The Bitcoin ecosystem is thriving, and Layer 2 projects have become the new focus.

Recently, the popularity of the inscription project has driven the prosperity of the entire Bitcoin ecosystem, with related tokens continuously reaching new highs. However, the accompanying issues of network congestion and high transaction fees have also sparked industry discussions on the future development of Bitcoin. Against this backdrop, Bitcoin Layer 2 solutions have gradually become the focus of market attention.

The main challenges facing the Bitcoin network are transaction congestion and skyrocketing fees. Since February 2023, inscription transactions have been the primary consumers of Bitcoin's block space, causing the mempool to remain persistently full. A large number of small transactions cannot be processed in a timely manner and may even never be included in a block, which not only wastes network resources but also raises controversy over "spam transactions."

In contrast, Layer 2 solutions show clear advantages. They not only alleviate network congestion issues but also bring more application scenarios to the Bitcoin ecosystem through smart contracts, such as trading, lending, and liquidity mining. Currently, Bitcoin Layer 2 projects mainly include the following categories:

1. Stacks: As a second layer for Bitcoin, Stacks introduces smart contract functionality similar to Ethereum, opening up new possibilities for applications such as DeFi and NFTs. However, its cross-chain approach poses certain centralization risks, and the network Gas uses its mainnet token STX, rather than BTC.

2. RSK: This is a general smart contract platform secured by the Bitcoin network. The uniqueness of RSK lies in its merged mining mechanism, which allows miners to mine both Bitcoin and the RSK blockchain simultaneously, enhancing miners' profitability. However, RSK uses smartBTC (RBTC) as its token, and there are still security risks associated with smart contracts.

3. BitVM: This is an emerging project aimed at achieving Turing-complete Bitcoin contracts. It implements smart contract functionality in an innovative way without changing the operational code. However, BitVM's current capabilities are still limited and primarily remain in the theoretical stage.

4. BEVM: This is a BTC Layer2 solution that uses BTC as Gas and is compatible with EVM. The core goal of BEVM is to expand the smart contract scenarios of Bitcoin, allowing BTC to build decentralized applications on Layer2. It achieves fully decentralized asset cross-chain functionality and is compatible with EVM, enabling Ethereum DApp developers to migrate directly to BEVM.

5. MAP Protocol: This is a Bitcoin Layer 2 network used for peer-to-peer cross-chain interoperability. It leverages Bitcoin's security mechanism to allow assets and users from other public chains to interact seamlessly with the Bitcoin network. MAP Protocol also implements BRC20 cross-chain capabilities and offers lower transaction fees.

As the cryptocurrency community increasingly recognizes the importance of Layer 2 solutions, the Bitcoin Layer 2 sector is ushering in new development opportunities. This field is still in its early stages and is expected to give rise to a number of leading projects worth billions of dollars. For investors, Bitcoin Layer 2 projects are undoubtedly a blue ocean market worthy of long-term attention.