Original Article Title: "BTC Ecosystem Competition in the Second Half: Who Is the Optimal Solution for Value Transfer?"

Original Article Author: Evan Lu, Waterdrip Capital

Since the 2023 Ordinals Protocol took off, it has sparked a vigorous development of the BTC ecosystem. In just a year and a half, the BTC ecosystem has completed the evolutionary path that took ETH many years in the past. By the end of Q1 this year, the 1.0 cycle of the BTC ecosystem has gradually come to an end. BTC's price has also changed its previous trend of being sluggish in the summer, continuously breaking through $110,000 and $120,000 per coin, reaching a new ATH moment. However, the market performance of BTC ecosystem-related tokens on exchanges has been unsatisfactory. A technology journey from proposal to development, and then to implementation and widespread adoption, in just one year is certainly not enough. Not to mention practicing new technology on the largest value storage network, BTC.

Observing the different technological paths of the BTC ecosystem, we are still in a period of development of the BTC ecosystem. The real prosperity of the BTC ecosystem has yet to come. Therefore, the debate over BTC L2's path has just begun.

BTC Ecosystem 1.0 and 2.0

Since BTC has been widely recognized as "digital gold," why is it still necessary to promote the development of the BTC ecosystem? This is because the script language of the BTC network itself is extremely simplified, coupled with the PoW consensus mechanism, ensuring a high level of security and decentralization. However, it also limits Bitcoin's scalability and programmability. As the underlying asset of the entire crypto industry, BTC actually has a lot of untapped value. Imagine if only 10% of BTC (about 2.1 million coins) were used in DeFi, calculated at $100,000 per coin, there would be up to $210 billion in asset liquidity unlocked!

From the perspective of ecosystem composition, the BTC ecosystem can be divided into the infrastructure layer (L2) and the upper-layer financial protocols (BTCFi). The following discussion will mainly focus on the interpretation and comparison of the BTC infrastructure technology path.

In the 1.0 era of the BTC ecosystem, its typical feature was "TVL-first"—transferring BTC to the L2 network through asset bridges or custodianship, and then deploying DeFi protocols on L2 to activate BTC liquidity. This was also the playbook of early ETH sidechains, with a well-known example being Polygon. This was also very friendly to crypto users who transitioned from the ETH era. The logic is essentially the EVM's L2—just that the underlying network is BTC, so this technological path could rapidly accumulate funds and user base. However, the weakness is particularly evident: the security of BTC assets is not guaranteed.

The BTC ecosystem's 2.0 era is returning to the fundamental innovation of technology: how to achieve breakthroughs in security, efficiency, and native compatibility. From the Lightning Network's mainnet launch to the active advancement of technical roadmaps such as ZK Rollup, RGB, BitVM, we see more and more projects beginning to explore how on-chain native assets can achieve a more secure, efficient, and native lifecycle and circulation on L2. For developers, this means a more potential space for innovation; for VCs, it signifies a significant turning point for the BTC ecosystem from being "valuation-driven" to "PMF-driven."

BTC L2 Technology Path Comparison

Based on the existing technology stack, it can be divided into several technical paths as shown in the table below. However, if each technical path and the represented projects are deeply explored, it will be found that even different technical paths may use the same solution in common, and there may also be parent-child relationships between different technologies and stacks.

Comparison of different BTC L2 technology paths, Data Source: https://worried-eagle-e5b.notion.site/BTC-21b34b2a8d7a80cb83c1d0021e3a5696

Based on the six well-known technical paths, this table selected 15 BTC L2 companies, visualizing their TVL data and the technology solutions they have adopted for comparison:

Overview of BTC L2 development, Data Source: https://worried-eagle-e5b.notion.site/BTC-21b34b2a8d7a80cb83c1d0021e3a5696

It can be seen that the TVL of most L2 solutions has experienced a significant decline due to market influences. In addition, although the Lightning Network's TVL data has increased compared to last year, the amount of BTC locked in the Lightning Network this year has undoubtedly decreased compared to last year.

Overview of Different BTC L2 Technology Paths

The Most Orthodox L2 Solution for BTC: Lightning Network

Widely regarded as one of the earliest Layer 2 solutions on BTC. Its basic mechanism involves users creating a 2-of-2 multisig address on-chain, establishing a bidirectional payment channel, and ensuring secure settlement on the main chain with the latest state after multiple off-chain interactions through Hash Time-Locked Contracts (HTLCs). Throughout the process, only two transactions for opening and closing the channel need to be written on the main chain, while a large number of intermediate transactions are completed off-chain, significantly saving block space and improving efficiency.

However, the early Lightning Network only supported BTC as the payment currency, greatly limiting the application scenarios. To address this, Lightning Labs specifically introduced the Taproot Assets protocol (referred to as the TA protocol), which supports the issuance of native assets on the BTC network while seamlessly integrating with the Lightning Network. The TA protocol is based on BTC's UTXO model and the 2021 Taproot upgrade, with asset states recorded in a sparse Merkle tree (MS-SMT) structure. Only the root hash of the transaction data is written on-chain to ensure the cleanliness of the Bitcoin main chain data. Additionally, TA assets can be embedded in Lightning Network channels for quick transfers, realizing the concept of "circulating stablecoins on the Bitcoin network."

Furthermore, not limited to stablecoins, real-world asset (RWA) assets and project tokens can also be issued on BTC, and a BTC multi-asset transaction network will truly be established with the introduction of the TA protocol.

Development Progress

As of June 2025, the Lightning Network has been online for 10 years, operating stably, with over 16,000 nodes and 41,000 active channels. The total locked capacity last year when BTC broke $100,000 per coin had exceeded 5,000 BTC and currently remains close to around 4,000 BTC.

An overview of Lightning Network data, data source: https://mempool.space/en/lightning

In Q1 of this year, Tether, the company behind USDT, announced that it would issue USDT on the Lightning Network through the TA protocol, indicating Tether's recognition of the Lightning Network.

Lightning Labs (parent company of the Lightning Network) announced Tether's integration into the Lightning Network, data source: https://x.com/lightning/status/1885083485678805424

In addition, the ecosystem based on the Lightning Network is slowly taking shape. For example, the financial infrastructure protocol Lnfi aims to become the preferred platform for BTC and Taproot assets, covering asset issuance, fundraising, returns, and the entire transaction process. The core product LN Exchange has a daily trading volume of $30 million, and LN Node provides over 5% of trustless BTC earnings. Recently, Lnfi collaborated with Tether and Lightning Labs at X Space to discuss the opportunities and challenges of issuing stablecoins on the Lightning Network.

X Space of USDT ON LIGHTNING, Data Source: https://x.com/i/spaces/1vOxwXmjVbRKB

Furthermore, "AI Agent + Micro Payments" is gradually building a new payment system relying on the security of the BTC network. A prime example is AIsa. Its principle leverages the Lightning Network's millisecond-level response feature and the robust security of the BTC network to address the massive microtransaction issues that traditional systems struggle to support. It provides AI service providers and enterprises with real-time, efficient, low-cost payment capabilities. AIsa supports automated micro payments, such as $0.0001 per API call, real-time settlement of DePIN nodes, and intelligent cross-chain path optimization, requiring minimal human intervention.

Limitations and Challenges

Although the Lightning Network has matured enough in recent years, its scalability is still limited by network effects and channel path design, with limited network throughput. While the TA protocol has filled the gap at the asset layer, its security design requiring users to run their own nodes has raised the bar for user participation, and the completeness of the product still needs to be addressed.

For example, BitTap provides users on the TA protocol with the right to a self-custody wallet. BitTap focuses on solving the decentralization and usability issues of the Lightning Network and TA ecosystem. They have launched a decentralized browser extension wallet and are about to launch a stablecoin payment wallet app, allowing users to make stablecoin payments and transfers on the Lightning Network layer and TA layer. It also supports secure, unrestricted cross-layer transfers (Bridge) of stablecoins between the Lightning Network layer and TA layer.

Native Ledger Scalability: Bitcoin Thunderbolt

Just last month, the Lightning Network officially launched its mainnet. This was revealed in an official press release by HSBC Bank. It marked the first time a traditional financial industry authority responded positively to and showed interest in blockchain infrastructure represented by BTC.

Strictly speaking, the Lightning Network is not a traditional BTC L2 in the traditional sense but rather a native ledger scaling solution based on a soft fork of the BTC mainnet. Its core technology lies in extending the BTC script language with the OP_CAT opcode, combined with UTXO Bundling technology to achieve high-performance smart contract execution.

Comparison with the Lightning Network:

Unlike the Lightning Network, which requires off-chain interactive payment channels to remain open at all times, the Lightning Network adopts a non-interactive asynchronous design that allows for off-chain UTXO ownership transfers between users without the need for direct trust or continuous connection. The key lies in the introduction of a Byzantine Fault Tolerant Committee to manage Schnorr signatures, enabling off-chain delegation of asset ownership and on-chain final confirmation. Under the 3f+1 model, this mechanism can tolerate up to f malicious nodes, ensuring transaction security and consistency even under asynchronous network conditions.

Furthermore, through UTXO Bundling technology, the Lightning Network can aggregate multiple UTXOs for processing, achieving transaction speeds and efficiency more than 10 times that of the BTC network. In terms of asset protocols, the Lightning Network has proposed the Goldinal BTC Layer 1 asset standard, complemented by its developed BitMM (Bitcoin Message Market) system, which has realized an on-chain AMM native to the BTC network.

In its design, the Lightning Network uses verifiable, adaptable signature components to achieve a recursive off-chain UTXO transfer structure that runs through Bitcoin Core's native logic. This acceleration mechanism, originating from the main chain architecture, not only maintains BTC's security and censorship resistance but also supports the transfer of BTC native assets such as BRC-20, Runes, etc.

Development Progress

The Lightning Network is driven by some OG miners, HSBC Bank, BTC Core developers, and Nubit community contributors, making it one of the few protocols in the current BTC technical stack with formal academic endorsement.

Currently, the Lightning Network is only open to users who have obtained a Boosting Code. This code is distributed in limited quantities by core contributors like Nubit through the community and comes with a rare BTC native airdrop reward.

As of mid-June, the ThunderCore mainnet has nearly 50,000 users, with a total transaction volume approaching 4 million transactions:

ThunderCore on-chain data overview, data source: https://data.thunderbolt.lt/?new

Limitations and Challenges

The ThunderCore technical stack has shown us another implementation possibility for BTC Layer 2. Since the mainnet is not yet live, its product-market fit still needs market validation; on the other hand, although the BFT committee model excels in security compared to traditional bridging solutions, whether it can gain widespread acceptance from the Bitcoin maximalist decentralized community still remains a question mark.

Merged Mining

Merged Mining is a technique that allows miners to mine multiple blockchains simultaneously without increasing additional computational resources. Among them, Stacks and Fractal are two representative projects that adopt the merged mining mechanism, but they have different solutions in terms of consensus mechanism and block validation. Stacks adopts a unique Proof of Transfer (PoX) consensus mechanism. In this mechanism, Stacks miners bid by sending BTC on the BTC mainnet to compete for the right to generate Stacks blocks, and successful miners receive the block packaging rights and corresponding mining rewards.

Bitflow, on the other hand, is a DEX based on the Stacks mainnet, supporting the trading of BTC, Stacks tokens, and various BTC-native assets like BRC20 and Runes. In addition, in December 2024, Bitflow launched the first Rune AMM based on Stacks, which is an AMM for Rune on the BTC Layer 2.

Core, building upon merged mining, made slight improvements to the consensus mechanism: Core's consensus mechanism is called the Satoshi Plus consensus mechanism, combining Delegated Proof of Work (DPoW) and Delegated Proof of Stake (DPoS); the specific implementation principle is that BTC miners delegate their hash power to Core's validators, utilizing BTC's robust mining infrastructure to provide security for the Core chain. This hash power is referred to as "Delegated Proof of Work (DPoW)" and is executed by Bitcoin miners and pools; simultaneously, Core token holders can stake or delegate their tokens to validators to participate in network security maintenance and governance. This stake is referred to as "Delegated Proof of Stake (DPoS)." Through this combination, the Core Chain incorporates BTC miners into the security of Turing-complete smart contracts, unlocking these miners' capabilities beyond simple BTC ledger maintenance and utility, and providing them with additional supplementary income rewards in the form of CORE tokens.

The Fractal protocol takes a scaling approach, employing a recursive expansion structure to create multiple independent extended layers on the BTC mainnet, forming a tree-like structure to increase transaction processing capacity and speed. Additionally, Fractal retains the PoW mechanism while introducing a hybrid mining mechanism called "Cadence Mining," where every three blocks produced, two are generated through permissionless mining and the remaining one is mined through BTC's merged mining.

Furthermore, Fractal Bitcoin has reactivated the OP_CAT opcode, which was a command that existed in early versions of BTC but was long disabled. The functionality of OP_CAT is to concatenate 2 strings into 1. In theory, a script utilizing OP_CAT could expand 1 byte of data into over 1 TB of content. Without strict limitations, this unlimited expansion feature could be maliciously exploited to launch DoS attacks, leading to node crashes or network congestion. Due to this risk, OP_CAT was disabled by the community early on. Today, the "purified" version of OP_CAT adopted by Fractal provides developers with a more flexible script processing method, particularly demonstrating potential in on-chain large integer calculations and smart contract functionalities. Despite the improved technical mechanisms, the revival of OP_CAT may still pose security risks in extreme scenarios.

Current Development:

Fractal Bitcoin has now gained some traction, with a market cap of approximately $20.12 million, a daily trading volume of 1.43M FB, and over 1.76 million active addresses. Its merged mining hash rate is 648.13 EH/s, with a mining difficulty of 0.01t, indicating its early stage.

An overview of Fractal on-chain data, data source: https://www.oklink.com/fractal-bitcoin

RGB & RGB++

In the early morning of August 7, 2025, after a 2-year pre-launch period, the BTC extension solution RGB protocol finally went live on the BTC mainnet.

RGB is based on a technical architecture proposed by the LP/BNP Association and is a off-chain asset issuance and smart contract protocol based on the BTC network's UTXO model. One of the most acclaimed technical aspects of RGB is that the data running on RGB will be compressed and encapsulated into every UTXO on the BTC network. Through "Single-use Seals" and "Client-side Validation" mechanisms, it achieves private state changes and validation of assets. Each asset state is tied to a specific BTC UTXO, and when that UTXO is spent, the asset state is updated accordingly. This design allows for asset ownership and state changes without public disclosure on the chain, enhancing privacy. The RGB protocol is also compatible with the Lightning Network and has DeFi logic building capabilities.

RGB 0.12 Version Released, Data Source: https://x.com/lnp_bp/status/1943318227854950809

Bitlight Labs: The First Wallet Supporting RGB Assets, Official RGB Association Member

Bitlight Labs is dedicated to leading the original BTC Fi by developing native smart contract infrastructure for BTC and the Lightning Network. Not only is it a board member of the INP/BP RGB protocol standardization association, but it is also a core contributor to RGB protocol development, making it an indispensable core product in the RGB ecosystem.

The product under Labs—the Bitlight Wallet—is a wallet designed specifically for the Lightning Network and the RGB protocol. Recently, it launched the first asset token "RGB" based on the RGB mainnet in conjunction with the official launch of the RGB mainnet.

BitMask Wallet:

Bitmask is the first wallet to support NFT assets on the RGB protocol. The team behind Bitmask is also one of the early major contributors to the RGB protocol, with its product development focusing more on privacy and user asset control. Recently, BitMask has been advancing full interoperability between RGB and RGB++, and is currently fully preparing for the mainnet version launch to truly achieve the combination of privacy, programmability, and usability on the BTC network.

From RGB to RGB++:

Nervos (CKB) is a popular project that has implemented BTC L2 using RGB logic and has proposed the concept of RGB++. RGB++ introduces "homogeneous binding" technology, mapping BTC's UTXOs to Nervos CKB's Cells. By leveraging CKB's Turing-complete smart contract capability and on-chain validation mechanism, asset state management efficiency and security are enhanced. In RGB++, asset state changes are recorded not only on the BTC chain but also have corresponding transactions and state validation on the CKB chain, achieving coordinated validation on-chain and off-chain.

Although RGB++ has achieved asset interoperability between BTC and CKB, the cross-chain interaction based on RGB protocol still lacks conciseness and poses security risks when handling certain transactions.

Following the ETH L2 Approach: ZK-Rollup

The core concept of Rollup is to batch a large number of off-chain transactions, generate a cryptographic proof, and submit it to the main chain for validation using ZK technology.

One of the Hottest BTC L2 Solutions

Merlin follows this approach as a BTC L2 network that is also EVM-compatible. Merlin adopts a Multi-Party Computation (MPC) wallet solution, jointly managed by Cobo (a crypto custodian in Hong Kong) to secure user assets. Furthermore, in terms of verification technology, Merlin still employs ZK-Rollup technology to compress a large volume of transaction data before submitting it to the BTC mainnet, ensuring data integrity and security.

Since its mainnet launch, Merlin has become one of the most prominent Layer 2 projects in the BTC ecosystem. Reportedly, its Total Value Locked (TVL) reached $3.5 billion within the first 30 days of launch, attracting over 200 projects to deploy and operate on its platform. Merlin Chain supports various BTC layer one native assets such as BRC-20, BRC-420, and expands its ecosystem's breadth through Ethereum compatibility.

Enhancing BTC Bridge Security

On the other hand, B², unlike traditional monolithic Rollups, adopts a "1.5-layer architecture." In this structure, the Rollup layer is responsible for transaction execution and state updates, while the Data Availability (DA) layer operates independently to store raw transaction data. After off-chain Labeling and organization, this data is periodically submitted to the Bitcoin mainnet for finality confirmation.

The DA (Data Availability) layer of the B² Network—the B² Hub—belongs to Layer 1.5. It first slices batched data using Reed-Solomon + KZG encoding, aggregates zero-knowledge proofs submitted by Layer 2 into Taproot commitments, and then submits them to the Bitcoin mainnet, inheriting the Bitcoin network's finality and immutability.

The B² Network adopts decentralized blob storage and light node sampling mechanism, where any validator only needs to randomly sample a tiny proportion of block shards to detect data integrity with high probability, significantly reducing synchronization and validation costs.

In terms of consensus, the B² Hub only needs to submit a short commitment and validity proof, offloading the mainnet from large data payloads. Rollup batch submitters are responsible for availability, forming a modular architecture of "validity outsourcing + availability guarantee." By decoupling Data Availability (DA) from execution, B² Rollup can achieve parallel scalability, shard updates, while still anchoring the security boundary to the Bitcoin chain, balancing high throughput, low cost, and L1-level security.

This approach brings two main benefits: modular design allows for unlimited horizontal scaling without any modifications or upgrades to the BTC network; furthermore, through the DA layer of the B² Network—B² Hub, storage proofs and state transition proofs can be aggregated and submitted to the Bitcoin network, integrating the security of the Bitcoin network;

However, since the final confirmation of L2 transactions needs to pass through the confirmation and aggregation of the B² Hub first, followed by on-chain confirmation by the BTC network, and on the BTC network, it is considered passive confirmation, following an optimistic model. In addition, zero-knowledge proof aggregation into Taproot commitments undergoes optimistic verification on the BTC network and is still in the proof-of-concept stage, yet to be finalized;

Project Progress: From Technical Implementation to User Ecosystem

As of now, the Total Value Locked (TVL) of BSquare has exceeded 6 billion USD, with an on-chain daily transaction volume peak of 9 billion USD, and has 500,000 active platform users. The platform ecosystem covers 100+ DApps, including DeFi, lending, AI Agent applications, and other scenarios.

BSquare on-chain data overview, data source: https://www.bsquared.network/

Meanwhile, BSquare has also launched the first BTC yield mining pool, "Mining Square," which is a "Yu'ebao" for miners, providing a solution with native BTC income for miners. Currently, the mining pool already accounts for 1% of the total network hashrate and can rank in the top 10 in the mining pool hashrate ranking.

Implementing a Turing Machine with BTC Script? Decoding BitVM

BitVM is an extension protocol built on the BTC mainnet, with its core goal being to achieve a universal virtual machine environment that can support arbitrary verifiable computation without altering the consensus mechanism. Its principle is inspired by the idea of optimistic rollup: most computation is done off-chain, and only in case of dispute, the relevant computation process is submitted to the chain for validation in the form of a "fraud proof." Similar to Ethereum's Arbitrum, BitVM uses off-chain computation + on-chain validation mechanism, but its uniqueness lies in utilizing Bitcoin's script system (Bitcoin Script) to build a "logical gate circuit" and thereby simulate a Turing-complete virtual machine. (Similar to the "Manifold" computer of the Trisolaris Game in The Three-Body Problem)

BitVM does not directly run EVM or WASM on-chain, but translates these high-level virtual machine operations into the most basic logic gates (such as AND, OR, NOT, etc.) in Bitcoin script, building a large "fraud verification circuit" through logic gates. All transaction data and computation are processed off-chain, and only when a challenge occurs, the data and computation steps are submitted to the chain (in the form of a Merkle Proof, etc.).

BitVM2 is an optimized version of the original BitVM, introducing a more modular computational structure and circuit compression mechanism, while also introducing interactive fraud proofs, time-locked scripts, multi-signature, and other mechanisms to enhance the protocol's utility and security. BitVM2 focuses more on optimizing on-chain data submission volume and attempts to introduce script opcodes like OP_CAT that may be activated in the future to improve circuit construction efficiency.

Current Development Status

The current BitVM roadmap is gradually transitioning from theory to practice, with a representative project being Citrea. Citrea executes a large number of transactions off-chain and submits the execution results and proofs to the BTC network for validation through BitVM, achieving efficient scalability and security for BTC Layer 2. Citrea is also the first solution to achieve general L2 settlement on BTC, with all proofs natively validated on the BTC network's blocks. Currently, Citrea's mainnet has not yet been officially launched and is still in the testnet stage.

On the other hand, projects like the Goat Network are exploring the possibilities of BitVM2. Goat's whitepaper showcases a fraud-proof mechanism based on circuit logic and Merkle tree structure. Goat emphasizes expanding computation on BTC into a Turing-complete state machine and attempts to build a new BTC L2 framework that allows smart contract execution and asset interaction to be natively completed on the Bitcoin main chain. Goat's implementation also includes the integration of a data availability layer (DA layer) and circuit compression mechanism optimization, driving BitVM from an experimental solution towards practical deployment.

As of June this year, the total value locked (TVL) in the Goat Network has exceeded $1 billion.

Top chains by TVL launched each month of the year, CryptoDiffer; Source: https://x.com/GOATRollup/status/1929596963286114614

Despite the clear advantages of the BitVM protocol series: extreme native design, achieving Turing-complete computation without altering BTC consensus, high security, and nativeness; its structure inherently supports fraud proofs, low on-chain data requirements, and ultimate decentralization.

However, BitVM's disadvantages stem from its technology: emulating an EVM or WASM using logic gates formed by BTC Script will inherently lead to an epic level of complexity and size, making BitVM's development highly complex and the circuit construction effort immense. Additionally, there is currently a lack of a mature developer ecosystem and standardized tools.

Advancing on Multiple Paths, the Battle of Value Transmission Continues

Various BTC Layer 2 solutions have different focuses in technical implementation. For example, the Lightning Network emphasizes payment efficiency and has developed a mature node network over many years, suitable for micropayments and off-chain settlements. RGB and RGB++ focus more on asset security, utilizing a client-side validation mechanism to safeguard asset states. The ZK-Rollup route mostly adopts mature EVM solutions with module security verification, currently possessing strong composability and cross-chain expansion capabilities, adapting faster to DeFi, AI Agent, and other scenarios. BitVM further pursues the ultimate in nativeness, achieving smart contract capabilities on-chain in a way that does not alter BTC consensus. Although still in its early stages, BitVM represents a boundary-pushing attempt at BTC's computational capabilities.

While the outcome is still uncertain, we can see that solutions with true long-term viability must strive to meet three key points: BTC native compatibility, verifiable security, and good support for upper-layer applications. Additionally, the trend of technology stack integration is becoming more apparent, such as the Lightning Network's integration with stablecoins and the explorations of ZK Rollup with RGB.

In the future, the BTC Layer 2 landscape will undoubtedly involve intense competition, with different solutions serving different core scenarios: payments, contracts, assets, storage, AI, and other areas collaborating to support the long-term prosperity of the BTC ecosystem. This competition is far from over, and the ultimate winner will be determined by asset accumulation capability and developer ecosystem. As BTC stands as the world's strongest consensus asset, its ecosystem boundaries will continue to expand due to the influx of US dollar stablecoins and L2 modular innovation, ushering in a bidirectional upgrade of "payment sovereignty + contract extension."

In recent days, with the enactment of the U.S. GENIUS Stablecoin Act, the global regulation of stablecoins has gradually become clearer and more mature. The "payment stablecoin" has been legally integrated into the dollar system, which is expected to drive the accelerated entry of stablecoins such as USDT and USDC, among others, into on-chain payment scenarios. As Tether's CEO pointed out, the emerging markets are the main battlefield for stablecoin adoption, with 60% of USDT's growth coming from actual payment demands outside the crypto community.

The GENIUS Act has provided a clear legal path for the on-chain use of stablecoins and has also opened a compliance channel for BTC Layer 2 to carry dollar-denominated assets. USDT, as the stablecoin that first originated on the BTC network, is now taking the lead in re-entering the BTC ecosystem. This move not only marks a return to its technical roots but also demonstrates the strategic value of BTC as a settlement layer. It can be foreseen that if the future stablecoin payment system is built on top of BTC Layer 2, it will be the most native, secure, and in line with the spirit of Bitcoin. Leveraging the composability and asset protocol capabilities of BTC Layer 2, the BTC network is poised to meet real-world payment settlement needs and achieve a symbiotic ecosystem where stablecoin circulation and value preservation are integrated.

References:

· https://eprint.iacr.org/2025/709

· https://riema.notion.site/Bitcoin-Thunderbolt-1d7f5aa90cdd803b8a73d080c83af098

· https://x.com/kevinliub/status/1919499375035756580?s=46

· https://www.theblockbeats.info/flash/289746

· https://lbank-exchange.medium.com/rgb-protocol-a-promising-approach-for-asset-issuance-on-the-bitcoin-network-after-brc20-357bd74f0c4c

· https://mp.weixin.qq.com/s/iMQPXFPWBpT9dQLyR8rzUg

· https://www.btcstudy.org/2023/09/12/the-potential-of-RGB-protocol/

· https://mp.weixin.qq.com/s?__biz=Mzk0OTYwMDM1Mg==&mid=2247487024&idx=1&sn=0241778d2e1fbed796a6beaeb3c07c4a&chksm=c21c27cca1e00c1d214dc01d1b6368b8e9198afa94d4bc16d5b5e1dadbd9402dd029a87747e9&scene=132&exptype=timeline_recommend_article_extendread_samebiz#wechat_redirect

· https://www.binance.com/zh-CN/square/post/23302994992353

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