Bitcoin has shown significant growth over the last couple of months, not only shown from its price but also from its ecosystem.
Thanks to the support of its layer two blockchains, Bitcoin has now been able to host several decentralized applications on its ecosystem, making it more competitive in comparison to other blockchains in the crypto space.
Bitcoin’s Growth Thanks to its Layer Two Blockchains
The most prominent evidence from Bitcoin’s ecosystem growth is the number of DApps that are currently active on it.
While only a couple have been successfully running, there are currently hundreds of DApps being built on the Bitcoin Blockchain, thanks to its layer two blockchains.
Most of these DApps seem to be actively developing in the Decentralized Finance or DeFi space and the Non Fungible Token or NFT space.
The DeFi growth has been incredible as data from DeFillama showed that the Total Value Locked or TVL of the ecosystem has risen significantly.
Currently the Total Value Locked in the Bitcoin Ecosystem is standing at around $3 Billion which is a significant increase in 2024, from less than $1 Billion in 2023 and 2022.
The current rise of Bitcoin TVL is due to the fact that new Bitcoin DeFi projects are being built and airdrop hunters are harvesting points by locking their money in those DApps.
Another side is the NFT space where the Bitcoin NFT ecosystem has also risen significantly because of the Ordinals Inscriptions mechanism that allows developers and artists to launch their NFTs natively on the Bitcoin Blockchain.
Bitcoin Layer Two Blockchains
All of these innovations are made possible because of Bitcoin’s layer two blockchains which are now considered one of the most active sectors of the crypto ecosystem.
Currently there are hundreds of layer two blockchains being built but only a few have been running successfully, helping the growth of the Bitcoin Ecosystem.
Lightning Network
The first notable one is Lightning Network, which was made popular as it helps people process Bitcoin transactions faster with lower fees than The Bitcoin Blockchain.
This layer two made the most sense prior to innovations happening on the Bitcoin Ecosystem, as Bitcoin itself was focused on only being a place for transactions rather than a place to host DApps.
The Lightning Network itself was made famous by El Salvador, a country in South America that has made Bitcoin a legal tender and used the Lightning Network for its citizens to use Bitcoin in their everyday lives.
Currently there are more than $300 Million being locked as liquidity on the network with over 5,000 BTC transactions monthly.
The network itself can handle up to 1 Million transactions per second, making it one of the biggest contributors to the Bitcoin Ecosystem.
Liquid Network
Next is the Liquid Network which is different from Lightning Network, but both acts as a layer two blockchain for Bitcoin.
Initially, the focus of Liquid Network is to only deploy assets on the Bitcoin Blockchain, so developers can have their own asset running on it.
It is not a place to deploy DApps on the Bitcoin Blockchain as the focus itself is only on assets, which has less complexity than DApps.
But after developments have been done, the Blockchain itself can now host applications from multiple languages, including Python and Java Script.
There are 12 DApps built on it which range from every category in the crypto space. Seeing as there are not many projects on it, this network is not a huge contributor but it certainly played a role in the transformation era of Bitcoin.
Stacks Blockchain
Next is the Stacks Blockchain which is currently the biggest contributor for the ecosystem of Bitcoin as it is used to build most of the leading DApps on the Bitcoin Ecosystem.
There are currently 21 DApps built on it, mostly in the category of DeFi, including the number one DeFi platform on the Bitcoin Ecosystem called Alex.
Aside from that, Stacks have helped Bitcoin to deploy other DApps in other categories such as NFTs and DAOs, making Bitcoin more whole as a new blockchain.
Stacks currently acts as its own blockchain ecosystem as well, but lately the focus has shifted towards being a blockchain to help Bitcoin.
Stacks contributed to more than half of the Total Value Locked on Bitcoin, making it a huge contributor in the growth of Bitcoin.
Rootstock
Last is Rootstock, which is an Ethereum Virtual Machine or EVM compatible blockchain that lets developers build applications on the Bitcoin Blockchain as well as EVM Blockchains.
With Rootstock, developers can have a DApp that is able to communicate between Bitcoin and EVM Blockchains, injecting more liquidity into the Bitcoin Ecosystem.
It promotes itself as a smart contract platform for Bitcoin and has attracted more than 82,000 users on its blockchain.
The Total Value Locked of Rootstock itself currently stands higher than Stacks, but this is because the blockchain does not only focus on Bitcoin as it also grabs opportunities from other EVM Chains.
Conclusion
Overall, the growth of the Bitcoin ecosystem is as high as ever, making the current bull run predicted to happen after the halving more than different than the past.
The innovations around Bitcoin that have not existed before, thanks to these layer two blockchains, might disrupt the pattern of previous data, giving larger potential profit in the coming year.
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