In this short research article we look into four different layer-2 BTC assets to see how they are serving Bitcoin as a layer 2 instrument, what their nature is in regards to decentralization, where we can learn more about the project, and where the asset can be invested in if investment is possible.
At the end of this article if you know about a project that was not listed here, please let us know about it in the comments below!
1. The Lightning Network
- Project Website: Lightning Network Official Site
- Description: The Lightning Network is a Layer 2 payment protocol designed to facilitate faster and cheaper Bitcoin transactions. It achieves this by creating payment channels between users that allow for off-chain transactions, which significantly reduces the load on the Bitcoin blockchain. This makes microtransactions and everyday payments more feasible with Bitcoin.
- Decentralization: The Lightning Network is considered a decentralized solution as it enables users to create peer-to-peer payment channels. It’s a network of nodes rather than a centralized platform, with each node operated independently.
- Asset on CoinMarketCap: Not applicable (Lightning Network is a payment protocol, not a tradeable asset)
- Asset on CoinGecko: Not applicable (Lightning Network is a payment protocol, not a tradeable asset)
- Where to Purchase: The Lightning Network isn’t a tradeable asset but a protocol for Bitcoin transactions. To use it, you typically need a compatible Bitcoin wallet that supports the Lightning Network.
2. Rootstock (RSK)
- Project Website: Rootstock Official Site
- Description: Rootstock, also known as RSK, is a smart contract platform connected to the Bitcoin blockchain through a sidechain. It aims to extend Bitcoin’s functionality by adding smart contract capabilities and increased transaction speeds, bridging the gap between Bitcoin and Ethereum’s capabilities.
- Decentralization: RSK is considered partially decentralized. While it uses a sidechain connected to the Bitcoin blockchain, its security model and infrastructure rely on a smaller set of participants (merge miners) compared to Bitcoin’s broader miner ecosystem.
- Asset on CoinMarketCap: RSK Infrastructure Framework (RIF)
- Asset on CoinGecko: RSK Infrastructure Framework (RIF) on CoinGecko
- Where to Purchase: RIF tokens can be purchased on various cryptocurrency exchanges. The availability of RIF on exchanges can be checked on CoinMarketCap and CoinGecko.
- Project Website: Stacks Official Site
- Description: Stacks is a Layer 2 blockchain that introduces smart contracts and decentralized applications (dApps) to the Bitcoin network. It employs a unique consensus model called Proof of Transfer (PoX) and enables developers to build applications and smart contracts directly on top of Bitcoin.
- Decentralization: Stacks is a decentralized solution, with its blockchain operating independently atop Bitcoin. Its PoX consensus mechanism and the ability for developers to deploy dApps contribute to its decentralized nature.
- Asset on CoinMarketCap: Stacks (STX)
- Asset on CoinGecko: Stacks (STX) on CoinGecko
- Where to Purchase: STX tokens can be purchased on various cryptocurrency exchanges. You can find a list of exchanges offering STX on CoinMarketCap and CoinGecko.
4. Liquid Network
- Project Website: Liquid Network Official Site
- Description: The Liquid Network is a Bitcoin sidechain designed for fast and confidential transactions. It provides a platform for asset issuance and inter-exchange settlement, offering enhanced privacy and reduced transaction times compared to the Bitcoin main chain.
- Decentralization: The Liquid Network is less decentralized than Bitcoin. It operates under a federated consensus model, where a group of functionaries (trusted entities) are responsible for validating transactions and signing blocks. This centralization can be a trade-off for its improved transaction speed and confidentiality.
- Asset on CoinMarketCap: Not applicable (Liquid Network uses LBTC, a Bitcoin pegged asset)
- Asset on CoinGecko: Not applicable (Liquid Network uses LBTC, a Bitcoin pegged asset)
- Where to Purchase: Liquid Network’s native asset, LBTC, is pegged to Bitcoin and is mainly used within the network. It’s not typically traded on standard exchanges. LBTC is acquired by locking BTC in the Liquid Network.
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