Bitcoin L2 project Bitlayer completes Series A funding, exploring the balance between security and scalability.

Introduction

Recently, the Bitcoin L2 project Bitlayer Labs completed a Series A funding round of 11 million USD, led by several well-known investment institutions. This marks Bitlayer as the first Bitcoin infrastructure project to receive institutional investment with ETF licensing.

Bitlayer is an L2 project aimed at enhancing Bitcoin's scalability and unlocking its ecological potential. Its unique feature is that it is the first L2 based on BitVM, and it is also the first L2 solution that fully inherits Bitcoin's security and is Turing complete.

1. The Current Status and Challenges of BTC L2

Currently, most BTC L2 projects are essentially cross-chain bridges, and their technical solutions are primarily based on multi-signature. However, multi-signature solutions have serious trust issues, and incidents of fund theft occur from time to time. As a complement to L1, L2 should not be limited to ecological expansion, but should also inherit the security of L1. Bitlayer, as the first L2 based on BitVM, achieves minimal trust while also achieving a good balance between security and scalability.

2. Bitlayer: A Balance Between Security and Scalability

2.1 The basic architecture of Bitlayer

The business process of Bitlayer is mainly divided into three stages: transaction processing, transaction validation, and final validation. Each stage has specific components and processing flows.

2.2 Transaction Processing Stage: Layered Virtual Machine LVM

During the transaction processing stage, Bitlayer uses two key components: the sorter and the LVM (Layered Virtual Machine). The LVM is the core computing component of Bitlayer, responsible for executing smart contracts and generating the latest state and zero-knowledge proofs.

The innovation of LVM lies in the decoupling of front-end smart contract execution from back-end zero-knowledge provers, greatly enhancing the system's scalability and security.

2.3 Transaction Verification Stage: OP Bridge Based on ZKP

In the transaction validation stage, Bitlayer faces the classical L2 cross-chain problem of how to inherit L1 security. Although ZK bridges are considered the most secure cross-chain bridge solution, due to technical limitations, Bitlayer chose the OP bridge as a compromise solution.

The cross-chain bridge solution of Bitlayer adopts a combination of BitVM bridge and OP-DLC bridge. The BitVM bridge is based on a prepayment and reimbursement model, which introduces Operators to achieve decentralization of the fund pool, enhancing the security of the bridge from the source.

Innovations and Limitations of the 2.4 BitVM Bridge

The BitVM bridge enhances security through a decentralized funding pool, but it also has some limitations. For example, for users who value the source of funds, the BitVM bridge may not meet their demand for fund independence. To address this, Bitlayer has added the OP-DLC bridging solution, enabling P2P transactions between users.

3. Summary and Outlook

Bitlayer has demonstrated forward-thinking in its architecture design and cross-chain bridge technology selection. Its LVM design provides the possibility for future adaptation to various VMs and zero-knowledge provers. The dual-channel bridge solution of BitVM + OP-DLC is currently a relatively secure cross-chain implementation in BTC L2.

Although Bitlayer's solution is a compromise between security and scalability, it represents an important step towards minimizing trust in BTC L2. With the continuous improvement of BitVM and Bitlayer's ongoing breakthroughs in this field, we have reason to expect it to gradually become the ideal BTC L2 solution.