Bitcoin Layer 2 project Bitlayer completes Series A financing, exploring the balance between BTC scalability and security.

Recently, a Bitcoin Layer 2 project completed a $11 million Series A financing round, led by several well-known investment institutions. This project has become the first Bitcoin infrastructure project to receive institutional investment with ETF approval.

This project aims to enhance the scalability of Bitcoin and unleash its ecological potential. It is the first Layer 2 solution based on BitVM and the first Layer 2 project to fully inherit the security of Bitcoin and achieve Turing completeness.

The Current State of BTC Layer 2

Currently, most BTC Layer 2 projects are essentially cross-chain bridges, and their technical solutions are primarily based on multi-signatures. However, multi-signature solutions have serious trust issues, which have led to multiple incidents of funds being stolen. An ideal Layer 2 should not only expand the ecosystem but also inherit the security of Layer 1. This project, as the first Layer 2 based on BitVM, achieves trust minimization and strikes a good balance between security and scalability.

Project Architecture and Technical Features

The basic architecture of the project includes three main stages: transaction processing, transaction validation, and final validation.

During the transaction processing phase, the project adopted an innovative Layered Virtual Machine (LVM) design. The LVM decouples the front-end smart contract execution from the back-end zero-knowledge prover, significantly improving the system's scalability and security.

The transaction verification stage involves interaction between Layer 1 and Layer 2. The project adopts a combination solution of the BitVM bridge and the OP-DLC bridge. The BitVM bridge is based on the "pay first, reimburse later" model, achieving decentralized management of the fund pool by introducing an Operator role. The OP-DLC bridge ensures security through fraud proofs and third-party oracles.

Advantages and Challenges

The project achieves a good balance of security and scalability in the Bitcoin ecosystem through technological innovation. Its LVM design lays the foundation for future adaptation to various virtual machines and zero-knowledge provers. The dual-channel bridging solution is currently one of the safest implementations in BTC Layer 2.

However, the project still faces some challenges. The funding pool model of BitVM Bridge may not meet the demands of certain users for fund independence. In addition, the availability of BitVM Bridge also requires continuous improvement, such as needing a large number of alliance members to be online at the same time and correctly execute pre-signed operations.

Outlook

With the continuous development and improvement of BitVM technology, the project is expected to achieve significant breakthroughs in BitVM construction in the coming months. The industry looks forward to it gradually evolving into the ideal Bitcoin Layer 2 solution, bringing more possibilities to the Bitcoin ecosystem.