There are hundreds of Bitcoin ‘layer 2s’
Unbeknownst to most of the Bitcoin community, there are apparently 400 ‘layer 2s’ operating on the blockchain. That ballpark estimate comes from Shehzan, founder of Lava, a loan platform that uses Bitcoin, Solana, and stablecoins.
Speaking on the August 25 edition of the YouTube-based Gwart Show, Shehzan, along with Gwart and fellow commentator Shinobi, called into question the benefit of these hundreds of roll-ups and alternative blockchains that use Bitcoin’s ledger.
Some estimates place the number at a much lower 80 or 85, while others exceed 1,000. Estimates vary to such an extent because anyone can ‘roll-up’ data and broadcast a tiny hash to any miner, which technically creates a ‘Bitcoin layer 2.’
Indeed, many are simple clones of Ethereum roll-ups, processing substantially all activities on a centralized server outside of the Bitcoin network and broadcasting a periodic hash of that state into Bitcoin blocks.
Moreover, they’re easy to create. Indeed, one developer created a roll-up for $20. Anyone can pay a miner to include data within a block; if that data is a hash of an alternative blockchain, that system can advertise itself as a ‘Bitcoin layer 2.’
Read more: Lightning Network hacker Burak introduces new Bitcoin layer 2, Brollups
Anyone can clone their own Bitcoin layer 2
So, what does it mean to say that there are hundreds of Bitcoin layer 2s? The answer to this question begins to illustrate the problem with this particular area of crypto: Few people agree on a single definition.
Originally, a layer 2 strictly referred to the trustless consolidation and enforcement of off-blockchain activity via a base blockchain. However, as years of development have passed, the term has morphed and now vaguely refers to crypto platforms that broadcast data onto a base blockchain.
Sometimes, the interactivity is two-way, with various methodologies for using Bitcoin transactions to enforce rights on the alternative blockchain.
Examples include layer 2s without a proprietary token like Lightning, Liquid, Ark, or BitVM. The far more popular Bitcoin layer 2s introduce a proprietary token like Rootstock, Stacks, Libre, or Merlin. According to the founder of Stacks, Bitcoin layer 2s in total were worth $5 billion as of February and would grow 20X.
Read more: What is Stacks and does it really serve as DeFi for Bitcoin?
Attempts to independently verify the precise number of layer 2s on Bitcoin is difficult without translating marketing language on a project-by-project basis. Projects that are essentially alternative blockchains with their own coins obviously want to avoid drawing attention to the economic reality of their endeavor.
Instead, project leaders write evasive descriptions of their projects to focus on Bitcoin language and bury their use of alternative blockchains and coins.
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