Why do we want to build it?

The reason be traced back to why we want to build BEVM Layer2 or why we think BTC needs Layer2 more urgently than Ethereum.

I. The issuance and circulation of assets have always been a narrative of Ethereum (ETH), but now it has also become a narrative of Bitcoin (BTC).

1) The business of ETH revolves around issuing assets and providing a series of services related to asset demand.

Whether you admit it or not, Ethereum has always been addressing financial needs related to assets. Whether it's the issuance of assets like ERC20 tokens or ERC721 non-fungible tokens (NFTs), or on-chain DeFi products like MakerDAO, Uniswap, OpenSea, they all cater to diverse user demands.

2) BTC has also been exploring on-chain asset issuance and management business.

As early as the emergence of Ethereum in 2014, BTC had already started exploring the business demand for asset issuance. For example, the most well-known Omni Layer protocol issued the earliest stablecoin, USDT, on the BTC network's UTXO's OpReturn. However, at that time, OpReturn only supported 80 bytes of content space, leading to the failure of the Omni Layer protocol.

However, in 2017, BTC succeeded in implementing the logic of asset issuance on Ethereum, making Ethereum the leading public blockchain. The thriving development of the Ethereum ecosystem directly proves the success of ETH DeFi.

During this period, the BTC network has also undergone continuous technological upgrades, among which three can be considered as the greatest technological innovations in BTC's history:

i.) 2009: BTC's initial release, using blockchain structure to build decentralized applications.

ii.) 2017: BTC's Segregated Witness (SegWit) upgrade, supporting up to 4MB storage, solving BTC's on-chain storage issues. This also provided the basis for the current popular Layer2 protocol (asset issuance).

iii.) 2021: BTC's Taproot upgrade, supporting the Schnorr signature algorithm. This provides underlying support for fully decentralized BTC Layer2 technologies.These three groundbreaking upgrades have contributed to the development of the BTC network in the future.​

II. ETH can solve the problem of on-chain asset settlement, while BTC can only solve the problem of on-chain asset registration.

1) ETH can provide asset settlement.

ETH has a Turing-complete virtual machine called EVM, which enables the EVM ecosystem to support on-chain decentralized exchanges (DEXs) for tokens/NFTs, derivative trading, and more. This has led to the success of many well-known DeFi applications such as Uniswap and Dai.

2) BTC can provide asset registration.

Although BTC's Segregated Witness (SegWit) solves the scalability issue from 80 bytes to 4MB, it does not solve the problem of on-chain computation.

Therefore, at present, BTC can only handle the logic of asset issuance and registration, and it cannot build on-chain computational applications like Ethereum, which supports AMM DEXs and other on-chain computation applications.

The achievements of the assets issued in the BTC ecosystem are indeed impressive. For example, the transaction volume of BRC20 tokens has exceeded 10 million, and the market value of BTC NFTs is comparable to that of ETH.

The focus of this article is how to solve the problem that BTC Layer1 cannot independently achieve asset settlement like ETH Layer1.​

III. Why does BTC need Layer2 more than ETH?

Currently, ETH's Layer2 solutions are mostly just copies of ETH Layer1, without solving any practical business problems that Layer1 cannot solve, but are instead addressed by Layer2.

If we have to point out what ETH Layer2 solves, it is the issue of expensive gas fees. It is this demand that has led to the success of the largest ETH Layer2, Arbitrum, and derivative applications like GMX.

On the other hand, BTC's Layer2 solutions are not as significant as ETH Layer2, and some may even argue that they are irrelevant.

This is because BTC's non-Turing complete on-chain virtual machine can only register assets and cannot settle them. Therefore, BTC Layer1 needs a Turing-complete BTC Layer2 to help solve the settlement problem for asset issuance.

However, there are several factors hindering the development of BTC Layer2:

1）BTC MAXIs and BTC purists

Many BTC MAXIs claim that BTC can grow native DeFi applications and often use examples like UniSat/BRC20 to illustrate that these are native applications on BTC.My counterargument is that UniSat is actually BTC's Layer2, a fully centralized Layer2. BRC20 tokens rely on centralized Layer2 indexers like UniSat for transaction matching and settlement.In other words, BRC20 tokens' computations are not settled directly on the BTC blockchain like ERC20 tokens are on the Ethereum blockchain; instead, they are settled off-chain, with on-chain registration only.

2）Opposition to building an ecosystem around BTC

Some crypto users have become accustomed to BTC being limited to only transfer functions and have accepted the monopolistic position of ETH in DeFi. They strongly deny the future of BTC's ecosystem.

However, if we understand the business logic of asset issuance and circulation on ETH, we can understand that BTC can also create an ecosystem. BTC can register assets on-chain, meaning it can issue assets on the BTC blockchain. While these assets cannot circulate directly on the BTC network like current ETH DeFi, they can circulate on BTC Layer2. This highlights the importance of BTC Layer2.​