Revelo Roundtable #25 - BTC Layer-2s

In this episode of Revelo Intel’s Twitter Spaces on August 29, 2024, Kirk hosted Derrek from BOB, Kevin from Bitlayer, Chaosmos from Botanix ,and Hakan from BEVM to discuss Bitcoin Layer-2 solutions, Bitcoin bridging, wrapped Bitcoin, the future of DeFi, and more! Read our notes below to learn more.

Background

Kirk (Host) – Head of Business Development at Revelo Intel

Derrek (Guest) – Developer Relations at BOB

Kevin He (Guest) – Co-Founder at Bitlayer Labs

Hakan (Guest) – Contributor at BEVM

Chaosmos (Guest) – Head of Asia at Botamix Labs

BOB – a first-of-its-kind hybrid Layer-2 powered by Bitcoin and Ethereum

Bitlayer Labs – a Bitcoin Layer-2 solution, extends the capabilities of Bitcoin by integrating a Turing-complete computational layer based on the BitVM paradigm

BEVM – a fully decentralized EVM-compatible Bitcoin L2 that uses $BTC as Gas

Botanix Labs – a EVM Layer-2 on Bitcoin

Insights on Bitcoin VM and Layer 2 Developments

Derek from BOB (Build on Bitcoin) introduces himself as the developer relations representative. He explains his background as a former high school physics teacher who got into crypto during the 2020 bull run and now works in community management and developer relations.
Hakan, co-founder of BEVM, introduces himself and his project. He explains how he got into crypto in 2015-2016 due to difficulties with traditional financial transactions while working in export and import.
Kevin from Bitlayer introduces himself and his project. He joined the industry in 2017 and has been involved in launching several EVM-compatible chains. He explains that Bitlayer started in Q3 of the previous year and has already launched its first version with $400 million TVL and over 150K transactions per day.
Kirk asks the participants to discuss the differentiating factors of their projects.
Derek elaborates on BOB, explaining that it’s an EVM-compatible optimistic rollup on Ethereum with plans for implementing merge mining to bring revenue back to miners. He mentions their plans to use BitVM as a fraud proof layer and highlights three main problems Bitcoin L2s face: Bitcoin bridge security, ecosystem (tooling and mindshare), and liquidity.
Derek highlights BOB’s position as a crossroads between Ethereum’s innovation layer and Bitcoin, making it easier for users to move their Bitcoin and explore the ecosystem.
Hakan explains that BEVM launched after the Taproot upgrade, focusing on bridge security, ecosystem building, and solving liquidity issues through hash tokenization.
Hakan mentions partnerships with large mining companies like Bitmain, NPool, and Bitfufu to tokenize Bitcoin and other PoW assets, potentially bringing $20 billion worth of value to L2s.
Kevin outlines Bitlayer’s two-step plan: first, achieving Bitcoin security layer two for a programmable environment, and second, building a high-performance execution engine for applications once a trustless solution to bridge Bitcoin liquidity is established.

Bridging Bitcoin Liquidity and Enhancing L2 Security

Kirk asks about the current security risks and future developments in Bitcoin L2 bridging.
Derek discusses the current state of Bitcoin bridging, mentioning $WBTC, $TBTC, and the limitations of multisig solutions.
Derek explains BOB’s approach to addressing bridging concerns, highlighting their atomic cross-chain swap mechanism called Gateway.
Derek details how the cross-chain swap works, using a combination of escrow smart contracts and on-chain light clients with SPV (Simple Payment Verification) to enable trustless token swaps between Bitcoin and other networks.
Derek mentions an upcoming improvement to the Gateway protocol that will extend the trustless peer-to-peer swap concept to support intents, allowing users to perform actions like Bitcoin staking in LSTs directly from a Bitcoin transaction.
Derek highlights that this approach provides a better user experience for Bitcoiners without introducing significant trust assumptions, especially once the BitVM bridge is live.

Bridging Bitcoin to Layer 2 Networks and the Future of Wrapped Bitcoin Solutions

Kirk asks about the state of bridging to L2s.
Kevin discusses the components needed for Bitcoin L2s or roll-ups, emphasizing the importance of verification ability on Bitcoin and trustless or trust-minimized bridges.
Kevin mentions their upcoming announcement of innovations in bridge design and their support for OP_CAT adoption to enable covenants and potentially validity proofs.
Kevin comments on $WBTC, suggesting it needs to upgrade its technical solution, and expresses hope that new verification solutions can help evolve $WBTC and unlock institutional Bitcoin.
Kirk asks about the competitive landscape of Bitcoin wrappers and representations on L2 networks.
Derek discusses the multi-chain nature of the ecosystem and the various attempts to solve the Bitcoin wrapping and bridging problem.
Derek mentions the upcoming BitVM 2 bridge as a potential solution for a trustless two-way peg, suggesting it could be maintained by a single user running it on their computer.
Derek says that scaling Bitcoin might involve using trust-minimized bridges to move the asset to other chains with more programmability.
Kevin shares his thoughts on $wBTC and its competitors, mentioning $cbBTC from Coinbase and $bBTC from Binance as potential market share takers.
Kevin acknowledges that people want convenience and security, which might lead to custodial solutions gaining some market share in the short term.
Kevin highlights the importance of trustless, on-chain solutions for the long-term, despite current user experience challenges.
Kevin expresses hope that with continued development and community effort, more users and institutions will be convinced to use trustless environments for their Bitcoin, highlighting benefits such as yield earning and elimination of single points of failure.
Hakan views the emergence of various wrapped Bitcoin tokens as part of a broader shift towards making Bitcoin more accessible in the DeFi space. Hakan sees this as a positive step, noting that companies like Coinbase are planning to build a massive Bitcoin economy on their chains. He believes the centralized exchange versions of wrapped Bitcoin provide an easier entry point for millions of users compared to trustless solutions.
Hakan highlights that decentralized versions are inevitable in the long term, which is crucial for building the Bitcoin ecosystem they’re targeting.

Expanding Bitcoin’s Role in DeFi: Wrapping, Staking, and Layer 2 Innovations

Kirk asks about strategies for attracting developers and users to their L2 solutions and bootstrapping growth.
Hakan outlines BEVM’s approach. They focus on understanding the needs and barriers faced by developers, users, and companies. BEVM encourages development through grant programs, particularly in DeFi spaces like lending and borrowing. They aim to gamify protocols and use real utility tokens like tokenized Bitcoin hash rate.
Hakan highlights the importance of user experience, especially for onboarding the next billion users. They’re working on solving liquidity issues through hash rate tokenization and improving interoperability. BEVM is creating awareness about the possibilities of building on Bitcoin L2s, as many developers are still unaware of these opportunities.
Derek discusses BOB’s strategy. He reframes the discussion from “Bitcoin maxis” to institutional custodians and whales. Derek highlights the focus on Bitcoin liquid staking in Q3 and Q4, as Bitcoiners seek yield similar to what’s available in the Ethereum ecosystem.
Derek highlights the importance of balancing security (for Bitcoin maxis) with user experience. He also predicts interesting second-order effects in the market, such as potential changes in borrow rates for wrapped Bitcoin.
Kevin shares his thoughts on Bitcoin staking. He sees it as a significant narrative shift, with people believing Bitcoin can earn yield in a trustless environment. Kevin notes that current staking protocols have limitations and questions the sustainability of the validator business model. He highlights the importance of fully trustless and programmable solutions to unlock Bitcoin’s liquidity potential.
In closing remarks, Derek mentions upcoming developments in BitVM and its potential implications for Bitcoin bridging. Kevin discusses Bitlayer’s plans, including the release of their V2 with BitVM implementation and goals to achieve 1 million daily transactions.

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Show Information

Medium: Twitter (Audio)
Show: Revelo Intel Twitter Space
Show Title: Revelo Roundtable #25 – BTC L2s
Show Date: August 29, 2024