3-Minute Introduction to BTC Ecosystem L2 Terminology

3-Minute Introduction to BTC Ecosystem L2 Terminology

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Why is there a surge in interest in BTC L2?

With the approval of the ETF, Bitcoin has received short-term bullish news. Investors seeking alpha have turned their attention to new narratives, and Layer 2 (L2), as a target capable of accommodating massive liquidity and high valuations, has become a widely discussed focal point. Consensus among various parties, coupled with the influx of venture capital, has contributed to the outbreak of the Bitcoin Layer 2 market this month.

3-Minute Introduction to BTC Ecosystem L2 Terminology

Understanding the Concept of L2

In the context of Ethereum, Layer 2 (L2) usually refers to solutions addressing the congestion and high fees of the mainnet while leveraging the strong consensus security of the mainnet.

In the Bitcoin ecosystem, the concept of L2 has been broadened. Many people seem to categorize all extension solutions other than Bitcoin's transfer transactions as L2 (e.g., Lightning Network, Liquid Network, Stacks, and even BRC-20). This is because Bitcoin lacks smart contract functionality like Ethereum.

What is Rollup?

Rollup can be translated as "packaging" and is a second-layer solution.

In a simple analogy, if we imagine the blockchain as a ledger, without Rollup, each completed transaction requires writing a record in the ledger, which can be laborious and expensive. With Rollup, multiple transactions can be recorded outside the ledger first, and the summarized results are then packaged and written into the ledger. This process reduces the burden on the main blockchain, increasing processing speed and efficiency.

In Ethereum's history, Rollup technology is mainly divided into two categories: Optimistic Rollup (OP-Rollup) and Zero Knowledge Rollup (ZK-Rollup).

  • Optimistic Rollup (Optimistic Rollup) assumes all transactions are valid, allowing them to be bundled first. Only when evidence proving these transactions are invalid (fraud proofs) appears within a certain period, corresponding actions are taken. On Ethereum, representative projects of Optimistic Rollup include Optimism and Arbitrum.
  • Zero Knowledge Rollup (Zero Knowledge Rollup) adopts a "pessimistic" approach, using zero-knowledge proof technology to verify transaction validity. It first proves that these transactions are sound and then transmits the data to the main chain. On Ethereum, representative projects using this technology include zkSync and Starknet.

A new concept has emerged, namely Sovereign Rollup. Unlike the previous Ethereum rollups, Sovereign Rollup emphasizes independent sovereignty, not relying on the Layer 1 (L1) settlement layer, forming a self-governing blockchain system. The rise of the modular blockchain project Celestia has gained widespread attention, making people realize that it is possible to build Rollup chains with sovereignty and self-management without depending on L1 settlement.

什么是 DA?

What is DA?

Data Availability plays a crucial role in Layer 2 (L2) blockchains. Its primary goal is to ensure that all data of a newly generated block is broadcasted to the network, and block producers cannot hide or distort information.

Using Rollup as an example, it needs to submit compressed transaction data to the Ethereum mainnet to obtain Data Availability (DA), ensuring that its state is protected by the Ethereum network. This process helps guarantee transparency and authenticity of information.

For the BTC ecosystem, with Bitcoin's network throughput less than 56 kbits per second (considering 4M blocks), some scholars consider it inefficient to act directly as a DA layer. Attempts to break through in this aspect include B² Network, Nubit, and others.

In Summary

Thanks to the Segwit and Taproot upgrades, we have witnessed the prosperity of plaintext transmission in Bitcoin. Bitcoin Layer 2 (BTC L2) has also benefited greatly from this and has encountered new opportunities. BTC L2 appears to be a popular target for accommodating liquidity and having massive valuation potential, sparking enthusiastic interest from both institutions and retail investors. We look forward to the exciting development of Layer 2 in this scenario.

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Copyrights:yiyi Posted on 2024年 1月 22日 am11:05。
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