Bitlayer is the first Bitcoin Layer 2 network security equivalent project based on the BitVM solution. It aims to provide security equivalent to Bitcoin and support Turing completeness, that is, it can execute any possible calculation or program.
The core goal of Bitlayer is to solve the trade-off between security and Turing completeness of Bitcoin's Layer 2 technology. Its design is inspired by BitVM, DLC/LN (Discrete Log Contract/Lightning Network) technology protocols, and multiple VMs (including EVM, Ethereum Virtual Machine).
The project's technical team abstracted three key tasks from these inspirations:
Trustless entry and exit of layer 1 assets
State transitions using a Turing-complete layer 2 virtual machine
Layer 1 verifies the validity of Layer 2 state transitions
Its core functions and operating principles are built around several key technical components to support more complex application scenarios such as smart contract execution, high-throughput transaction processing, and cross-chain asset transfer.
1. Core functions
Turing-complete smart contract support: Bitlayer enables developers to write and execute complex smart contracts on Bitcoin by implementing a Turing-complete virtual machine (called BitVM) that is compatible with the Ethereum Virtual Machine (EVM). This is not supported by Bitcoin's native functionality, introducing a wide range of decentralized application (DApps) development possibilities to the Bitcoin ecosystem.
Efficient transaction processing: Using optimistic convolution technology and layered verification mechanism, Bitlayer has greatly improved transaction processing speed and system scalability. This allows a large number of transactions to be processed on the second layer network, and on-chain verification is only required when disputes arise, reducing the burden on the main chain and reducing transaction costs.
Secure cross-chain transfer of assets: Through the OP_DLC bridge, Bitlayer enables secure and seamless transfer of Bitcoin and other assets between the Bitcoin main chain and the second layer. This bridge technology supports the liquidity of assets between different blockchain platforms while ensuring the security of assets and user control.
2. Core Mechanics
Based on BitVM's Bitcoin second-layer solution, Bitlayer uses layered virtual machine technology (Layered Virtual Machine), using zero-knowledge proof (ZKP) and optimistic verification (Optimistic Verification) mechanisms to support various complex calculations. In addition, Bitlayer has built a dual-channel two-way locked asset bridge through OP_DLC (Optimistic Discreet Log Contracts) and BitVM bridge, achieving the same security as Bitcoin's first layer.
BitVM
BitVM is the core component of the Bitlayer project and is a Turing-complete virtual machine designed specifically for the Bitcoin ecosystem. Its main purpose is to expand the functionality and programmability of Bitcoin without sacrificing the inherent security and decentralization of the Bitcoin network. The following is a detailed introduction to BitVM:
Design goals
BitVM is designed to overcome some of the limitations of the Bitcoin native protocol, especially in terms of smart contracts and complex computing capabilities. Although Bitcoin is one of the most secure blockchains, it does not natively support complex smart contracts, which limits its use in certain application scenarios, such as decentralized finance (DeFi).
Turing Completeness
BitVM is Turing complete, which means it can perform arbitrarily complex computing tasks as long as there are enough resources. This feature allows developers to design and run a variety of complex decentralized applications on the Bitcoin network, such as automated trading strategies, financial derivatives, smart contracts, etc.
In short, BitVM is the key technology of the Bitlayer project, which enables Bitcoin to better adapt to current and future blockchain application needs by providing a secure, scalable and feature-rich virtual machine. It not only solves Bitcoin's shortcomings in smart contracts and high-throughput applications, but also maintains its security and decentralization as a top cryptocurrency.
Layered Virtual Machine (LVM)
Bitlayer's Layered Virtual Machine (LVM) technology is an innovative architectural design that aims to increase the computing power and programmability of the Bitcoin network while maintaining its core security and decentralization. This technology allows complex smart contracts and other applications to be executed on Bitcoin's second layer without placing an excessive burden on Bitcoin's main chain. The following is a detailed introduction to the key components and working principles of this technology.
Key components
Front-end execution environment: The front-end execution environment is mainly responsible for handling the execution of smart contracts. It can support multiple smart contract languages and frameworks, allowing developers to choose the most suitable tools and languages for specific applications.
Backend verification environment: The backend environment focuses on verifying the results of frontend execution. This part usually uses zero-knowledge proof technology (ZKP) to ensure the correctness of the calculation results without revealing the specific execution details.
working principle
The core idea of the layered virtual machine is to separate the computation and verification. This layered architecture allows a large amount of computation to be processed on the second layer, while only the necessary verification information is submitted to the Bitcoin main chain, which greatly reduces the burden on the main chain.
Execute smart contract:
Developers deploy smart contracts in the front-end execution environment. These contracts can be financial derivatives, games, or other applications that require complex logic processing.
When a contract is executed, the relevant calculations are performed on the second layer instead of directly on the Bitcoin main chain.
Generate a zero-knowledge proof:
Once the smart contract execution is completed, the backend verification environment will generate zero-knowledge proofs that can confirm the correctness of the front-end execution without revealing the specific content of the execution.
These proofs can then be submitted to the Bitcoin main chain for anyone who needs to verify these calculations.
On-chain verification:
Once the zero-knowledge proof is submitted to the Bitcoin main chain, anyone can verify that the smart contract was executed without error without having to recalculate.
This not only ensures the transparency and verifiability of the calculation, but also protects the privacy of the execution details.
Advantage
Efficiency: By performing most of the calculations on the second layer, the layered virtual machine greatly reduces the pressure on the main chain and improves the throughput and efficiency of the entire system.
Flexibility: Supports multiple smart contract languages and execution environments, providing developers with a wide range of choices and promoting innovation and development of various applications.
Security: Zero-knowledge proof technology is used to protect user privacy while ensuring the correctness and non-tamperability of calculation results.
Layered virtual machine technology is the key technology that Bitlayer attempts to add complex smart contract functions to the Bitcoin network without sacrificing security and decentralization. This innovative technical framework provides new possibilities for the functional expansion of Bitcoin, enabling it to better serve the various modern blockchain application needs.
Zero-Knowledge Proofs (ZKP)
Zero-Knowledge Proofs (ZKP) is a cryptographic technique that allows one party (the prover) to prove to another party (the verifier) that a statement is true without revealing any information other than the truth of the statement. This technique ensures the integrity and security of data while protecting privacy. In the Bitlayer project, zero-knowledge proof technology is used to enhance security, improve efficiency, and protect user privacy.
Fundamental
The core of zero-knowledge proof is the ability to prove the correctness of a piece of information without revealing anything about the specific content of that information. For example, a prover can prove that they know a password without revealing the password itself. This is done through a series of mathematical challenges and responses that can only be successfully solved by someone with the correct information.
Application in Bitlayer
In Bitlayer, zero-knowledge proofs are used in the following key aspects:
Enhanced privacy protection: By using ZKP, users can prove that they have enough funds to conduct transactions without having to disclose the specific amount of their account balance. This protects the privacy of users and ensures the security of the network.
Improve transaction efficiency: In traditional blockchain systems, the details of each transaction need to be publicly recorded on the chain, which may lead to privacy leaks and network congestion. Using ZKP can only prove the validity of the transaction without showing all the details of the transaction, thereby reducing the need for data transmission and storage.
Secure execution of smart contracts: Using ZKP in smart contracts can ensure that the execution results of the contract are correct while not leaking the internal state and logic of the contract. This is especially important for applications involving sensitive data and logic.
Technical Challenges
Although zero-knowledge proofs offer many advantages, they also face several technical challenges, including:
Computational complexity: The process of generating and verifying zero-knowledge proofs is often computationally intensive, which can cause performance issues, especially in resource-constrained environments.
Design complexity: Designing an effective and secure zero-knowledge proof system requires advanced cryptographic knowledge and precise implementation, and incorrect design may lead to security vulnerabilities.
Interoperability issues: The standards and implementations of zero-knowledge proofs may not be compatible across different systems and platforms, which may limit their cross-platform application capabilities.
In the Bitlayer project, zero-knowledge proof technology is a key component, which enables Bitcoin's second-layer network to not only maintain Bitcoin's core security properties, but also provide higher efficiency and better privacy protection. By using ZKP where necessary, Bitlayer is able to provide a secure and efficient blockchain platform that supports a variety of complex and sensitive blockchain applications.
Optimistic Verification
Optimistic Verification is a technology used in second-layer blockchain solutions, especially for expanding the capacity of the main chain and reducing its load. This technology assumes that the participants act honestly and allows transactions and contracts to be executed without immediate verification. The necessary verification is only performed when disputes arise. This method can effectively reduce the number of transactions on the main chain, thereby improving the performance and scalability of the overall network. In the Bitlayer project, optimistic verification is one of the key technologies to achieve high throughput and low latency.
working principle
The basic principle of optimistic verification is that most transactions or contract executions are correct, and the verification process is only triggered when necessary. This reduces the need for on-chain operations, thereby reducing transaction fees and latency while increasing the overall scalability of the system.
Submission phase:
Transactions or state changes are first executed on a second-layer network (such as Bitlayer) and their validity is assumed. This stage does not require instant on-chain verification, which greatly reduces latency and fees.
Challenge Window:
Each submitted state or transaction has a "challenge window" during which network participants can dispute the submitted state. If there is no challenge during this window, the transaction is considered valid.
Dispute Resolution:
If a challenge occurs, the dispute must be resolved through on-chain verification. This involves submitting evidence to prove the validity or invalidity of the state. If the challenge succeeds, the incorrect state is rolled back; if the challenge fails, the state is confirmed.
Applications in Bitlayer
In the Bitlayer project, optimistic verification enables significant improvements in transaction processing speed and system scalability while maintaining the core security properties of Bitcoin. Here are a few key applications of Bitlayer utilizing optimistic validation:
Smart Contract Execution:
Bitlayer can execute complex smart contracts on the second layer, and only requires on-chain verification when disputes arise. This allows Bitlayer to support more complex and feature-rich applications than the native Bitcoin protocol while maintaining the core security and decentralization features.
Batch transaction processing:
Through optimistic verification, Bitlayer can process a large number of transactions on the second layer first, and then record the final status of these transactions as a single submission batch to the Bitcoin main chain. Doing so reduces the burden on the main chain while increasing the overall transaction throughput.
Cost efficiency:
Reducing the need for immediate on-chain verification, optimistic verification greatly reduces transaction fees, making small transactions economically feasible on the blockchain.
Challenges and considerations
Although optimistic validation provides significant performance benefits, it also poses some challenges, primarily security and data integrity considerations. Due to the reliance on challenge mechanisms to ensure the correctness of transactions, the system must be carefully designed to prevent fraud and ensure that network participants can respond to any possible challenges in a timely and efficient manner. In addition, the length of the challenge window and the design of the dispute resolution mechanism need to be meticulous to ensure the fairness and efficiency of the system.
In general, optimistic verification provides an effective expansion path for second-layer solutions such as Bitlayer. It greatly improves the scalability and economy of blockchain systems while ensuring security by reducing the need for on-chain operations.
OP_DLC桥（Optimistic Discreet Log Contracts Bridge）
OP_DLC Bridge (Optimistic Discreet Log Contracts Bridge) is a key technology used in the Bitlayer project to achieve cross-chain asset transfer. This technology is based on the combination of Discreet Log Contracts (DLC) and Optimistic Protocols, and aims to provide a safe, reliable and decentralized method to enable assets to circulate between the Bitcoin main chain and the Bitlayer second layer.
Discreet Log Contracts (DLC)
Discreet Log Contracts is a form of smart contract based on Bitcoin, which allows the execution of contracts based on some predefined conditions without relying on external oracles. The implementation of DLC mainly relies on Bitcoin scripts and multi-signature technology to ensure that the execution of contracts is completely on-chain, transparent and tamper-proof.
How the OP_DLC Bridge Works
Asset lock-up:
Users first lock their assets through a DLC contract on the Bitcoin main chain. This means that the assets are retained in a specific smart contract address and can only be released or transferred when the contract conditions are met.
Cross-chain transfer:
Once the assets are locked on the main chain, the corresponding tokens representing the assets are created on Bitlayer Layer 2. These tokens are completely controlled by the DLC contract, ensuring a one-to-one correspondence with the main chain assets.
Users can freely trade these tokens on Bitlayer and enjoy low fees and high-speed transaction experience.
Asset Redemption:
When users want to redeem second-layer tokens back to main-chain assets, they need to initiate a redemption request on Bitlayer.
This request triggers the execution of the DLC contract, the token is destroyed, and the corresponding assets are released from the smart contract and sent to the user’s Bitcoin address.
Optimistic Validation:
Throughout the process, the optimistic protocol ensures that only when disputes arise, related transactions need to be verified on the chain. This greatly improves the efficiency and scalability of the system.
Advantages of OP_DLC Bridge
Security: Using a Bitcoin-based DLC contract ensures the security and transparency of asset locking and transfer.
Efficiency: Through optimistic protocols, the need for on-chain verification is reduced, thereby increasing transaction processing speed and reducing costs.
Decentralization: It does not rely on any centralized oracle or third-party service. All operations are automatically completed on the chain, ensuring the decentralized nature of the system.
Flexibility: Supports multiple types of cross-chain asset transfers, expanding the application scenarios of the Bitcoin ecosystem.
In short, the OP_DLC bridge is Bitlayer's core technology for achieving safe and efficient circulation of assets between the Bitcoin main chain and the second-layer network. It combines the security of DLC and the efficiency of the optimistic protocol to provide users with a powerful cross-chain asset management tool.
Bitlayer NFT
Bitlayer announced that after the release of its mainnet V1, it will launch its first official NFT, the Bitlayer Lucky Helmet. This NFT is not only an image, but also a symbol that represents the identity and contribution of Bitlayer community builders. This series of 5,000 lucky helmets will be distributed to active Bitcoin and Bitlayer community participants through a whitelist.
Lucky Helmet holders will enjoy a series of practical rights and benefits, including priority governance rights, possible token airdrop rights, official activity points, and point multiplication advantages in ecological projects. In addition, Lucky Helmet also adopts the Ordinals issuance paradigm, which optimizes circulation efficiency and minimizes transaction costs.
The ways to get the lucky helmet include priority pass and public allowlist, which are respectively for the earliest and most active participants in the Bitlayer ecosystem, and a limited whitelist obtained through the Bitlayer x OKX wallet event held in cooperation with OKX wallet. These NFTs will be minted within a specified time, and the minting process needs to be completed within the specified time on the official website.
Team/Partners/Financing
Bitlayer was co-founded by Charlie Yechuan Hu and Kevin He.
Charlie Yechuan Hu is the co-founder of Bitlayer and previously served as the managing partner of LucidBlue Ventures. He has also been involved in projects such as Polygon, Tezos, and Polkadot. He graduated from Nehrad University of Business and Beijing Foreign Studies University. Charlie Hu has played a crucial role in expanding the influence of Tezos and Polygon, especially as the head of business development for Tezos China, and later oversaw Polygon's business in China and Southeast Asia.
Kevin He is the co-founder of Bitlayer. He has served as Vice President of Technology at Newfire Technology, Senior Technical Director at Huobi, and Chief Scientist at YOUChain. He holds a Master’s degree in Software Engineering from Peking University.
So far, Bitlayer has successfully completed a round of seed financing of $5 million. This round of financing was led by Framework Ventures and ABCDE Capital, and also received participation from many well-known investment institutions such as StarkWare, OKX Ventures, Alliance DAO, UTXO Management, and Asymmetric Capital. In addition, the project also attracted many well-known angel investors including Messari CEO Ryan Selkis, Messari co-founder Dan McArdle, and Asymmetric Capital founder Dan Held.
In addition, Bitlayer announced that its $50 million developer airdrop event has attracted more than 500 project parties to sign up, and the participating projects cover infrastructure, DeFi, inscriptions, SocialFi, cross-chain bridges and other types. Within 48 hours of the launch of the event, more than 300,000 users voted for the supported projects. The event will continue to be open for registration until April 29, and the official competition time is expected to be in mid-May. At that time, project parties can share the $50 million token airdrop rewards and Grant through the list ranking and accelerator program.
Project Evaluation
Track Analysis
The Bitlayer project belongs to the second-layer solution track of Bitcoin, focusing on expanding the functionality of Bitcoin, increasing its processing speed and programmability while maintaining its security and decentralization. The key to this track is to solve the scalability and flexibility problems of the Bitcoin network so that it can support more complex financial and commercial applications.
Similar Projects
Lightning Network: Lightning Network is one of the most famous second-layer expansion solutions for Bitcoin, which mainly solves the transaction speed and scalability problems of Bitcoin. By establishing payment channels, it allows participants to conduct almost instant transactions, greatly reducing transaction costs and increasing the throughput of the network.
Liquid Network: Developed by Blockstream, Liquid Network is a Bitcoin-based sidechain technology that is primarily targeted at financial institutions such as exchanges, brokers, and market makers. It supports faster Bitcoin transactions and asset issuance while providing privacy enhancements.
RSK (Rootstock): RSK is another sidechain project that introduces smart contract functionality to the Bitcoin network. RSK aims to achieve similar functionality to Ethereum, including support for Turing-complete smart contracts, while maintaining the security properties of Bitcoin.
Target customers
Blockchain developers: Provide a feature-rich and EVM-compatible development environment to attract developers on Ethereum and other blockchain platforms to develop and deploy applications on the Bitlayer platform.
Enterprise users: Provide efficient and low-cost blockchain solutions for enterprises that need to process a large number of transactions, especially those that want to use blockchain technology to optimize their business processes or develop new business models.
Financial institutions: Provide secure cross-chain asset transfer and management services to help financial institutions manage, trade and settle assets on the blockchain.
Cryptocurrency investors and traders: Providing investors with a secure and fast trading platform is particularly attractive to high-frequency traders who require instant trade execution and low fees.
Privacy- and security-conscious users: Zero-knowledge proof technology is used to provide enhanced security for privacy-conscious users, protecting their transactions and data from being leaked.
Project Benefits
The advantages of the Bitlayer project are mainly reflected in its unique technological innovation and strong ecosystem cooperation:
Layered virtual machine technology provides flexible front-end smart contract execution and back-end zero-knowledge proof generation. This layered approach optimizes the computing and verification process, improves efficiency and reduces costs.
Zero-knowledge proof (ZKP) enhances privacy and security. Bitlayer can verify the correctness of transactions without revealing any specific transaction details, providing users with higher privacy protection.
Optimistic Verification returns to the chain for verification only when disputes arise, effectively reducing network congestion and transaction fees.
The OP_DLC bridge achieves highly secure interoperability with the Bitcoin main chain. This technology allows assets to be securely locked and transferred between the two chains while maintaining full control of the user's assets.
Bitlayer has reached ecological construction and cooperation intentions with more than 80 projects, covering infrastructure, stablecoins, wallet services, and other key areas. This extensive partnership provides Bitlayer users with a wealth of services and applications, enhancing the platform's attractiveness and competitiveness.
Bitlayer combines technological innovation with a wide range of cooperative networks, not only providing efficient and secure solutions in terms of technology, but also forming a strong ecological support in the market. This enables Bitlayer to occupy a favorable position in the fiercely competitive blockchain market and lay a solid foundation for future development.
Potential Disadvantages of the Project
Although the Bitlayer project has performed well in terms of technological innovation and ecosystem building, like many technology projects, it also faces some potential challenges and shortcomings. These shortcomings may affect its widespread adoption and ultimate success. The following are some of the main shortcomings that Bitlayer may face:
Technical complexity
User Adoption Barriers: Bitlayer’s advanced features, such as layered virtual machines and zero-knowledge proofs, are powerful, but the complexity of these technologies may make them difficult for ordinary users and developers to understand and use, thus hindering their widespread adoption.
Maintenance and upgrade challenges: Highly complex systems may face more technical challenges in maintenance and upgrades. Any small error or vulnerability may lead to system security risks or performance issues.
Security issues
Security risks of new technologies: Although Bitlayer uses advanced encryption and security technologies, the introduction of new technologies is always accompanied by unknown security risks. For example, zero-knowledge proofs and optimistic verification mechanisms may be vulnerable if they are not implemented properly.
Dependence on external systems: Some features of Bitlayer may depend on external systems and services, such as cross-chain bridging. The security and stability of these systems may affect the overall security of Bitlayer.
market competition
Competition with other second-layer solutions: There are many other second-layer solutions on the market, such as Lightning Network, Liquid Network, etc. These projects already have relatively mature technology and user base. Bitlayer needs to prove the superiority and unique value of its technology to stand out from the competition.
Market acceptance and adoption speed: Although technologically advanced, Bitlayer’s market acceptance and adoption speed will also be affected by its actual application scenarios, user experience, and the overall market environment.
Economic and regulatory factors
Funding requirements: The development and operation of advanced blockchain projects require a lot of financial support. If there is insufficient financing in the future, the continued development of the project may be affected.
Regulatory uncertainty: Blockchain technology, especially projects involving financial applications, faces a strict and changing regulatory environment. Regulatory uncertainty may affect the operation and expansion of Bitlayer.
Future plan
Bitlayer's development roadmap shows its major milestones in the next few releases:
Mainnet-V1 (expected to be launched in April 2024):
More than 30 ecosystem projects are planned.
The total locked value (TVL) reached $100 million.
The number of transactions (TXs) processed daily reaches 1 million.
Mainnet-V2 (expected to be launched in Q3 2024):
Focus on solving cross-chain bridging problems.
Expand the ecosystem to 500 projects.
Increase the total locked value to $1 billion.
Daily transaction volume increased to 3 million.
Mainnet-V3 (expected to be launched in Q2 2025):
Implemented first layer verification with BitVM.
The number of ecosystem projects has surged to 3,000.
Total locked value exploded to $10 billion.
The daily transaction volume reaches 5 million.
Overall, Bitlayer plans to significantly increase the number of ecosystem projects on its platform through a series of upgrades, increase the total locked value of assets, increase the daily transaction volume, and promote the integration verification of the first layer chain (L1) and BitVM. . These goals demonstrate Bitlayer’s commitment to building a robust network that provides highly scalable solutions to support the growing needs of blockchain applications.
Conclusion
The Bitlayer project is moving towards becoming a revolutionary second-layer solution for Bitcoin. Through its original BitVM technology and layered virtual machine architecture, it aims to significantly improve the scalability and smart contract capabilities of the Bitcoin network. As its development blueprint is gradually realized, Bitlayer is committed to expanding its ecosystem to thousands of projects, accumulating billions of dollars in total locked value, and processing millions of daily transactions, which is expected to greatly promote the practicality and market penetration of Bitcoin. With the continuous iteration of the mainnet, from Mainnet-V1 to Mainnet-V3, Bitlayer has demonstrated its ambition to become the center of Bitcoin's economic and innovative activities.
