Since the rise of the likes of Ordinals and BRC-20s, many have speculated as to how to get more of the massive marketcap Bitcoin possesses into the onchain arena. It may be true that a lot of large Bitcoin holders could be opposed to the new Bitcoin solutions or just simply not interested enough to step foot into the Bitcoin smart contracts space. But there is a community of Bitcoin OGs that do indeed support the thriving new usescases for BTC, and a new cohort of users, investors, traders and more who simply find the existing options interesting, the ‘shiniest object’. Unlike other chains, Rollup, etc. the moat of Bitcoin scaling solutions is not nearly as vulnerable to competition the way chains built on the EVM, Move ecosystem, and more are. While some chains might be more performant and are increasingly competing with each other for smaller and smaller incremental improvements in throughout and scalability, being built on Bitcoin, and using Bitcoin for security, is something that people can always point to as a valid and valuable use case. Bitcoin stands as the gold standard when it comes to security and decentralization; building a scalable L2 on top of this chain is quite the feat.
We’ve been quick to cover the rise in interest for Bitcoin scaling solutions, including Stacks, Ordinals & BRC-20s, and now a new crop of BitVM-focused protocols. We’ve even backed some protocols building on Bitcoin via our members investment syndicate, Revelo Ventures. With the Stacks Nakamoto upgrade in its activation phase and a bit of a pause in retail hype following the Bitcoin Runes launch, Bitlayer represents one of the most interesting recent innovations in the build-on Bitcoin movement right now. Bitlayer is a leading Bitcoin L2 scaling solution, which is working its way towards taking the actual computing off chain and using the actual Bitcoin base layer toll for verification, making Bitcoin security equivalency possible.
Bitlayer has made a bit of a name for itself recently, after raising a $5M round earlier this year from the likes of Framework Ventures, ABCDE Labs, OKX Ventures, and more. The protocol has made some high-profile media appearances and brought more attention to the strong narrative that is Bitcoin L2s. While ETH may be in the spotlight this week for obvious reasons, Bitcoin has seen some rejuvenation. This is due to a rejuvenation in the Bitcoin ETF inflows to the new Hong Kong ETFs, a slew of BTC-eco conferences, and even some reignited gold vs BTC conversations. Bitlayer has made sure to position itself in the midst of it all, being extremely proactive when it comes to attending conferences, hosting, debates and simply getting the word out around what they bring to the table. But there’s a lot more than narrative backing Bitlayer; Bitlayer is looking to create a new Bitcoin computation layer by being one of the primary teams working to implement the BitVM framework.
Stay informed, stay alert ⬇
Not Ethereum; Compute Anything on Bitcoin
BitVM was first introduced in a whitepaper published in December, 2023 dubbed “BitVM: Compute Anything on Bitcoin”. This piece was authored by Robin Linus, Co-founder of Zero Sync, a protocol over on Starkware. Linus is also a supporter of the OP_CAT movement, an initiative to change Bitcoin’s opcodes to enable smart contracts natively. This prospect, at least right now, is unlikely to pass as this idea is not yet mainstream, so builders have to look at alternative solutions to build on Bitcoin, with the BitVM being probably the most promising thus far.
The thesis of the BitVM piece basically prescribes arbitrary computation being done on Bitcoin, which then enables optimistic rollups to be built on top, instead of side chains. Sidechains don’t inherit the security of BTC, just as sidechains on Ethereum don’t inherit the security of ETH. Computations can be done off chain, and the results can be verified by users themselves. Considering the recent publishing date of this paper, it certainly didn’t take long for the Bitlayer team to spring into action! Bitlayer spearheads a large group of teams and projects tinkering on the BitVM and trying to make it a reality.
Understanding the Bitlayer Framework
The BitVM is an ambitious endeavor, that doesn’t ‘belong’ to BitLayer or any one protocol. BitLayer represents a team that has been quick to ship and intends to release one of the first and most popular implementations of a BitVM L2 on Bitcoin. On the user facing side, its incentives and project ecosystem are impressive, which is very important in the development stage while the BitVM is still being integrated. Rather than hoping that everyone can see the vision the same way the team does, BitLayer has opted for a proactive approach to attract users independent of infrastructure and technical capabilities.
Bitlayer is a very young project, with its Mainnet V1 going live just last month. This has seen the protocol start out as a PoS sidechain with a native multisig. On May 30th, a V1 upgrade is scheduled, which will enable the halving hardfork on mainnet.
Bitlayer V2 is slated for September; this will allow Bitlayer to transition into a Rollup-equivalent model. V2 offers more security for bridging assets, as well as “L1 verification challenging game” but without the use of the BitVM. In June, 2025, the protocol is looking to upgrade to its V3, enabling full Bitcoin security equivalence via BitVM, as initially intended. In its full form, Bitlayer will be a Turing complete L2, using layered virtual machine (LVM) technology, derived from the BitVM. The LVM also helps to separate the backend generator, which uses ZK proofs, from the front-end smart contract execution layer.
Bitlayer works a bit differently from typical blockchains users may be accustomed to using in EVM and other ecosystems. This is typical of Bitcoin native protocols; there are some barriers users face due to the fact that BTC doesn’t natively support smart contracts. Users can bridge onto Bitlayer from Ethereum mainnet and other EVM chains via a 3-way bridge. ETH, USDT, and USDC can be bridged. On the backend, this bridge is made possible by the BitVM implementation as well as OP-DLC (Optimistic-Discreet Log Contract) technology. Specifically, this component of the stack ensures a seamless bridge between Bitlayer and Bitcoin, making assets secure via a forced withdrawal mechanism.
Ready Player One Airdrop Initiative
Though young, Bitlayer has already seen a slew of projects begin building out projects and raising capital. This is in part due to the team’s efforts in the Ready Player One campaign, which has distributed $50M in incentives specifically for developers and protocols building on top of Bitlayer. $20M of this total will be dedicated to a leaderboard competition, in which dApps compete for ‘Bitlayer Gems’ which can be exchanged for Bitlayer’s native token come TGE. This competition actually goes live today, May 23rd.
Projects will receive gems corresponding to their TVL, DAU, transaction counts, and position on the popularity leaderboard. This is sort of similar to the massively successful Blast points program, in the sense that projects can opt to pass some or all of these rewards off to their users. When the program concludes, Gems will be exchanged for BTR tokens, in Bitlayer’s TGE.
This program goes well beyond incentives though, as the Bitlayer team offers help in areas such as guidance, providing introductions to investors, ecosystem collaboration, and more. The team has dedicated $2M toward helping Bitlayer native projects get listed on top CEXs including Binance, OKX, Bybit, and more, specifically paying half of the fees associated with listing. $100M in liquidity support for projects has also been pledged.
Current TVL sits at around $100M according to DefiLlama; this number will likely rise much higher due to projects continuing to build on the protocol, incoming incentives, the fact that Bitlayer’s main net has only been live for a very short period of time, and just the Bitcoin ecosystem itself continuing to gain traction. For these reasons, Bitlayer’s Gems program may be underrated right now. According to the team, 80 projects have expressed their intentions to deploy on Bitlayer, with 130 projects “on the way”.
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