Report: Who are the players when it comes to Bitcoin layers?
by Stacks Foundation team on January 18, 2024
The world is talking about Bitcoin layers. Finally, right?

Just this week, Spartan and Binance each released reports featuring Bitcoin layers and this comes on the heels of a quarter that saw a number of theses and commentary drop about building on Bitcoin.

And yesterday, Bitcoin L2s were literally trending:
In case you missed them, here is a list of recent write-ups you may want to check out:
• House of Chimera reports on rapid growth in daily transactions on Stacks.
• Venture Capitalist Tim Draper says he’s excited about Stacks and explains his Bitcoin thesis.
• a16z lists Babylon chain and the Stacks layer as Big Ideas for 2024 and expands on the breakdown in this piece.
• Web3 Venture Studio “Thesis” shares thesis on Bitcoin & Bitcoin layers.
• Pantera Capital publishes Blockchain Letter for the year ahead with the resurgence of Bitcoin and DeFi Summer 2.0 partially thanks to Bitcoin L2s.
• Portal Ventures shares Bitcoin thesis including Stacks as leading L2.
• Digital Asset Investment Firm North Rock Digital releases thesis on Stacks.
• Foundation Capital lists Stacks as an effort to give Bitcoin additional scalability and functionality.
• Messari publishes the latest edition of the Crypto Theses for 2024, including thoughts on Stacks & Bitcoin L2s.
• Coinbase releases 2024 Crypto Market Outlook predicting elevated activity for Bitcoin on secondary via L2s like Stacks.
• Investment Firm VanEck publishes 15 Crypto Predictions for 2024, including Stacks.
• Gate.io says Stacks Nakamoto is about to be upgraded to inject new impetus into the Bitcoin ecosystem.
Today, we’re going to highlight the Spartan Group’s report and tee up some further conversations and content coming up throughout the ecosystem that will delve deeper into this 30+ page (digital)goldmine of information.
Key Themes of Spartan's Bitcoin Layers Report:
  1. Underutilized Potential: Despite Bitcoin's $850+ billion market cap, much of its capital remains dormant due to challenges in programmability, scalability, and community alignment.
  2. Emergence of Bitcoin Layers: To unlock Bitcoin's potential, new layers are being developed, providing functionalities like smart contracts and scalability, without altering the foundational layer.
  3. Cultural Shift with Ordinals: Ordinals have reinvigorated the Bitcoin development community, expanding the use of Bitcoin beyond a Store of Value, but also stressing its performance and scalability limitations.
  4. Strategic Importance of L2 Solutions: Layer-2 solutions are crucial to address Bitcoin’s inherent limitations in programmability and transaction speeds, with significant advancements like Stacks’ Nakamoto Release.
  5. Institutional Adoption and Financial Revolution: The development of Layer-2 solutions is aligning Bitcoin for increased institutional interest and a transformative role in the trustless financial ecosystem.
  6. Innovations Beyond 'Big Four' Bitcoin Layers: The report explores emerging innovations in Bitcoin’s layered architecture, including new token standards and privacy/security solutions, indicating a vibrant and evolving landscape.
  7. Challenges and Future Trajectory: While the Bitcoin ecosystem shows immense potential, it faces challenges like balancing scalability, security, and decentralization, and fostering a more inclusive development landscape.
The Big 4
Spartan Group's report recognizes Stacks, alongside Lightning, Rootstock, and Liquid, as key players contributing to the ongoing transformation of the cryptocurrency ecosystem. These four projects currently play a significant role in expanding Bitcoin's functionalities:

  1. Stacks: This layer brings smart contracts and decentralized applications (dApps) to Bitcoin. It enables complex functionalities that go beyond Bitcoin's original scope, allowing for more versatile and programmable use cases.
  2. Rootstock (RSK): Similar to Stacks, Rootstock is a smart contract platform. It is merge-mined with Bitcoin, which means it leverages the same mining power as Bitcoin, thus ensuring a high degree of security. RSK extends the capabilities of Bitcoin to support smart contracts, enabling more complex financial functions.
  3. Lightning Network: This is a Layer 2 solution designed to enable faster and cheaper transactions on the Bitcoin network. It addresses the scalability issues of Bitcoin, making it more suitable for everyday transactions and microtransactions.
  4. Liquid Network: A sidechain solution, the Liquid Network facilitates faster and more confidential transactions. It's particularly beneficial for entities that require rapid and secure asset transfers, like financial institutions and exchanges.
According to the report, these four layers are helping drive evolution of Bitcoin from a pure cryptocurrency into a more comprehensive financial ecosystem capable of supporting a wide range of applications, from simple transactions to complex programmable contracts.
Deeper insights and discussions
The journey toward a more scalable and interconnected Bitcoin ecosystem is a critical one, and Stacks, alongside other solutions, plays a role in defining its trajectory. As this plays out, we have an opportunity to identity and support new players, new use cases, and new needs along this path to maturity and unlocking of the Bitcoin economy.
To support this ongoing dialogue within the community, we’ve indexed a number of followup pieces and Spaces:
January 31st
  • Spartan X Space (AMA): Nakamoto Release Testnet Launch with Kyle Ellicott, Muneeb Ali, Chain and Melody.
February 1st
February 2nd
  • Spartan X Space (AMA) with Kyle Ellicott, Muneeb Ali, Melody and Chain
February 8th
February 9th
  • Spartan Blog Post: Report Section 2 (Bitcoin Economy)
March 1st
  • Spartan Blog Post: Report Section 3 (Bitcoin Layers)
March 6th, 7th, 8th
  • Spartan AMA with Kyle Ellicott & Muneeb
March 22nd
  • Spartan Blog Post: Report Section 4: Trustless Financial System on Bitcoin