Author: Golem, Odaily Planet Daily
With 2024 nearing its end, those in the crypto circle also have their own year-end summaries: one is to see if this year's investment returns outperformed the market (reminding you, BTC rose over 130% this year), and the other is to summarize the development of the tracks/ecosystem they are interested in this year.
The Solana ecosystem, Base ecosystem, TON ecosystem, and AI Agent track have all had shining moments this year. As for the Bitcoin ecosystem, although many events have occurred this year, such as infrastructure development and application innovation, it has yet to reach the expectations of early 2024.
Thus, some summarize the silence of the Bitcoin ecosystem this year as a 'failure,' but there are also steadfast ecological OGs who continue to choose to 'believe.' As an ordinary player in the Bitcoin ecosystem from beginning to end, I choose to use the word 'regret' to conclude this year.
2024 actually has a good start.
2024 actually has a good start for the Bitcoin ecosystem; people began the year with expectations that 2024 would be the year of a complete explosion of the Bitcoin ecosystem into the mainstream, just as many now believe that 2025 will be the year of the AI Agent ecosystem explosion.
Why did we have such high expectations for the development of the Bitcoin ecosystem in 2024? Perhaps it is because since the inception of the Ordinals protocol in December 2022, the Bitcoin ecosystem has undergone a year of growth and consensus-building, transitioning from the 'barbaric era' to the 'industrial era,' with projects, VCs, and mainstream exchanges all entering the fray, forming three main tracks: asset issuance protocols, L2s, and Bitcoin staking.
From the perspective of one-layer asset issuance protocols, influenced by Binance's launch of BRC 20 tokens ORDI and SATS spot trading at the end of 2023, the inscription concept has once again exploded online at the beginning of 2024. Not only has this heat influenced other chains to imitate and start inscription modes, but it has also driven up the tokens of other one-layer asset protocols like ARC 20, SRC 20, PIPE, etc. Meanwhile, the Rune pre-mining and airdrop gameplay initiated by RSIC and Runestone in January 2024 has made people full of expectations for the upcoming Runes protocol.
From the development of L2s, Bitcoin L2s had a blowout development at the beginning of 2024. With the hot issuance and trading of one-layer assets, the congestion issue of the Bitcoin mainnet and players' demand for increasing the playability of mainnet assets has made Bitcoin L2s a popular entrepreneurial direction. At the beginning of 2024, it was reported that over 100 Bitcoin L2 projects appeared in a short time. Although many of these were hastily assembled or 'cut and run' projects, overall, domestic and foreign VCs began to invest heavily in Bitcoin L2, hoping that Bitcoin L2 could replicate the glory of Ethereum's L2 ecosystem in 2024.
In March 2024, @Bitvmclub summarized 69 Bitcoin L2s.
From the perspective of Bitcoin staking, the Bitcoin staking protocol Babylon announced completion of $18 million in financing in December 2023, officially launching the narrative of Bitcoin staking and re-staking. With the top-tier Ethereum ecosystem project EigenLayer serving as an example of re-staking narratives, people believe that with Bitcoin's stronger consensus foundation and security compared to Ethereum, the prospects for Bitcoin staking and re-staking in 2024 will be very broad, awakening dormant Bitcoin whales to participate in the Bitcoin ecosystem and forming a re-staking ecosystem that is no less than Ethereum's.
In addition to the overall positive trends exhibited by the three main tracks at the beginning of 2024, the general infrastructure of the Bitcoin ecosystem (such as wallets, cross-chain bridges, and trading markets) has also gradually improved during this period. Unisat and OKX Wallet have technically supported multiple asset protocols, becoming major wallets and trading markets in the Bitcoin ecosystem.
The Bitcoin spot ETF was approved and listed on January 11, 2024, marking Bitcoin's official integration into traditional finance. At the same time, this has once again strengthened people's expectations for the Bitcoin ecosystem, as a network valued at trillions of dollars will naturally grow into a market scale of hundreds of billions.
However...
Regrettably, the Bitcoin ecosystem in 2024 did not receive attention and development that exceeded the heat of previous bull markets, initiating a long period of silence.
The performance of mainnet assets is deteriorating.
On April 20, 2024, Bitcoin will experience its fourth halving, and the token protocol Runes, developed by Ordinals founder Casey, will also launch. To grab inscription numbers, project teams have raised on-chain transaction fees to over 2000 satoshis/byte, leading many to believe this marks the beginning of the prosperity of the Bitcoin ecosystem driven by the Rune relay BRC 20, but unexpectedly, the peak came right at the start, and speculative enthusiasm faded in just two weeks. Although the market cap of Runes briefly surpassed $2 billion in June and November, the vitality and liquidity of new projects within the ecosystem have remained sluggish.
At the same time, the performance of other asset protocols this year has also been similar. ORDI's peak this year saw a drop of 70%, while new assets generated FOMO among market participants, but later became worse due to the lack of new funds and flow participation, such as the airdrop of PIZZA from Unisat and CAT 20 from the Fractal network.
The reasons are twofold: one is that after experiencing the previous Bitcoin bull markets, the narrative of fair asset issuance after Runes has failed to excite the outside world and cannot generate a wealth effect again; the second is the lack of synergy between domestic and foreign players, as the community around Runes is largely dominated by overseas users while major funding in the Chinese-speaking world remains on BRC 20, such as this year's popular inscription 'ground-pushing coin' 𝛑, 𐊶, etc.
The survival rate of Bitcoin L2s is less than 20%.
At the same time, it is regrettable that the Bitcoin L2 ecosystem in 2024 did not achieve the anticipated prosperity. 'Except for the Lightning Network, all other Bitcoin L2s are castles in the air,' Casey, the founder of the Ordinals protocol, criticized when discussing Bitcoin L2 in an interview.
In the past 12 months, the market has seen over 100 Bitcoin L2 projects, but according to DefiLlama, only 19 L2s remain today, with a TVL of approximately $2.8 billion. Meanwhile, Ethereum's Arbitrum alone has a TVL of $3 billion.
So why is it that while Ethereum's L2 ecosystem has been proven viable for scaling, the development in the Bitcoin ecosystem has not been as satisfying?
In the early days, most Bitcoin L2s lacked innovation. In the initial phase of the Bitcoin L2 track, many L2s adopted EVM-like architecture and cross-chain bridges to scale Bitcoin's mainnet to attract investment and quickly build ecosystems. Although this method borrowed from Ethereum's experience, making it convenient and low-cost for user education, it lacked innovation and was often met with skepticism, such as 'If this is called Bitcoin L2, then Ethereum is the best Bitcoin L2.' This has proven to be the case; however, as the hype faded, these hastily assembled L2s also quickly disappeared.
Bitcoin L2 started its TVL competition too early. Perhaps influenced by Ethereum L2 Blast, Bitcoin L2s learned from the beginning to stimulate the growth of TVL through points and team incentives. Merlin is a popular chain among Bitcoin L2s; on February 9, 2024, Merlin fired the first shot in the Bitcoin TVL competition, reaching $543 million in TVL within just 24 hours. At the same time, B² Network, BEVM, and Bitlayer also started competing for TVL.
Ultimately, Merlin won this competition with over $3 billion in TVL within a month and launched its official token MERL on OKX on April 19. After launch, MERL's price peaked at 1.78 USDT but quickly plummeted, with a peak drop of 85%. Since then, those focused on price have shifted from anticipation to disappointment and criticism regarding the Bitcoin L2 ecosystem.
Who recognizes the Bitcoin staking narrative?
The glamorous financing lineup and 'narrative appeal' of Babylon and its underlying Bitcoin re-staking ecosystem are another expected track in the Bitcoin ecosystem for 2024. When Babylon's mainnet opened its first phase of staking in August, it attracted attention from all over the network, reaching the limit of 1,000 BTC in just 3 hours; currently, Babylon's TVL stands at 57,051.72 BTC, approximately $5.64 billion. However, compared to EigenLayer's staggering TVL of $15.718 billion, Babylon's TVL is only 1/3 of that, and despite Bitcoin continuously reaching new highs, Babylon's market attention has not increased. Who exactly has recognized the Bitcoin staking narrative?
There is a mismatch between the market and products; true large holders are unwilling to part with Bitcoin. Babylon's narrative slogan is to unlock the liquidity of 21 million BTC through staking, but the market may not buy this. The market recognizes Ethereum as the on-chain native financial asset, while still viewing Bitcoin as 'digital gold,' which partially explains why the funding scale of Bitcoin spot ETFs is much larger than that of Ethereum spot ETFs.
For Bitcoin holders, as Bitcoin continues to rise, they are even less willing to part with their Bitcoin. For traditional finance, Bitcoin spot ETFs and MSTR are what they truly favor in BTCFi. This is completely inconsistent with the Ethereum ecosystem, which mechanismically encourages staking.
Babylon sets the stage, but others take the lead. According to Babylon's official data, re-staking protocols like Lombard, Solv Protocol, PumpBTC, Bedrock, and Chakra account for over 60% of Babylon's total staking volume. The operation of these platforms can be summarized as users exchange their BTC for the platform's wrapped BTC, which the platform deposits into Babylon, allowing users to enjoy dual returns from Babylon and the platform's points. However, the issue is that the BTC users deposit and the platform's wrapped BTC may not be limited to a 1:1 ratio, and the circulating wrapped BTC may exceed the value of locked BTC, which may pose liquidity risks.
At the same time, the security of re-staking protocols is also worth considering. Previously, Bedrock suffered an attack that resulted in losses of about $2 million on DEX. Although Babylon claims to use a self-custody solution to protect user funds, most of the re-staking protocols behind it use custodial solutions, which is inconsistent with Babylon's initial promotional concept. Therefore, not only are large holders unwilling to stake BTC, but in the face of unclear returns and insufficient security guarantees, retail investors may also hesitate to participate in staking.
In summary, while the Bitcoin ecosystem has a good start in 2024, the performance of the Runes protocol at launch was a peak, various asset protocols quickly cooled down, the dramatic developments of Merlin and other Bitcoin L2s, and the Babylon ecosystem failing to bring about the expected BTCFi bull market have left us feeling regretful about the development of the Bitcoin ecosystem this year.
In 2025, will everything be better?
It is important to emphasize that what I have said above does not constitute a bearish view on the Bitcoin ecosystem, nor is it a conclusive judgment on its fate—there is always a gap between people's beautiful expectations for the future and the actual situation in reality, and I refer to this gap as 'regret,' which is also my summary of the Bitcoin ecosystem this year.
To this day, there are still steadfast holders and builders in the Bitcoin ecosystem. Communities like ORDI, Runes DOG, and PUPS are continuously building, while OKX Wallet and Unisat are still working on infrastructure. Although the Bitcoin L2 bubble has burst, the surviving teams have not given up, and a series of innovations like OP_CAT are on the way. Babylon may launch its TGE in January-February 2025...
In 2025, will everything be better? Although we did not witness a larger-scale explosion in the Bitcoin ecosystem this year, I still believe that the Bitcoin ecosystem will become the protagonist of this cycle, confidently welcoming 2025.
If it were you, what keyword would you give this year's Bitcoin ecosystem?
