Original source: Bitroot
As a pioneer of cryptocurrency, Bitcoin has dominated the crypto market since its inception. However, with the rise of blockchain platforms that support smart contracts, such as Ethereum, Bitcoin faces challenges in functionality and practicality. This article will explore the current status of the Bitcoin ecosystem, the challenges it faces, and future development directions, with a special focus on how innovative projects such as Bitroot are driving Bitcoin’s evolution towards smart contracts and interest-bearing functions.
The Current Status and Challenges of Bitcoin
1. Limitations of the UTXO model:
Bitcoin uses the UTXO (unspent transaction output) model, which is simple and efficient, but it is incapable of handling complex transaction logic. In contrast, Ethereum’s account model is more suitable for implementing complex smart contract functions.
2. Limited scripting languages:
Bitcoin’s scripting language was designed to be simple and secure, but this also limits its ability to express complex logic. Although new opcodes can be introduced through soft forks, this process is often slow and controversial.
3. Lack of native smart contract support:
Unlike Ethereum, Bitcoin does not natively support complex smart contracts. This limits its ability to host decentralized applications (dApps) and participate in the thriving DeFi ecosystem.
4. Scalability issues:
Bitcoin’s block size limit and block time have led to network congestion and high transaction fees, which have hindered its use as a daily payment tool.
5. Slow development of ecosystem:
Compared with the booming DeFi and NFT ecosystems on other blockchain platforms, Bitcoin’s application ecosystem is relatively lagging behind.
Innovative solutions: Bitroot’s dual-wheel drive
In the face of these challenges, the Bitcoin community has been exploring various solutions. Among them, the Bitroot project is injecting new vitality into the Bitcoin ecosystem through its two core products, Bitroot Protocol and Bitroot Network.
Bitroot Protocol: Asset Innovation on Bitcoin
Bitroot Protocol is a simple and flexible protocol designed to enable the minting, transfer and management of native assets on Bitcoin. The launch of this innovative protocol is in line with the latest trends and market demands in the Bitcoin ecosystem.
1. Trend driven:
As the Bitcoin halving event occurs, miners’ income decreases, driving them to look for new sources of income, mainly Bitcoin transaction fees. Data shows that on some days, Bitcoin fee income once reached 60% of total income. This trend shows that the development of Bitcoin native assets (such as inscriptions, runes, etc.) will be supported by miners because these assets can stimulate trading activities and thus increase fee income.
2. Huge market potential:
At present, the total market value of the Bitcoin native asset market (including ORDI, Sats, etc.) is approximately US$2 billion. Compared with the nearly US$500 billion market value of ERC20 assets on Ethereum, there is huge room for growth. This shows that the Bitcoin native asset market is at a very early stage with significant growth potential.
3、Bitroot’s innovative solutions:
Bitroot Protocol solves key issues of Bitcoin native assets in the following ways: a. User-friendly one-stop service: Providing a convenient native wallet, users can easily complete asset issuance, transfer, management and trading. b. Decentralized Exchange (DEX): Enable fully decentralized asset trading on the Bitcoin network. c. Smart Contract Integration: Leveraging innovations such as OP_CAT opcodes, introduce smart contract functionality to Bitcoin, paving the way for DeFi applications. d. Network Solution: Solve the performance limitations of the Bitcoin network through Network technology, enable the operation of high-performance applications, and maintain two-way confirmation with the Bitcoin main chain through zero-knowledge proofs.
Through Bitroot Protocol, users can:
1. Issue tokens and NFTs that comply with the BRT20 standard.
2. Store arbitrary data in Bitcoin transactions and store the data directly in the Bitcoin blockchain.
3. Maintain a strong abstraction layer between the Bitcoin UTXO system and the Bitroot system.
4. Participate in decentralized exchanges and the broader DeFi ecosystem.
These innovations of Bitroot not only provide more operability for the innovation and application of Bitcoin chain assets, but also lay the foundation for the expansion of the Bitcoin ecosystem. By introducing smart contracts and DeFi functions, Bitroot aims to unleash the potential of Bitcoin’s native assets while leveraging Bitcoin’s trillion-level liquidity. This series of innovations is expected to drive Bitcoin from a simple value storage tool to a more diversified and feature-rich financial ecosystem.
This provides more operability for innovation and application of Bitcoin chain assets and lays the foundation for the expansion of the Bitcoin ecosystem.
Bitroot Protocol Testnet: From Theory to Practice
The Bitroot Protocol testnet began in May 2024, when an internal test for ambassadors was launched. This internal test received positive feedback and provided valuable insights for the subsequent development of the project. Based on the feedback from the ambassadors, the Bitroot team conducted comprehensive code optimization and bug fixes to prepare for wider public testing.
Subsequently, on September 12, 2024, Bitroot Protocol officially launched the open incentivized testnet, marking the project’s transition from closed testing to a broader community participation phase. This open testnet includes the core functions of Bitroot Protocol, such as BRT20 token issuance, NFT creation, and decentralized exchanges (DEX), etc., aiming to further verify technical concepts, collect more user feedback, and make final preparations for future mainnet deployment.
From internal testing to the open testnet, the team has successfully achieved several key technical milestones:
Completed the implementation and verification of the BRT20 token standard
Achieved seamless integration with the Bitcoin network
Established preliminary cross-chain bridging functionality
Greatly improved system stability and performance, and solved major issues found in internal testing
These achievements not only prove that the core concepts of Bitroot Protocol are technically feasible, but also demonstrate the team’s ability to quickly iterate and respond to community feedback.
User Experience and Interface
The open testnet provides an optimized user interface that incorporates feedback from internal test users. Key features include:
One-click BRT20 token issuance, a smoother process
Improved visual NFT creation tools
User-friendly DEX trading interface with more advanced features
Compared with the internal beta version, the interface of the open test network has been significantly improved, and user feedback shows that the operation process is more intuitive and efficient.
Community Engagement and Feedback
Since the launch of the open incentive testnet on September 12, community participation has exploded:
The number of registered testers has rapidly increased from 100 in the internal test to over 500
The number of daily active users has steadily increased from 50-60 in internal testing to 200-300
User feedback was generally positive, especially from ambassadors who participated in the beta test, who appreciated the improvements to the system. A senior Bitcoin user commented: “The progress of Bitroot Protocol is impressive. From the beta test to now, it demonstrates the amazing expansion potential of the Bitcoin network, which may be the most exciting innovation since the Lightning Network.”
From testing to innovation
The Bitroot Protocol testnet journey, from closed beta in May to open incentivized testnet in September, not only verified the technical feasibility of the project, but also demonstrated the team’s ability to quickly iterate and adapt. With the continuation of open testing and wider community participation, Bitroot Protocol is expected to become a key force in promoting the expansion of Bitcoin network functions and bring new possibilities to the digital asset field.
This updated version incorporates new information you provided, highlights the evolution from closed beta to open testnet, and how the team is making improvements based on feedback. It showcases the project’s continued progress while maintaining a look into future developments.
Bitroot Network: The core engine of Bitcoin interest generation
As mentioned above, the Bitcoin ecosystem is in urgent need of new sources of revenue, and this need has become more urgent after the Bitcoin halving. This is mainly due to two aspects:
1. Miners’ income has dropped significantly:
After the fourth Bitcoin halving, the block reward dropped from 6.25 BTC to 3.125 BTC. According to the current market conditions, the break-even point for many miners has risen from $20,000/BTC to $52,000/BTC. Miners’ income has dropped by more than 70% year-on-year. If the price of Bitcoin does not rise sharply, a large number of miners will face losses. If the price of the currency falls further, it may trigger a new round of mining shutdowns. Therefore, finding a new income model for miners has become a top priority to maintain the sustainable development of the BTC ecosystem.
2. Increased demand for idle assets:
At the same time, a large number of early BTC holders have accumulated considerable idle assets, and they are in urgent need of safe and reliable interest-bearing investment channels. The market demand for BTC unilateral returns continues to grow, and the scale has exceeded 10 billion US dollars. However, a considerable part of the funds can only obtain a low rate of return of 1-3%, and have to hand over trust to centralized institutions. This situation has caused the inefficient use of a large number of assets and brought unnecessary trust risks. This phenomenon undoubtedly reflects the market’s strong demand for safe and risk-free returns on BTC idle assets.
In this context, we have seen explosive growth in Bitcoin Layer2 projects. A large number of Bitcoin expansion projects and new applications based on BTC have sprung up. According to the latest data from rootdata, as of now, the number of Bitcoin expansion projects has reached 78, and the total locked volume of Bitcoin, Bitcoin bridges and expansion solutions has exceeded the $12 billion mark. This marks that Bitcoin is transforming from a single asset to a more dynamic ecosystem, and more application scenarios, innovative construction and investment opportunities are being nurtured around Bitcoin.
Among many emerging solutions, BTC Staking is generally considered by the industry to be a highly promising and reasonable development path. As a mature revenue model that has been fully verified in the Ethereum ecosystem, once BTC Staking is introduced into the Bitcoin ecosystem, it will enable Bitcoin to connect with a wider decentralized ecosystem and provide security support for other PoS chains or second-layer networks. With the advantage of higher security consensus, BTC Staking has the potential to achieve higher security and decentralization levels than Ethereum staking. By reusing existing infrastructure and combining emerging innovative technologies such as EigenLayer and AVS, BTC Staking can open up a new economic profit model and inject new sources of income into the entire ecosystem.
Bitroot: Integrating three major interest-earning solutions
In the current crypto market, stable and secure returns mainly come from the following three aspects:
1、Staking：
Refers to passive income generated by holding cryptocurrencies and participating in their consensus mechanisms. The most typical example is Ethereum POS staking, where users stake ETH and verify transactions to earn passive income. Staking income is relatively stable and does not require too much active operation, but the rate of return is relatively limited.
2. CeDeFi fee arbitrage:
Utilize the interest rate difference between the centralized finance (CeFi) and decentralized finance (DeFi) systems to conduct interest rate arbitrage transactions to earn income. The CeDeFi arbitrage strategy combines the security of CeFi with the flexibility of DeFi. Users can use CeFi’s deep liquidity to perform profitable delta-neutral interest rate arbitrage, while obtaining considerable returns and relatively controllable risks.
3. DeFi Applications:
Refers to some broadly emerging sources of income in the decentralized financial ecosystem, such as PointsFi’s accumulated user dividends, liquidity mining, revenue aggregation and other innovative applications. These innovative revenue models often stem from community participation, incentive mechanisms, etc., and have certain uncertainties, but may also bring excess returns.
Although the above solutions have been verified in Ethereum, have very successful cases, and are naturally suitable for permissionless blockchains, it is not easy to implement them for non-Turing-complete Bitcoin due to the limitations of the scripting language. The most effective solution at present is to upgrade the underlying architecture of the Bitcoin network, such as implementing OP Code, OP_CAT, etc., to support more advanced functions and achieve truly decentralized on-chain settlement. However, to implement OP_CAT, more Bitcoin developers need to support Bitcoin Core updates, which is also what Bitroot has been working hard to promote.
Bitcoin interest: an innovative automatic income mechanism
Bitroot introduces a revolutionary Bitcoin interest-earning mechanism that provides Bitcoin holders with a seamless and efficient way to earn passive income. This innovative system integrates multiple leading financial platforms to provide users with unprecedented income opportunities.
Fund custody and basic interest
Bitroot cooperates with Binance cueff for fund custody to ensure the security and reliability of user assets. For the basic interest-bearing layer, Bitroot cooperates with well-known platforms such as Babylon and Solv to provide a stable and reliable source of income for Bitcoin.
Automatic staking and rebase mechanism
When users bridge their BTC to the Bitroot network, their BTC is automatically staked on the partner platform. Through an innovative automatic rebase mechanism, users’ BTC balances continue to accumulate earnings, which are reflected in their accounts in real time.
Secondary interest and LP opportunities
In addition to basic interest-earning, Bitroot also supports users to use their interest-earning LP (liquidity provision) tokens for secondary interest-earning on the financial layer, providing additional income opportunities.
Expected benefits and ecological impacts
Through this comprehensive interest-earning mechanism, users can obtain an estimated annualized return of 8%-15%. This mechanism has the potential to create up to tens of billions of dollars in value for the Bitcoin ecosystem each year, greatly enhancing the economic vitality and practicality of the entire Bitcoin network.
User-friendly design
The entire interest-earning process is completely seamless and automatic for users. Users only need to bridge BTC to the Bitroot network to start enjoying the benefits of automatic interest-earning without any additional operations or monitoring.
The future of Bitroot
As the Bitcoin ecosystem continues to grow and mature, Bitroot is laying a solid foundation for itself in the future BTC Staking market with its innovative technical solutions and comprehensive interest-earning strategies. By integrating diversified income models such as Staking, CeDeFi arbitrage, and DeFi applications, Bitroot not only meets the diverse needs of Bitcoin holders, but also injects new vitality into the entire ecosystem.
The advantages of Bitroot are mainly reflected in the following aspects:
1. Attach great importance to security and use MPC technology to ensure the safety of user assets.
2. Provide flexible and diverse income plans to meet the needs of users with different risk preferences.
3. Actively promote the upgrade of Bitcoin’s underlying architecture, such as the implementation of OP_CAT, to prepare for future technological innovations.
As more investors realize the investment opportunities in the Bitcoin ecosystem, Bitroot is expected to become a leader in this blue ocean. Its forward-looking strategic positioning will enable it to take the lead in future technological innovations. As the Bitcoin network gradually improves its functions, Bitroot’s solutions will become more decentralized and efficient, further consolidating its market position.
Looking ahead, as the BTC Staking market grows rapidly, Bitroot is expected to become a key player in this field. Its innovative technical solutions, comprehensive interest-earning strategies, and deep involvement in the development of the Bitcoin ecosystem will help Bitroot stand out in the highly competitive market. It is foreseeable that in the future BTC Staking landscape, Bitroot will become a shining star and contribute to the further development and innovation of the Bitcoin ecosystem.
This article is from a contribution and does not represent the views of BlockBeats
