included; the top 30 in the list.

Pumpad

Pumpad is Bitlayer’s native Launchpad project. According to the official statement, Pumpad is a one-stop Launchpad for the BTC ecosystem to issue VGA assets according to the IPOS standard. After asset issuance, Pumpad can help issuers automatically add liquidity to DEX and deploy automated market maker protocols. Pumpad is more than just an IDO service provider; it offers a full-cycle service platform for project parties.

Positioning-wise, Pumpad proposes two concepts:

IPOS: Initial Pump Offering Standard refers to a set of full-cycle IDO service packages, including IDO mechanisms, market value management, etc., to minimize the operating costs for project parties before and after coin issuance.
VGA: Value-Growing Asset Building refers to assets issued on Pumpad that will follow IPOS to ensure project parties cannot exit or withdraw funds, and earn a certain commission income through this model.

Currently, there are no specific details about the above two concepts. In addition, Pumpad’s Pump Point is proposed to incentivize loyal and active users, which may be used for airdrops or priority launches of Pumpad’s own platform tokens in the future.

Specifically, Pumpad has two main business lines:

Launchpad: Pumpad’s Launchpad will support various issuance methods, including oversubscription lottery, weighted allocation, and first-come, first-served IDO methods.
Airdrop: Pumpad’s Airdrop module is a platform for users to claim airdrop rewards, and project parties can customize airdrop activities to incentivize different types of users.

As of May 10, Pumpad ranks 19th on the Bitlayer Dapp Leaderboard, ranking first in its track, and other Launchpad platforms have not been observed to be followed or retweeted by Bitlayer, indicating Pumpad’s strong legitimacy. The first project on the platform is $CBD, also mentioned below as MEME, forming a strong alliance as “No.1 MEME No.1 Launchpad,” with the possibility of mutual traffic boosting.

Official Twitter: https://twitter.com/pumpad_io

Macaron

Macaron is the first native DEX on Bitlayer. Macaron provides users with a range of tools including liquidity farming, staking incentives, trade-to-earn, airdrops, etc., to enhance user earnings.

With the technical and ecosystem support of Bitlayer, the Macaron team has been committed to building an excellent product to make Macaron DEX safer, cheaper, and faster. As Bitlayer’s native DEX, Macaron will serve as a trading platform for Bitlayer ecosystem assets and mainstream BTC assets, with the following advantages:

Industry-leading security: Utilizing multi-signature protocols and other technologies to ensure fund security, Macaron can provide users with round-the-clock protection.
Advanced AMM algorithm: Macaron’s original AMM algorithm ensures efficient asset trading at lightning speed while providing high liquidity and minimizing slippage, optimizing yield.
Liquidity provider rewards: When users provide liquidity, Macaron rewards them based on the fees collected. Rewards are calculated and distributed based on the fees collected. Macaron rewards help teams continuously improve the liquidity provision experience.
Trading earnings: Macaron’s Trade-to-earn reward program introduces a revolutionary trading incentive mechanism. A certain percentage of tokens from Macaron’s governance token will be distributed to users as rewards.
Low gas fees: Thanks to Bitlayer’s excellent underlying functions, Macaron as a native DEX can achieve high performance with low fees, lightning-fast confirmations, and seamless trading.
Seamless user experience: Macaron DEX’s advanced AMM algorithm and simple interface provide users with an optimal trading experience, regardless of their level of trading experience.

Macaron provides users with a comprehensive incentive program, mainly including a point system, Macaron NFT, and native DeFi earnings based on Macaron. These include trading rewards, LP incentives, staking rewards, and more. The point system consists of social points and DeFi points, each with different acquisition methods and exchange rates for converting to mainnet tokens in the future. Macaron NFT is a PFP NFT platform introduced by the platform, offering benefits such as future airdrops and governance rights. DeFi native earnings involve stable asset yields from trading, staking, and liquidity provisioning on Macaron. For more information, users can follow Macaron’s official social media channels.

As of May 11th, Macaron ranks second on the Bitlayer Dapp Leaderboard, just below the stablecoin bitSmiley. It has 49.2k followers on Twitter, indicating significant popularity.

Official Twitter: https://twitter.com/macarondex

Cat Driving Bitcoin ($CBD)

Cat Driving Bitcoin ($CBD) is the native MEME token on the Bitlayer chain, with a visual theme centered around cats driving, aligning with Bitlayer’s overall elements. According to the official statement, $CBD aims to disrupt the meme economy by building MEME CBD—a thriving, modern, high-rise Bitcoin world. $CBD strives to become the largest community asset on Bitlayer, promoting Bitcoin as the best asset on Earth. It has garnered attention from Bitlayer and Marcaron’s official channels.

As of May 10th, $CBD ranks third on the Bitlayer Dapp Leaderboard, leading in the MEME category. Based on previous data from $BONE, which ranked ninth in the MEME category and had gained significant traction after listing, $CBD’s potential is considerable.

In the token model, unlike $BONE, which airdropped most tokens to bitSmiley testnet users, $CBD tends towards a collective airdrop model: 70% for airdrops, 20% for liquidity, and 10% for the treasury.

$CBD will be airdropped to four types of users:

Bitlayer helmet NFT holders who have completed cross-chain interactions.
Holders of BTC-related assets who have recently executed BTC transactions.
Participants in the community ecosystem, such as voting and co-building.
Holders of other assets in the Bitlayer ecosystem.

It’s worth noting that $CBD airdrops are not conducted by the project team themselves but through Pumpad. Additionally, based on the rules mentioned above, Bitlayer helmet NFT holders have the clearest participation rules currently. More airdrop rules can be continuously monitored through official social media updates.

Official Twitter: https://twitter.com/catdrivebitcoin

TrustIn Finance

TrustIn Finance is the native permissionless lending protocol on Bitlayer, driven by a Layer2 solution that ensures Bitcoin’s security equivalence based on BitVM.

TrustIn Finance features:

Floating interest rates: In TrustIn Finance, the interest rates for lenders and borrowers are determined based on market fund usage, ensuring participants receive optimal rates while safeguarding the safety of funds in the liquidity pool.
Risk isolation: To simplify the protocol and enhance security, TrustIn Finance isolates asset pools based on different underlying assets to prevent extensive defaults from burdening the protocol and mitigate potential uncontrollable consequences.
Reserves: Reserves are another important security measure introduced by TrustIn Finance to address potential debt loss issues. TrustIn Finance allocates a portion of the loan interest as reserves based on reserve ratios, further safeguarding the assets within the protocol.
Early investor incentive mechanism: TrustIn Finance aims to grow together with each participant and is committed to incentivizing all contributors. Specific incentive mechanisms are yet to be officially announced.

TrustIn Finance is expected to announce a points incentive program soon, where users can earn points by depositing or interacting with assets. Points will serve as an important reference for TrustIn Finance governance token airdrops, distributed to users with points in a certain ratio. For more information, users can follow TrustIn Finance’s official social media channels.

As of May 10th, TrustIn Finance ranks sixth on the Bitlayer Dapp Leaderboard, with a vote count close to Nekoswap. It has 38.1k followers on Twitter.

Official Twitter: https://twitter.com/TrustIn_Finance

Nekoswap

Nekoswap is the first native decentralized rune and token cross-chain exchange on Bitlayer.

NekoRunes will be the first rune asset token on Nekoswap. NekoSats promises a Fair launch, where all tokens except the 2% held by the project team will be airdropped and added to the liquidity pool. Neko will attempt to address the circulation of Layer 1 and Layer 2 rune assets through mapping, and if the technical time cost is high, alternative methods will be used to realize the monetization of rights. Regarding token holder rights, Nekoswap has made a series of commitments, including perpetual sharing of trading fee dividends for Nekosats holders.

Nekoswap’s work is still ongoing, with no official website or documentation available yet. Nekoswap aims to be a fully community-driven, fair, transparent, and decentralized exchange, offering features such as Swap, liquidity pools, Farm, Launchpad, rune trading, and more. In the future, decisions regarding blockchain access, deployment, and development will be based on community feedback through voting, AMAs, etc. For more information, users can follow Nekoswap’s official social media channels.

As of May 10th, Nekoswap ranks fourth on the Bitlayer Dapp Leaderboard, with 23k followers on Twitter.

Official Twitter: https://twitter.com/NekoSwap

BitMagic

BitMagic is the native NFT Marketplace on Bitlayer, dedicated to driving innovation in the Bitcoin NFT ecosystem. As an early participant in the BitLayer blockchain ecosystem, BitMagic aims to address challenges faced by NFTs in the Bitcoin network, such as reducing transaction costs and increasing asset liquidity. By offering a comprehensive platform combining NFT issuance and trading markets, BitMagic optimizes the entire lifecycle management of NFTs, significantly improving user experience and ecosystem value creation.

In the near future, BitMagic will introduce NFT cross-chain bridges and a points system, which will not only facilitate the circulation of assets between layers but also stimulate user trading enthusiasm through incentive mechanisms. Additionally, BitMagic will reward cross-chain behavior of high-quality Layer 1 projects and native assets to ensure more assets are fully utilized in Layer 2, accelerating the development of the Bitcoin Layer 2 NFT ecosystem.

BitMagic is closely integrated with BitLayer BitVM technology, focusing on process optimization, cost reduction, and innovative trading incentive schemes, offering users an unprecedented Bitcoin NFT trading experience and laying the foundation for the explosive growth of Layer 2 BTC NFT ecosystem.

BitMagic is expected to launch its OG NFTs soon, offering holders special benefits such as future airdrops and priority access to Launchpad projects, with plans to issue platform tokens in the future. These multiple rewards aim to incentivize active traders and NFT holders on the platform. For more information, users can follow BitMagic’s official social media channels.

As of May 10th, BitMagic ranks 106th on the Bitlayer Dapp Leaderboard, with 21.4k followers on Twitter.

Official Twitter: https://twitter.com/bitmagic_nft

Bitlayer Ecosystem Puzzle

On March 29th, Bitlayer initiated an ecosystem incentive plan, announcing a $50 million budget to incentivize major early builders and contributors. As of the article’s deadline (May 10th), over 280 projects have been deployed on Bitlayer.

It can be seen that Bitlayer’s ecosystem is rapidly expanding, with more and more projects joining Bitlayer. This gives Bitlayer a significant advantage in the fiercely competitive BTC Layer2 race.

Where’s the Endgame for Bitcoin Layer 2?

In the current fierce competition in the Bitcoin Layer2 race, we have summarized three core solutions: rollup series (focusing on Layer1 verifiability), sidechain series (focusing on solution maturity), and client verification (focusing on Layer1 native DA). Undoubtedly, the market has not yet produced a winner, but we believe that Bitcoin’s greatest value lies in its Layer1 security. Therefore, whether Layer2 can inherit security is crucial. Although client verification can largely ensure that all ledger records occur on Layer1, the user’s trust cost in the client is inherent and unavoidable. Rollup series try to control user trust costs as much as possible by ensuring Layer1 verifiability through modular solutions. Therefore, based on this value system, we believe that rollup series will eventually outperform the others.

Among the rollup series, Bitlayer’s consideration is relatively comprehensive. Bitlayer emphasizes Bitcoin’s verifiability through BitVM, and adds fraud proof to the original DLC bridge to ensure oracle trust. Although the current cross-chain bridge solution still requires external trust in oracles, it is almost equivalent to the native bridge that “rollup” should have in terms of security.

Furthermore, the prosperity of the Bitlayer ecosystem has pushed it to the top under the token expectations on the Leadboard. Currently, a large number of native projects have joined the ecosystem construction, including DEX, permissionless lending protocols, MEME, etc. As of now, Bitlayer’s ecosystem has attracted more than 280 projects.

In the current early stage of the bull market, Eureka Parnters maintains an optimistic and cautious attitude towards the overall development of Bitcoin Layer2. Although the current market sentiment is weak, we believe that when liquidity is sufficient, market enthusiasm will still be reflected in the Bitcoin ecosystem, including Bitcoin-related assets and Layer2, where Bitlayer will undoubtedly be an ecosystem not to be missed.