Some people say that the concept of BTC Layer2 can be described as “a doctor’s achievement is to cure a disease without causing it to get sick”, and the mentality of BTC Layer2 developers can be described as “it does not matter if the clothes get dirty, as long as the wish is fulfilled”.
Combined with the industry environment, the first sentence is people's evaluation of a new industry. Translated, it means: Taking BTC Layer2 as an example, some public intellectuals like to take advantage of people's lack of knowledge about things, create some concepts out of thin air, and then operate to come up with something new, and use it as their own credit.
The second sentence is the analyst's evaluation of the developer team, which means: It doesn't matter whether I make money or not, I just want to be a qualified Builder.
This view seems to make sense on the surface, but a closer look reveals that it is just a joke.
So today we will take a look at the opportunities in these areas:
Will BTC Layer2 explode?
What should we focus on before BTC Layer2 explodes?
How did GOAT Network achieve monetization in 3 months (where it makes money recently)
GOAT Network Fundamentals
1. Is BTC Layer2 really “a doctor’s achievement is to cure the disease and prevent the disease from happening again”?
BTC Layer2 has not been a technical problem since the release of Ordinals, BRC-20, Atomicals and other protocols and standards last year. However, from December last year to now, no real project with a driving effect has emerged, and most projects have postponed the issuance of tokens, leading many people to believe that the narrative of BTC Layer2 is "the doctor's cure is the best result".
Is the BTC Layer2 concept really “the doctor’s achievement is to cure the disease and not get sick again”?
We use data to prove that the development of BTC Layer2 is necessary. It is generally believed in the industry that the development of BTC Layer2 is based on the following three factors:
1. BTC needs application scenarios (external factors)
From 2019 to the third quarter of 2023, there were several DeFi Summers on Ethereum and other ecosystems. At that time, ETH holders could make a lot of money just by participating in a simple staking.
During this period, BTC has been used as a "value reserve", which means that BTC holders cannot play the ecological games derived from other chains (such as Ethereum), which means that the currency-based interest-earning channel has disappeared.
The solution to this dilemma at the time was to mint $WBTC, which is a BTC 1:1 minted ERC-20 token that locks BTC. At that time, it was used as a bridge for BTC to flow into the Ethereum ecosystem.
$WBTC
The TVL reached a peak of US$15 billion in the fourth quarter of 21, which is enough to illustrate the user demand for the blockchain ecosystem. In fact, there is a large amount of asset liquidity in the Bitcoin network that has not been released, and the native Bitcoin ecosystem has huge potential momentum.
(II) Developing BTC Layer2 can increase network security (internal factors)
The revolutionary launch of the Ordinal protocol has made BTC Layer2 possible, allowing developers to develop on BTC just as they expand the ecosystem on ETH. There are no technical barriers to BTC Layer2.
As a store of value, although BTC has indirect liquidity via $WBTC, the activity on the BTC chain is indeed limited. With the halving of BTC, the activity on the BTC chain will further decrease.
The lack of on-chain activity is actually harmful to Bitcoin. The halving of Bitcoin has led to a significant reduction in miners’ income. If the income is not enough to cover the expenses, the number of miners will be greatly reduced, the degree of decentralization will be reduced, and the vulnerability to attacks will increase accordingly.
There are only two solutions to avoid this:
The price of Bitcoin increases (even if the price of Bitcoin doubles, the block reward income will just be balanced with the current level);
Active BTC on-chain activities bring more transaction fees — and this has been verified by the Ordinals protocol and BRC20.
The first option is not something that any project can achieve. Obviously, the BTC network needs ecological empowerment. The increase of Dapps on the chain not only brings economic benefits to miners and makes up for the losses after halving, but also increases the number of full nodes and network security.
3. BTC Layer2 market potential is large enough to reach a potential market value of $130 billion (wealth effect)
Regarding Layer 2, there are a lot of industry-specific data, and the most successful one is ETH. Here is a rough example:
🔹Ethereum’s market cap is $400B, and Layer2s on Ethereum account for about 10% of that market cap, so the valuation is about $40B.
🔹Bitcoin’s market cap is $1.3 trillion, which means Bitcoin Layer 2 could have a market cap of $130 billion.
Judging from the above three major factors, the concept of BTC Layer2 is not "the doctor's success is to cure the disease and not get sick", but a sector that can generate actual needs from the inside out. If there is actual demand, then it is nonsense to evaluate the developers as "it is not a pity to get their clothes dirty, as long as their wishes are fulfilled". Developers are here to solve actual needs.
This also proves that where there is demand, there is wealth, and where there is wealth, there is community, there is consensus.
This can be seen from the book "Bitcoin Ecosystem: Draw the Curtain on the Era of Trustless Finance" co-authored by the authoritative Spartan Group team and Kyle Ellicott. The main point of the paper is that Bitcoin is no longer just a reserve of value or an asset, but is realizing its significance as infrastructure in an expanding economy.
This shows that BTC Layer2, from top to bottom, believes that BTC Layer2 is the future, and BTC Layer2 Summer will inevitably appear in the future.
2. What should we pay attention to before BTC L2 Summer arrives?
By the first half of 2024, by June 2024, more than 200 BTC Layer2s are under development or in preparation. The current categories of Bitcoin L2 solutions are roughly state channels (such as Lightning Network), side chains (such as Liquid, Merlin), Rollups (such as Rollkit), client verification (such as RGB, RGB++, Taro), etc.
https://l2.watch/
1. Two major camps of BTC L2
These projects can currently be divided into two camps:
The EVM camp mainly refers to ETH's technology stack + bridge to solve BTC's expansion problem, which can be quickly built in the short term. Most BTC Layer2s adopt this solution.
The UTXO camp is a group of people who derive ideas based on the UTXO model, such as CKB, which proposed RGB++.
In the first half of the year, MerlinChain was the most popular EVM project and was entrusted with a heavy responsibility in terms of user capacity. Unfortunately, MerlinChain chose not to issue its token at a very good time. Despite various efforts, MerlinChain was unable to gain a foothold in overseas markets and was not listed on Binance. This was also a regret for BTC Layer2 in the first half of the year.
Due to the small number of projects and long development cycle in the UTXO camp, the one that has entered the public eye is Nervos Network (CKB). It has an inherent advantage in the market that its tokens have been listed on Binance. The subsequent CKB RGB++ Layer can be developed gradually to empower the tokens.
After talking about so many fundamentals above, it seems that there is nothing interesting to see. So the question is, the market is not short of BTC Layer2 projects. As small investors, which projects should we pay attention to in order to make money?
I think that in order to make money we should do the following:
There are not many projects in the UTXO camp, so just pay attention to one when it comes out.
There are a lot of projects in the EVM camp, and the competition among project owners is particularly fierce. In order to stand out, many projects have prepared a lot of quotas for users. For a freeloader like me, this is where there are more opportunities and where you can make money.
2. What are the main factors to consider when choosing the EVM camp?
There are a huge number of projects in the EVM camp. If you study each one of them, it may take you one or two months to finish. By the time you study the Nth project, most of the previous ones have ceased operations.
This is the "nerdy" investment research. Before you make any money, you're exhausted. The dark circles under your eyes won't go away for months. Every day, people say to you, "I feel like you have a dark forehead and red eyes..."
You are also likely to miss out on projects that are about to issue tokens and be listed on major exchanges. We are all small investors, so we don’t think too much and start researching the most direct projects that can make us money in the short term.
There are very few tokens in the EVM camp listed on Binance. If one is listed and you happen to have an airdrop for this project, it will take off right away. Babylon, which is now highly anticipated, may be listed on Binance, but is it a bit late to participate now? Whether it can issue a coin within 3 months is something you need to consider yourself.
Many projects in the EVM camp were suspended halfway through. If we interact with these projects, it would obviously be a waste of time. So if there are projects that issue airdrops every 3 months, this will increase our capital turnover rate and quickly realize cash.
What is the token distribution of the new projects you are paying attention to, how many projects belong to the community, how many of them belong to airdrop users, and what is the airdrop threshold?
Who is the team behind the project? Do they have experience in listing tokens on Binance?
I think that if you are going for the idea of making money, you can initially screen out a large number of projects by examining the above 4 points. We can then conduct in-depth research on the filtered projects to see if we decide to enter the market.
Now let’s take the above questions and take a look at a new BTC Layer2 project I have seen in the past few days - GOAT Network
3. Is GOAT Network a short-term, fast-paced project?
1. From the perspective of monetization, GOAT Network can be monetized in 3 months
(1) What is GOAT Network?
GOAT Network aims to extend the functionality of Bitcoin by implementing Bitcoin Rollup, which derives security from the underlying Bitcoin blockchain (L1). It introduces an optimistic challenge protocol (GOAT-OCP) and leverages BitVM2 security and ZKM interwoven Rollup as a general settlement layer to enhance transaction inclusion and finality while protecting assets within a decentralized sequencer network.
This is easy to understand, because it is generally believed in the industry that BTC is currently a "passive asset" and its scale is already very large, but most people just hold it passively as a value reserve. In order for BTC to gain more adoption, we need to transform it into an "active asset", that is, an asset that can generate income and participate in various transactions. In this way, more institutions and individuals will hold BTC and gain income from it, driving the growth of the value of derivatives. To achieve this goal, BTC needs an intelligent financial market to support the trading of various derivatives. Therefore, GOAT plans to build a platform that supports a variety of BTC derivatives to transform BTC from a passive asset to an active asset.
Well-known media Theblock reported: GOAT Network will be launched on the mainnet in the third quarter. That is to say, if we participate now, we can cash out within 3 months.
https://www.theblock.co/post/303937/metis-co-founder-zkm-bitcoin-layer-2-goat-network
(II) GOAT Network airdrop distribution
The total amount of GOAT tokens is 1 billion, and 49% will be allocated to community contributors.
42% is allocated to Sequencer mining and community mining (low-cost coin mining);
6% for airdrop activities
(III) Recent Activities
Before the mainnet launch, GOAT Network launched a "GOAT Club" reward program. Ordinary users can apply for the whitelist as long as they sign a wallet on the official website and hold more than 0.001BTC. Future rewards are provided to first-day DAPP release partners and sequencer node operators who lock Bitcoin to protect network security.
https://x.com/goatrollup/status/1816111747692171691?s=46&t=lctQ6O-qb2W1JTmPlZHoSw
Participating in the GOAT Club joint points event on the platform will earn points, and points can be used to obtain token airdrops. The official will divide the airdrops into different stages. Whether you are a BTC holder, builder, or sorting node, you can get points by participating in the set activities:
4. Activity Participation Tutorial
Step 1: Enter the official website
Related links: https://club.goat.network/points,
Link Wallet
Step 2: Enter the invitation code
Step 3: Follow social media
Need to verify wallet address in TG
Step 4: Apply for GOAT
The GOAT list is the core interaction of the first phase. Joining the GOAT list means being considered an early contributor and being able to participate in generous rewards. After the mainnet is launched, completing mainnet tasks will give you a chance to get double points.
At this stage, it is a test network. Staking does not require the actual transfer of your BTC. Users can stake multiple nodes at the same time. Try it now. After the main network is launched, you can stake BTC according to your preferences. The more you stake, the more points you will get.
Here’s how:
Click Apply
Then choose a node and stake BTC;
By the time you see this article, the testnet may have ended, but it doesn’t matter, the second phase will start soon.
GOAT Network Fundamentals
1. Project Introduction
GOAT Network is a second-layer solution based on Bitcoin that aims to provide yield-generating opportunities for Bitcoin holders. The project will be launched with a decentralized sequencer model, where sequencer node operators will help secure the network while earning revenue from their Bitcoin and fees from activities including block production, transaction ordering, and maximum extractable value (MEV) opportunities.
Does the official statement seem like reading a book of heaven? We can understand it this way:
GOAT Network is the first BTC Layer2 that uses a sorter to share network ownership and fees. Every transaction on a block generates a lot of fees, and users who participate in GOAT Network nodes can obtain continuous income from sorters and GAS fees.
Do you think it looks familiar? There is a project on ETH Layer2 that is also a sequencer, called Metis. What is the relationship between GOAT Network and Metis?
2. GOAT Network Background
GOAT Network is a Bitcoin Layer 2 solution launched by ZKM. It can be said that GOAT Network and Metis are brothers from the same school.
It is not difficult to understand why GOAT can quickly adapt to ZKM's Entangled Rollup technology to achieve the native security of Bitcoin's Layer 1. Through Entangled Rollup deployed on all blockchain infrastructures, whose states are synchronized through recursive knowledge proof technology, GOAT Network can become a "universal Layer 2" that can solve the decentralized liquidity problem in the blockchain world by enabling any L1 to seamlessly connect to any L2 without the vulnerabilities of traditional third-party bridges.
The core member of GOAT Network is Redouane Elkamhi, a professor of finance at the Rotman School of Management at the University of Toronto. Dr. Elkamhi has served as a consultant to traditional finance and Web3 companies, including KPMG and EY. His expertise includes strategic asset allocation, fund management, and DeFi. He is leading the GOAT team to provide sustainable returns, covering everyone from decentralized sequencers to small BTC holders.
(III) GOAT Network Node
Like other BTC L2s on the same track, GOAT Network also uses the POS mechanism to protect blockchain security. Unlike a single node, GOAT Network will launch seven sorter nodes, each of which pledges its own bitcoin to protect the network, thereby creating a stronger and more decentralized infrastructure.
The project, which has already received commitments from five node operators (Amber, Hashkey, Benmo, RockX, and an as-yet-unnamed operator) for a total of 5,000 BTC, with a goal of 8,000–10,000 BTC at launch, aims to build a deep liquidity pool to support a wide range of decentralized finance (DeFi) applications and ensure smooth network operation.
With node operators, naturally everyone can stake BTC with the node operators and then share 42% of the mining revenue. After users stake BTC, they will get yBTC and then unlock more revenue in the GOAT network ecosystem.
In addition to GOAT mining revenue, node operators (including Bitcoin miners, holders, and institutions) can also earn income from block production, transaction ordering, and MEV (maximum extractable value) opportunities.
This multi-income model allows users to maximize their profits.
Summarize
Let’s go back to the questions raised above, “What projects should we pay attention to before the arrival of BTC Layer2 Summer?” Now there are more and more projects being launched, but there are only so many users, and the competition among project owners is also fierce. If the project owners adopt a super long-term strategy to treat users, it will undoubtedly drive users to other rival projects.
We now select projects for analysis, mainly based on whether they can be monetized within 3-6 months, whether the project has sustainable profitability, and whether the project owner has experience in listing on large exchanges.
GOAT Network is a fellow student of Metis. With Metis’ experience in clearing dungeons for him, it is not difficult for GOAT to get started. Moreover, 49% of the tokens belong to the community, and it will be launched on the mainnet in 3 months, which is very attractive to users.
If you want to seize the opportunity, before GOAT Network goes live on the mainnet, you can participate in the official whitelist event for 0.001 BTC and take up a spot first.
