I just recently learned that on the fund side, several Bitcoin ecosystem projects that previously took action were valued at 100 million to 300 million dollars. If no one asks, no one mentions this, it's really quite speechless...

But looking back, during the FOMO in the first half of the year, everyone felt that the Bitcoin ecosystem would trend like Ethereum, being the trend and the future, everything realized on Ethereum would be realized again on Bitcoin.

In fact, the biggest problem with the Bitcoin ecosystem is that Bitcoin has risen too quickly, and during this cycle, basically no BTC L2 or related tokens have outperformed Bitcoin. Moreover, these unreleased projects generally have valuations above 300 million dollars, and this round can say goodbye to Binance.

You might ask, what about ORDI and SATS at the beginning of the year? The answer is that initially, their liquidity was low, and the inherent attributes of inscriptions made them somewhat akin to low-circulation small-cap NFTs being discovered for their value on DEX.

At the early stage of the market, even small amounts of capital would have a significant impact on their prices. However, as the price of a single coin rises higher, especially with universes involved, it requires a larger capital volume to keep up with subsequent increases.

However, this capital is currently mainly on Ethereum and Solana. There are many speculative institutions above them, as well as many medium to long-term allocators.

Unfortunately, as Bitcoin prices continue to rise, this seems not to be a good thing for on-chain prosperity, as it decreases people's willingness to exchange it for other coins.

Currently, the outside world is packaging Bitcoin as digital gold, but few institutions are packaging Ethereum as digital silver. This is because everyone talks about Bitcoin's scarcity value, while Ethereum resembles programming currency or future circulating assets.

Therefore, reviewing the narrative of this market wave, you will find that the external interpretation and impression of Bitcoin are mostly focused on value storage, with little mention of its potential in on-chain L2 use cases.

In simple terms, this description of direction gives people a deeply rooted impression that once they buy BTC, they must hold it and not touch it; if they do, it will be over.

Solv's on-chain micro-strategy is a way to position themselves as a fund company to whales and institutions, allowing them to discuss the on-chain version of MSTR, which is actually quite appealing for large holders.

However, as the coin issuance time approaches, this narrative may waver at the moment the price appears because the output ratio will then be easily calculable.

Bouncebit has completely embraced CeDefi following Binance. After all, the founder of the PayPal investment back then was quite optimistic, and it's indeed a pity that it blew up. So they hope to replicate a controllable on-chain version; this path might be feasible, but what about other ecological L2s?

All institutions are tied to the vehicle.

This autumn, I was fortunate to communicate with some founders of BTC L2 teams with good financing backgrounds in Tokyo. They hope to gain some Bitcoin funding support from large holders in Japan since Mentougou is compensating everyone, worth about 9.2 billion at the then Bitcoin price.

But I countered, what about the Bitcoin OGs or miners in the Chinese-speaking world? The responses were surprisingly unanimous: it's hard to find them, and those who can be found seem to have been snatched up by kings like Babylon and Solv, or they require additional clauses, such as extra TVL annual commitments, like must be above 25%.

I was shocked because in the first half of the year, when not many people were doing BTC L2, this commitment wasn't so high... I didn't expect it to be exceptionally high now.

Currently, there are about 20 BTC L2 or sidechains on the market that have secured financing, which is just what I have known this year, as there are many that haven't been disclosed or have already received support from investors and are on their way to doing things.

With so much infrastructure, it is a significant problem because Ethereum next door already has L1 infrastructure and active funds. It rose first before doing L2. But it seems that the Bitcoin ecosystem is somewhat sluggish in L1 and inscriptions, resulting in L2 becoming even more numerous than Ethereum next door.

Currently, those pushing this wave of Bitcoin ecosystem construction are basically VCs, who are taking LP's money and distributing it to these projects. These projects then need to maintain high technical costs, spending money to buy Bitcoin for testing; quite a bit of cost has already been incurred.

With the establishment of the altcoin season, many institutions seem to be unable to wait any longer. This market trend will be a major test for these projects regarding coin issuance, with the timing concentrated in Q1 of next year. After Q1, regular post-investment support may turn into rights protection.

After all, when the market arrives, no one wants to wait, and no one wants to be tied to the vehicle.

The above is my perspective and insights on this matter. Due to some subjective factors, I hope it won’t offend anyone and hope the content is helpful to you.

AB KUAI DONG
December 9, 2024