Countdown to Bitcoin Halving: A Feast of Opportunities in the Bitcoin Ecosystem

Amidst the overall market's sluggish phase, there's heightened interest in tokens related to the Bitcoin ecosystem, demonstrating relative strength. As the Bitcoin halving countdown begins, which segments and tracks within the Bitcoin ecosystem deserve attention? Besides BCH, which halving-themed coins should we watch? What major upgrades are expected for Inscriptions and Runes post-halving? What key developments are anticipated in the Bitcoin Layer 2 ecosystem?

Halving-Themed Coins Stir Interest, Ushering in a Bull Market Feast

With the approaching Bitcoin halving, several halving-themed coins are gaining market attention, with BCH experiencing significant growth following its April 4 halving.

As detailed on gitlab.com, BCH is set for its next upgrade on May 15 this year. This upgrade will implement the CHIP 2023-04 Adaptive Blocksize Limit Algorithm, aimed at reducing social attacks on BCH and saving costs for all network participants by auto-adjusting the block size limit based on the exponential moving average size of previous blocks.

Other notable halvings include BSV on April 14, ETC on June 7, DASH on July 10, ZEC on November 22, and ZEN on December 11.

Runes Challenges BRC20 Post-Halving

Both BRC20 and Runes protocols, based on the Ordinals protocol, are homogenized token distribution protocols. BRC20 protocol has produced notable tokens like ORDI and SATS since its inception. However, it has faced challenges, including a congested Bitcoin mempool and high gas fees due to excessive UTXO sets stored on-chain, hampering the Bitcoin ecosystem's normal operation.

To address these issues, the more streamlined Runes protocol announces the official launch of the RUNE protocol based on the UTXO model post-halving. Different from BRC20, Runes maintains all rune balances within unspent UTXOs, effectively solving the problem of growing useless UTXOs. It also ensures compatibility with the Lightning Network and reduces dependency on off-chain centralized indexes, enhancing security. Technically, Runes holds clear advantages over the BRC20 protocol.

Interestingly, the BRC20 protocol is also gearing up for an upgrade around Runes' launch. Founder domo has outlined the update in documentation, including a self-issuing mechanism, modified inscription deployments, the adoption of 5-byte codes, and consensus building on the destruction of BRC-20 assets. Activated at block height 837090, the introduction of self-issuing allows deployers complete control over token distribution, with initial enthusiasts driving gas costs to thousands of dollars.

The public competition between Inscriptions and Runes has reignited market interest in the Bitcoin ecosystem. Casey even stated on social media: "If the Rune ecosystem doesn't reach a market cap of 1 billion dollars within a month of its release, I'll commit harakiri."

Bitcoin Layer 2 Gains Momentum Post-Halving

With the Bitcoin halving, the Layer 2 ecosystem, which has recently garnered significant attention, is poised to unveil major developments. Unlike Inscriptions and Runes, Bitcoin Layer 2 solutions, compatible with EVM, unlock more application scenarios. Let's spotlight some noteworthy Bitcoin Layer 2 projects.

Merlin Chain – Unlocking Staked Assets

On February 28, Merlin Chain conducted the Merlin's Seal staking event, allowing users to accumulate M points through asset staking to earn governance tokens $MERL, accounting for 20% of the total supply. Merlin Chain announced the official launch of M-Token on March 19. Staked assets from Merlin's Seal are expected to unlock in April, allowing users to exchange M-Tokens for their original assets on a 1:1 basis.

Stacks – Nakamoto Upgrade

Stacks, a smart contract layer on Bitcoin, went live initially in 2021, marking one of the first Layer 2 projects in the Bitcoin ecosystem. Stacks publicly launched the Nakamoto testnet on March 26, with the Stacks Nakamoto upgrade set to roll out between April 15-29.

B² Network – Mainnet Launch

B² Network, a Layer 2 solution on Bitcoin, leverages zero-knowledge proofs committed to the Bitcoin network, allowing challengers to initiate fraud proofs for security. Reportedly, B²'s mainnet will launch in April.

BounceBit – Mainnet Debut

BounceBit, a DeFi solution designed for the Bitcoin ecosystem, is powered by AUCTION and based on BTCB. This strategy focuses on BTCB, a BEP 2/BEP 20 asset pegged and locked on the Bitcoin blockchain. BounceBit plans to launch its mainnet on April 23, followed by an airdrop in May and the opening of BounceBit point exchange and asset withdrawal functionalities.

Conclusion

Following the approval of Bitcoin ETFs and the influx of traditional financial capital into Bitcoin, coupled with the maturity of Layer 2 technologies, many projects are migrating to the Bitcoin ecosystem, unlocking more application scenarios. Driven by capital influx and technological innovation, the Bitcoin ecosystem is thriving, showcasing sustainable development unlike previous market cycles. Its ecosystem concept merits continuous attention.