Bitcoin Layer 2 Project Bitlayer: A New Attempt to Balance Security and Scalability

Recently, a Bitcoin Layer 2 project called Bitlayer Labs completed a $11 million Series A financing round, led by several well-known investment institutions. It is worth noting that Bitlayer has become the first Bitcoin infrastructure project to receive institutional investment from an ETF licensed entity.

Bitlayer aims to enhance the scalability of Bitcoin and unlock the potential of its ecosystem. This project is the first Layer 2 solution based on BitVM and the first to fully inherit the security of Bitcoin while possessing Turing completeness.

The Current Status of Bitcoin Layer 2

Currently, most Bitcoin Layer 2 projects are essentially cross-chain bridges, with their technical solutions primarily based on multi-signature. However, multi-signature schemes have serious trust issues, which have led to several incidents of funds being stolen.

The ideal Layer 2 should not only expand the ecosystem but also inherit the security of Layer 1. Bitlayer, as the first Layer 2 based on BitVM, achieves trust minimization and strikes a good balance between security and scalability.

The Core Architecture of Bitlayer

The basic architecture of Bitlayer includes three main stages: transaction processing, transaction validation, and final verification.

In the transaction processing phase, Bitlayer uses two key components: a sorter and a Layer 2 virtual machine (LVM). The LVM innovatively decouples smart contract execution from zero-knowledge proofs, significantly enhancing the scalability and security of the system.

Cross-Chain Bridge Solutions: The Combination of BitVM Bridge and OP-DLC Bridge

In the transaction verification stage, Bitlayer adopts a solution that combines the BitVM bridge and the OP-DLC bridge. The BitVM bridge is based on the "pay first, reimburse later" model, and by introducing the Operator role, it has achieved decentralized management of the fund pool, enhancing the security of the cross-chain bridge from the source.

The OP-DLC bridge serves as a supplement, enabling peer-to-peer transactions between users, with its security relying on fraud proofs and third-party oracles.

Advantages and Challenges of Bitlayer

The LVM design philosophy of Bitlayer is highly forward-looking, laying the foundation for future adaptation to various virtual machines and zero-knowledge provers. Its dual-channel bridging solution is one of the safest cross-chain implementations in Bitcoin Layer 2, achieving minimal trust.

However, Bitlayer still faces some challenges. For example, the availability of the BitVM bridge needs continuous improvement, especially in ensuring that a large number of alliance members are online simultaneously and correctly performing pre-signatures.

Future Outlook

With the continuous advancement of BitVM technology, Bitlayer is expected to make significant breakthroughs in BitVM construction in the coming months. The industry anticipates that Bitlayer will gradually evolve into an ideal Bitcoin Layer 2 solution, finding the best balance between scalability and security.