3-Minute Introduction to BTC Ecosystem L2 Terminology
3-Minute Introduction to BTC Ecosystem L2 Terminology
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.
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.
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