Market Updates
Bitcoin Ecosystem
30 Apr 2024



Bitcoin is globally recognised as the revolutionary "digital gold". It is the world's largest decentralised ledger powered by Proof of Work (PoW) consensus mechanism. Despite the success of establishing its position on the global stage, Bitcoin doesn't have programability similar to Ethereum's smart contract, resulting in a lack of decentralised finance applications, token issuances and rollups. However, this couldn't stop the Bitcoin developer community from innovating, introducing Lighting Network in 2015, Taproot upgrade in 2021, Ordinal inscription and BitVM in 2023. These innovations give birth to fungible tokens on the Bitcoin network, rollups and other applications.
As Bitcoin spot ETFs launched in January, opening up the flood gate to the broader economy from traditional finance. It is increasingly important to understand the Bitcoin ecosystem well and the potential beneficial impact they bring to Bitcoiners.

What is Bitcoin Renaissance


Bitcoin Renaissance, Bitcoin Ecosystem, Bitcoin Layer 2s or BTFfi are references to the same thing. It represents fungible tokens, rollups, sidechains and other applications that inherit Bitcoin network security, applications to extend BTC economy, such as facilitating BTC DeFi activities or security deposits on sourviegn blockchains, introducing real yield opportunity to BTC. Creating a positive flywheel effect.
These innovations typically increase Bitcoin network gas fees, which embraced by miners to boost their operating revenue in the decreasing Bitcoin mining rewards environment. Transaction fees are expected to increase from 4% to above 10% of miners' total block rewards after halving

Bitcoin Renaissance Catogeries


Ordinal Inscription

Ordinal inscription was introduced in January 2023, introducing the standards to write arbitrary data onto Bitcoin satoshis (sats, the smallest unit of Bitcoin). The engraved arbitrary data could include images, videos, texts, audio and more.


BRC20 is the most popular inscription, which contributes 82% of all Ordinal transactions and 75% of fees paid by Ordinal transactions. It is also the primary contributor that set the highest record level, above 566MvB in Bitcoin mempool in January 2024, costing a massive gas spike during the period.
Most of the BRC20 tokens are meme-ish. The top 2 largest BRC20 tokens are ORDI and SATS, which have approximately market capitalisation of $1 billion and $600 million in April 2024 with no actual token utilities.
However, there are some great examples of BRC20 protocols such as Multibit, TurtSat and BitStable.
Multibit, MUBI: It utilises multi-signature mechanism smart contracts to implement cross-chain transfers of BRC20 to other blockchain such as Ethereum, Solana, BNB chain, Polygon, Core Dao and upcoming integration like BounceBit and Botanix. Multibit also paves its ecosystem into AMM, farming and stablecoin.
MUBI is the protocol governance token and serves as the security deposit in the node for cross-chain networks. It has $97 million fully-diluted market capitalisation with 1 billion token supply, among those 924 million tokens are bridged to ERC20. Its current total TVL excluding MUBI and BSSB is $56 million, although 98% of the locked assets are SAVM.


RUNES is Bitcoin's fungible token standard with UTXO model instead of BRC20's account based model. This design integrates seamlessly with Bitcoin's UTXO model without the need for off-chain data or complex interactions rampant in other protocols. Runes was launched together with Bitcoin 4th halving and embraced by huge communities. Bitcoin transaction fees soared to a record high, approximately $81 million on April 20th, accounting for 75% of the total miner revenue.
Ordinals Account-based
Witness (up to 4MB)
OP_Return (80 bytes)
Ordinals-supported wallet only. Creates UTXO junk in transactions, higher on-chain footprint.
Normal Bitcoin transaction and compatible with Lighting Network.

Layer 2: Rollups

The Bitcoin rollup concept caught the mainstream attention after the birth of Ordinal and BitVM whitepaper published in December 2023. The Eli5 version of BitVM is an experimental design to post Layer-2 (or other network) transactions claim to Bitcoin via inscription optimistically, then a verifier is able to "slash" the prover's deposit if the claim is proven false. It requires significant amount of off-chain computation, costly, high latency and centralisation concern. Despite the limitations, it indeed empowers rollups to inherit the security of the Bitcoin network, enables BTC, BRC20 and other inscription focus Defi applications and farming opportunities.
Below are several examples of Bitcoin rollup protocols.


SatoshiVM launched one of the early zkEVM Bitcoin rollup, it mainnet went live on March 15th. It has 12 WBTC bridged into the chain and currently attracts 3,854 user accounts, a relatively slow growth compared to other Bitcoin rollups that launched an incentivised vault point program. Its governance token, SAVM, has approximately $110 million in fully diluted valuation.

Merlin Chain

Merlin Chain is a Bitcoin zk-rollup built by the Bitmap Tech team, after achieving great success in royalty-enabled BRC420 NFT. Merlin Chain is powered by Lumoz RaaS and Polygon CDK. It was also announced in March exploring the possibility of integrating Nubit's data availability solution to enhance its Bitcoin-native infrastructure and Layer 2 network. It has partners with Particle Network to be part of its Chain Abstraction ecosystem, allowing users to interact seamlessly across all ecosystem chains in Particle Network. It has also partnered with Cobo's MPC to launch its incentivised vault, Merlin's Seal, to reward early supporters M-points for future airdrop. Its website shows approximately $3.2 billion worth of assets deposited into the program, marking it to be the Bitcoin rollup with the largest TVL.

B² Network

B² Network cooperates with AltLayer and Polygon to build its zk-rollup on top of the Bitcoin network, while also offering a Data Availability Layer solution for other Bitcoin rollups. It has launched a similar airdrop program to Merlin's Seal, called Buzz, which already attracted TVL of $530 million.

Tuna Chain

Tuna Chain is a Bitcoin modular zk-op-hybrid rollup that is EVM-compatible. The transaction processing on Tuna Chain involves meticulous ordering and processing of transactions, followed by secure posting to Celestia and final state confirmation on the Bitcoin blockchain, solidifies the state of the network. TUNA is the ERC20 governance token of the network, network security, gas and benefits from other protocol revenue sharing. It currently has fully diluted market capitalisation of $36 million in April. TORO is its stablecoin and WOOG is the a BRC20 token launched on Bybit launchpad with limited information about its utility. The rollup utilises BVM Network's RaaS technology, which potentially benefits further from the shared liquidity hub between other Bitcoin rollups or dapps specific rollups in the BVM Network ecosystem. Part of the protocols in the BVM Network ecosystem are Naka Chain, a modular optimistic EVM-compatible rollup with Polygon and Celestia as its data availability layer, featuring BRC404 (similar to ERC404), and Eternal AI, a Bitcoin Layer-2 specialises in AI dapps, allowing anyone to train and deploy AI models.


ROOS is a modular Bitcoin zkEVM-rollup that features a BitcoinStorage layer. The layer cleverly reduces the size of data publishing to Bitcoin network and saves Bitcoin storage costs by 99%.

Layer 2: Sidechain

Bitcoin sidechains are protocols that utilise proof of transfer, merged mining or variant of these consensus approaches to leverage Bitcoin security into their respective blockchain. These approaches typically incentivise existing Bitcoin miners with additional income while providing the same computation resource, which is widely welcomed by the miner community.


Stacks runs Proof of Transfer consensus mechanism by electing Bitcoin miners according to their weighted BTC transferred. The winning miner will then earn the right to stream microblocks and commit a new block to Stacks network in exchange for STX as block reward and transaction fees. Stakers will earn BTC as their staking reward. Stacks has approximately $143 million of TVL and $4.5 billion in fully diluted valuation. It has one of the most diverse ecosystem applications among other Bitcoin Layer-2s with notable dapps such as StackingDAO, offering STX liquid staking and ALEX, an offchain-orderbook, swap DEX and launchpad protocol.
Its major upcoming Nakamoto upgrade will further improve network performance, matching Bitcoin finality and more. This upgrade essentially makes Stacks unable to survive without the Bitcoin network, dismissing the argument that Stacks is a sidechain that doesn't truly inherit Bitcoin security. Another major upgrade is sBTC, the highly anticipated wrapped BTC developed by Stacks, with permissionless 150 validators network and approximately an additional $250 million of collateral in STX tokens.



Rootstock (RSK) secures its EVM-compatible smart contract blockchain by merged mining with Bitcoin miners, which allows the miners to apply the same computational resources and receive both rewards from Bitcoin and Rootstock networks. Rootstock offers Bitcoin miners one of the highest rewards compared to other merged mining protocols as the paid out is RBTC (native wrapped BTC) instead of protocol native token.
Rootstock has approximately $194 million of TVL. The team also manages Rootstock Infrastructure Framework, RIF, the first rollup on top of RSK with $207 million fully diluted valuation.


Syscoin is comprised of a dual-chain Layer 1: the core is the Syscoin native UTXO blockchain providing data availability and finality. Running in tandem with the UTXO chain is an EVM chain called NEVM, which is merged mined alongside the UTXO chain and also inherits finality. Syscoin also provides a data availability layer called PoDA (soon upgrade to zkDA) for rollups that wish to anchor Bitcoin's PoW security. Rollux is the first modular rollup using this framework.
SYS, its native token, has been around since 2014 with market capitalisation of $174 million. It has only less than $100,000 of TVL according to DefiLlama.


Core DAO

Core is an EVM-compatible Layer-1 blockchain with unique consensus mechanism, Satoshi Plus. The workflows involve Bitcoin miners to delegate the Core network validators who will share the base rewards to the miners. This delegation does not affect Bitcoin miners' mining process. Their mainnet launched on 14th January 2023 and currently has $11 million in TVL according to DefiLlama. The protocol launched its incentivised vault program, Core Ignition, on March 25th with a duration of six months intending to boostscrap its Defi ecosystem. Their bridged version of coreBTC is expected to be released soon as well.



BOB, Build On Bitcoin announced to partner with another Bitcoin Layer-2, Anduro, incubated by Marathon Digital, to develop a new Bitcoin sidechain called ALYS. ALYS inherits Bitcoin security via OptiMine, a variant from merged mining co-developed by BOB and Anduro, reduces the block time by optimistically produces blocks on the rollup level and verified by Bitcoin miner on checkpoint. This hybrid consensus reduces rollup blocktime. At the same time, fallback to vanilla merged mining could be implemented in the event of emergency. The stack further allows multiple Layer-2s to aggregate transactions at the checkpoint to reduce the cost of merged mining.


Bitcoin Layer 2 Overview

Merlin Chain
B² Network
Tuna Chain
Core DAO
ZK-OP-Hybrid Rollup
Proof of Transfer
Merge Mine
Merge Mine
Satoshi Plus
Might be TORO
Lumoz, Nubit DA
AltLayer, Native DA
AltLayer, Celestia
Bitcoin Storage Layer
Particle Network
Polygon CDK, Particle Network
Polygon CDK, Babylon
Polygon CDK, BVM Network


Cross-Chain Protocol or Bitcoin Bridge

Since the Bitcoin network doesn't support smart contracts, bridging BTC to alternative Layer-1 could be tricky. In contrast to WETH, which users are able to wrap ETH into WETH permissionlessly via smart contract, WBTC is an ERC20 format Bitcoin issued by BitGo and its community.

Threshold Protocol

tBTC is a wrapped version of BTC, governed by a randomly selected group of operators running nodes on the Threshold Network with a weekly rotation basis to secure the deposited Bitcoin through threshold cryptography. There has been 2,933 BTC bridged via the protocol. tBTC could also be used as the collateral to issue thUSD, its native stablecoin, which is a fork of Liquity v1 and allows users to leverage with their BTC holding permissionlessly. The mint and redemption fees are determined by the DAO and these revenues are directed to treasury. T token is the protocol governance token and tBTC node operators are required to stake T for node setup as well.


Zetachain is a cross-chain protocol built on Cosmos SDK. Its cross-chain service supports Bitcoin, Ethereum, BNB Chain and Zetachain now. It has already performed over 650,000 cross-chain transactions since its mainnet launched in February 2024. ZETA is its native token with over $2.6 billion fully diluted valuation, used to secure Zetachain, transaction fees and the core liquidity pool asset and external chain assets.

Bitcoin Restaking

Restaking is first introduced by EigenLayer to further utilise staked ETH to secure various blockchain applications via Actively Validated Services (AVS). However, the idea is theoretically not limited to ETH. BTC is arguably the best restaking security asset because of its global digital asset recognition by the mainstream community.


BounceBit is part of the Bounce Brand ecosystem that offers Bitcoin restaking infrastructure by shared security clients (SSCs). Bitcoin that is deposited into BounceBit has the options for several yield generating systems such as Cefi yield and funding rate arbitrage by elite asset management entities including Chainup Investment, used as part of the dual staking asset with its native token, BB, or simply the Defi yield opportunity in BounceBit Chain ecosystem.



Babylon system is built using Cosmos SDK to enable Bitcoin restaking feature without stakers to bridge their BTC out of Bitcoin network, reducing the risk of centralisation or bridging security. Stakers are able to provide BTC as the security asset in the self-custodian vault. In the event of slashing, the protocol will leak the private key of the dishonest vault to the public.


We expect to see an extraordinary number of new Bitcoin narrative protocols and Layer 2s to be launched in 2024. However, only a few Layer 2s will successfully attracted a high amount of TVL and on-chain activities. After the initial hype, only the Layer 2s with constant innovation to increase the performance of the chains (including improvement on security model) or an "super-dapp" that is able to attract continuous flow of funds will survive the trough of disillusionment. The ecosystem which the Layer 2s adopted could also potentially benefit from the growing network effect on the ecosystem.
Amidst aggressive funding from Asian venture capitalists, the Bitcoin narrative is set to ignite, fueled further by the imminent catalyst of the Bitcoin post-halving cycle. This event has garnered significant attention within the community, not only due to its potential impact on circulating supply dynamics, but also because it introduces native BTC yield, sparking a surge in interest. As investors speculate on the evolving narrative surrounding Bitcoin, it represents a compelling opportunity for both seasoned enthusiasts and newcomers alike.

About ChainUp Investment

ChainUp Investment, affiliated with the Singapore-based ChainUp, operates in the realm of crypto asset management. Mirroring ChainUp's focus on blockchain technology solutions, ChainUp Investment specializes in cryptocurrency investment, combining technological expertise with a solid understanding of regulatory frameworks.

Active in various international markets, ChainUp Investment's approach is marked by a strong emphasis on regulatory compliance and a focus on investor interests. ChainUp Investment utilizes ChainUp's technological infrastructure to guide its investment strategies and crypto asset selections, with an emphasis on the security and interests of investors.

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