Of course, some of these teams are very focused on scaling. While some of the original OGs in the market (including Stacks) continue to innovate, we also have a group of new builders who are making their first forays into the world of Bitcoin scaling.

In this report, we will focus on this aspect of the Bitcoin scaling narrative. How can we evolve to adapt to the evolving ecosystem and build Bitcoin to a level that can sustain true mass adoption?

In this report we will discuss the problems and solutions surrounding Bitcoin scalability, diving into Rollups, sidechains, state channels, and more.

- Why Bitcoin Scaling Solutions Matter❓

(1) Why We Need to Scale Bitcoin❓

Achieving Bitcoin scalability through L2 or other forms of scaling solutions is not a new topic. This discussion has been going on as early as 2009, when Satoshi Nakamoto implemented a 1MB block limit on Bitcoin.

The 2017 Segregated Witness soft fork upgrade was an important node in the scalability debate, and subsequent solutions such as the Lightning Network, Stacks, and Rootstock have been building solutions based on this for many years.

However, some recent developments have brought this discussion to a new level. At the heart of the new Bitcoin era is the introduction of standards for fungible and non-fungible tokens through the emergence of Ordinals, Inscriptions, BRC-20 tokens, and Runes

This has a very direct impact on Bitcoin’s on-chain transaction fees, with average Bitcoin transaction fees rising 175% from $1.5 to $4.2 between 2022 and 2023.

This trend is still continuing, with average Bitcoin transaction fees reaching $9 in 2024. This phenomenon also directly highlights the importance of Bitcoin’s scaling solutions.

The rise of the concept of inscriptions has helped Bitcoin usher in a renaissance in the ecosystem. Many new Bitcoin projects have either been launched in the past year or are currently raising funds and developing. 🔺

These projects include a variety of solutions, whether they are projects focused on creating trading markets on Bitcoin or focusing on introducing other primitives such as staking and re-staking to the largest crypto projects.

All of these new projects have or are expected to contribute to the Bitcoin block space, and therefore also affect fees.Bitcoin L2 is critical to these projects.