Have You Ever Wondered: Why Does Bitcoin Struggle with Scaling and Smart Contract Deployment?

The answer lies in limitations regarding speed, transaction fees, and programmability. This is also an opportunity for Bitlayer, a pioneering Bitcoin Layer 2 project, applying BitVM and ZK proofs to bring Bitcoin scalability equivalent to Ethereum while maintaining its original security level.

So, what makes this project special? Let’s explore with Allinstation through the article below!

What is Bitlayer (BTR)?

Bitlayer is a pioneering Bitcoin Layer 2 (L2) platform designed to address Bitcoin’s fundamental limitations such as:

• Poor scalability: low transaction processing capacity (only about 7 TPS).
• Lack of programmability: Bitcoin Script is not Turing-complete, does not support complex smart contracts.
• No trustless bridge: BTC finds it difficult to directly participate in DeFi/Web3.

With the vision of becoming the “operating system of Bitcoin DeFi (BTCFi),” Bitlayer introduces a new expansion layer based on BitVM and Rollup, allowing smart contract deployment, increasing transaction speed, and reducing costs while maintaining Bitcoin’s original security.

Key Features:

• Security-equivalent Layer 2: Bitlayer directly inherits security strength from the Bitcoin network, ensuring absolute asset safety.
• BitVM (Bitcoin Virtual Machine): a new technology that allows smart contract verification on Bitcoin without changing the original protocol.
• Turing-complete: supports complex logic programming, transforming Bitcoin from “digital gold” into a decentralized application platform.
• EVM Compatibility: compatible with Ethereum, allowing developers to migrate dApps from Ethereum to Bitlayer without rewriting the source code.
• Trustless Bridge (BitVM Bridge): a bridge that allows BTC to switch between Layer 1 and Layer 2 without a third party.
• Superior performance: roadmap towards 20,000 TPS and 3-second confirmation time by the end of 2025.

Highlights of Bitlayer

Bitlayer is not just an expansion Layer 2 for Bitcoin but also a pioneering project that brings a combination of security, speed, and programmability. The main highlights include:

Security-equivalent

• Unlike many other Layer 2 solutions that often sacrifice some decentralization or security for performance, Bitlayer is built on a Security-equivalent model.
• This means every transaction and smart contract on Bitlayer is guaranteed the same level of safety as the Bitcoin blockchain itself.

BitVM Application – Supporting Smart Contracts on Bitcoin

• Bitcoin originally only had Bitcoin Script, a limited and non-Turing-complete programming language, making smart contract deployment nearly impossible.
• Bitlayer applies BitVM (Bitcoin Virtual Machine) – a new architecture that allows smart contract state verification directly on Bitcoin without changing the original protocol.
• Thanks to this, Bitcoin can become a decentralized application platform (DApp Platform) similar to Ethereum.

Complete EVM Compatibility

Bitlayer fully supports EVM Compatibility (compatible up to Ethereum’s Cancun upgrade). This brings significant benefits:

• Ethereum developers can easily deploy dApps on Bitlayer using Solidity without modifying the code.
• Familiar tools like MetaMask, Hardhat, Truffle can be used directly.
• The DeFi, NFT, GameFi ecosystems from Ethereum can quickly expand to Bitcoin through Bitlayer.

Trustless BitVM Bridge

• One of Bitcoin’s major barriers is the lack of a decentralized bridge. Bitlayer introduces BitVM Bridge, allowing users to transfer BTC between Layer 1 and Layer 2 without relying on a third party.
• Transactions through the bridge are verified by zk-proofs and OP-DLC, ensuring transparency, safety, and decentralization. BTC transferred through Bitlayer can be used in DeFi, lending, farming, or NFT trading.

Superior Performance – High TPS, Low Fees

• Bitlayer aims to upgrade the network to: 20,000 TPS (transactions per second). Confirmation time of 3 seconds (finality).
• This allows Bitcoin to directly compete with high-speed Layer 1s like Solana or current Ethereum Rollups.

BTCFi Ecosystem

Bitlayer transforms Bitcoin from “digital gold” into a decentralized financial infrastructure platform (BTCFi):

• Allows deployment of native DeFi smart contracts on Bitcoin.
• Users can stake, farm, trade, lend/borrow, NFT… using BTC.

This opens the door to a massive capital flow from the trillion-dollar Bitcoin market cap into Web3.

Bitlayer’s Operating Model

Bitlayer is built on a combination of Rollup, BitVM, ZK Proofs, and OP-DLC, creating a secure, efficient, and programmable Layer 2 system. Bitlayer’s operating model can be divided into 3 main layers and 6 operational steps.

Main Components in Bitlayer Architecture

Bitlayer PoS (V1)

• The first experimental phase, using Proof-of-Stake mechanism to test basic features.
• Lays the foundation for Bitlayer’s node and validator infrastructure.

Bitlayer Rollup (V2)

• Uses the Rollup model to process off-chain transactions and compress them into batches sent to Bitcoin for verification.
• Combines BitVM to allow smart contract verification directly on Bitcoin without modifying the original protocol.
• Ensures all data is still stored and verified on Layer 1, maintaining security.

BitVM Bridge

• A trustless bridge that allows BTC to move back and forth between Bitcoin L1 and Bitlayer L2.
• Uses Optimistic Discreet Log Contracts (OP-DLC) and ZK proofs for verification, eliminating the need for a third party.
• BTC, once “wrapped,” can be used in the DeFi, NFT, GameFi ecosystem on Bitlayer.

EVM Compatibility Layer

• A special layer ensuring Bitlayer is compatible with EVM and Solidity, allowing Ethereum developers to easily deploy dApps to Bitcoin.
• Supports familiar toolsets like MetaMask, Hardhat, Truffle…

BTR Token

• The native token of the network, used for governance, staking, fees, and ecosystem incentives.

Transaction Processing on Bitlayer

This process can be visualized through 6 operational steps:

Step 1: Application Initialization & API Integration

• Developers use EVM tools (Hardhat, Truffle, MetaMask) to deploy dApps on Bitlayer.
• All applications written in Solidity can run directly without rewriting the source code.

Step 2: Smart Contract Deployment & Verification

• Smart contracts are loaded onto Layer 2 via the Rollup mechanism.
• Transactions and contract states are batched and then sent to Bitcoin for verification by BitVM.
• This ensures smart contracts running on Bitlayer are as safe as Bitcoin.

Step 3: Sequencer, Prover, and Challenger

Three central components:

• Sequencer: collects orders and creates transaction batches.
• Prover: generates ZK proofs to verify transaction correctness.
• Challenger: monitors and has the right to challenge if fraud is detected.

This mechanism is similar to Optimistic Rollups but adds ZK proofs, making it both fast and safe.

Step 4: BitVM Bridge

• Users send BTC from their Bitcoin wallet to the BitVM Bridge.
• The bridge uses Minimized Interaction and OP-DLC mechanisms, allowing BTC to be wrapped and used on Bitlayer without intermediaries.
• BTC can be used for trading, lending, farming, or buying/selling NFTs on dApps.

Step 5: Reward Distribution & Governance

• Users stake BTR tokens to secure the network and earn rewards.
• Developers, validators, and the community can be incentivized with BTR.
• Protocol upgrade decisions are made through on-chain voting using BTR.

Step 6: Asset Withdrawal to Bitcoin L1

• When users want to withdraw BTC from Layer 2 to Layer 1, they send a request through the BitVM Bridge.
• This transaction is verified by Rollup proofs (ZK proofs) on Bitcoin, ensuring assets return to L1 safely, transparently, and trustlessly.

Benefits of the Operating Model

• High Performance: fast transactions, low fees, aiming for 20,000 TPS & 3-second finality.
• Absolute Security: inherits Bitcoin’s security strength.
• Scalability: supports smart contracts, dApps, DeFi, NFT on Bitcoin.
• Trustless bridge: BTC can move freely between L1 and L2 without intermediaries.

Information on BTR Token and Tokenomics

Basic Information

• Token Name: Bitlayer
• Ticker: BTR
• Token Standard: ERC-20
• Contract: 0x6C76dE483F1752Ac8473e2B4983A873991e70dA7
• Total Supply: 1,000,000,000 BTR

Tokenmetrics

• Ecosystem Incentive (40%): Unlocks 20% at TGE, the rest is released gradually over 48 months
• Investors (19.3%): Locked for 6 months and released gradually over the next 24 months
• Team (15%): Locked for the first year and unlocked over the next 2 years
• Public Distribution (9%): Fully released at TGE
• Node Incentive (8.7%): Unlocks 5% in the first year and halves the unlock amount each subsequent year
• Treasury (6%): 75% released at TGE, the rest over 5 months Liquidity (2%): 100% unlocked at TGE

Token use cases
Staking & Node Voting

• Users can stake BTR to participate in network security.
• The node voting mechanism allows holders to have voting rights in selecting validators or delegating power to other nodes.

Governance

• BTR holders have the right to participate in voting on network upgrade proposals, transaction fee adjustments, and important changes related to the ecosystem.

Fee Switch

• Transaction fees on Bitlayer can be reallocated: rewarding stakers, transferring to the treasury, or used for BTR token buyback, helping maintain long-term ecosystem sustainability.

Ecosystem Incentives

• BTR is allocated as rewards for developers, the community, and users with positive contributions.
• Airdrop campaigns, events, or incentive programs will use BTR to increase engagement.

Development Team, Investors, and Partners

Development Team

Bitlayer is founded and operated by experienced personnel in the blockchain industry, having participated in building major ecosystems like Polygon, Polkadot, Tezos, Huobi. The two most prominent figures in the core team include:

Charlie Yechuan Hu – Co-Founder & CEO

• Before founding Bitlayer, Charlie held many important roles at Polygon, Tezos, Polkadot, responsible for ecosystem development.
• He initiated the idea of BitVM (Bitcoin Virtual Machine), the core technology of Bitlayer that allows smart contract deployment on Bitcoin without changing the original protocol.
• Charlie currently leads the strategic development direction and overall technical architecture of Bitlayer, aiming to transform Bitcoin into a global DeFi infrastructure platform (BTCFi).

Kevin Changbin He – Co-Founder & CTO

• Previously Head of Technology at Huobi Global, where he led the global technical team.
• The “father” of Heco Chain (Huobi ECO Chain) – one of the prominent EVM-chains with TVL once reaching over $14 billion and processing over 4 million transactions/day.
• Has extensive experience in developing EVM chains and ZK-Rollup, currently responsible for designing the BitVM Bridge and Rollup infrastructure of Bitlayer.
• Besides Bitlayer, Kevin also co-founded BTCEden and BitVM, demonstrating a long-term vision in expanding the Bitcoin ecosystem.

Investors

Seed – March 27, 2024

• Bitlayer successfully raised $5 million led by Framework Ventures and ABCDE. Additionally, there was participation from many other investment funds such as OKX Ventures, Kenetic Capital, Alliance DAO, along with angel investors like Paul Taylor and prominent backers in the Web3 community.
• This Seed round laid an important foundation, helping Bitlayer develop technical infrastructure and attract attention from the global investment community.

Series A – July 23, 2024

• The funding round was valued at $300 million and successfully raised $11 million.
• This round was co-led by Franklin Templeton Investments and ABCDE, with participation from many reputable organizations such as GSR, Flow Traders, Skyland Ventures, Caladan, and many other VC funds.
• The presence of Franklin Templeton – one of the world’s leading asset management groups, created a significant impact, proving Bitlayer’s long-term potential in expanding Bitcoin Layer 2 infrastructure.

Extended Series A – October 8, 2024

• Bitlayer continued to make waves by announcing the Extended Series A round, raising an additional $9 million while maintaining a $300 million valuation.
• This round was led by Polychain Capital and Franklin Templeton, with participation from Selini Capital, V3V Ventures, SCB Limited, MN Capital, and several other funds.
• The presence of Polychain – one of the leading crypto-native funds, further solidified the belief that Bitlayer will become a key pillar in the BTCFi trend and the expanding Bitcoin ecosystem.

ICO Coinlist – July 31, 2025, to August 7, 2025

• The most recent step was the ICO on the Coinlist platform, raising an additional $4 million.
• The ICO had a sale price of $0.2/token, with a total of 20 million tokens offered and 100% of the tokens unlocked immediately at TGE.
• This ICO not only helped Bitlayer supplement development capital but also opened opportunities for retail investors to participate directly, thereby creating a strong spread for the BTR token ahead of the next expansion phases.

Partners

In addition to investors, Bitlayer also collaborates with many organizations and projects in the Web3 ecosystem:

• StarkWare – developer of StarkNet, supporting zk-proof solutions.
• Alliance DAO – a global Web3 startup incubator.
• Gate Labs – the investment arm of Gate.io exchange.
• Global Coin Research, Web3Port, Faculty Group – units specializing in research and community development support.

Conclusion

Bitlayer is not just an additional Layer 2 for Bitcoin but also a solution to the limitations that have existed for over a decade in this network: slow transaction speed, high fees, and lack of programmability. With the combination of BitVM, Rollup, ZK proofs, and a trustless bridge, Bitlayer provides an infrastructure with security equivalent to Bitcoin but as flexible as Ethereum, opening a new era for BTCFi – decentralized finance based on Bitcoin. Strong backing from leading global investment funds like Franklin Templeton, Polychain Capital, Framework Ventures, ABCDE, along with an experienced founding team, ensures the project’s long-term vision. Additionally, a dynamic community ecosystem and the BTR token play a central role in attracting users and encouraging developers to participate in building.

In the context of Bitcoin increasingly being positioned as a global asset class, Bitlayer has the potential to become an important infrastructure piece, transforming Bitcoin from “digital gold” into a global-scale decentralized application platform. If successful, Bitlayer will not only enhance Bitcoin’s role in Web3 but could also become the leading Layer 2 in the BTCFi trend in the coming years.