What is a Bitcoin L2 (or Layer)?

A Bitcoin Layer is a protocol that adds functionality to BTC the asset, pays Bitcoin for security, and/or is integrated with the Bitcoin protocol in some capacity. Examples of this include metaprotocols, L2s, and more.

Bitcoin L2s

Bitcoin L2s are separate protocols that extend utility to Bitcoin assets, while also ensuring that users are able to withdraw their assets from the L2 at any time of their choosing.

We use this definition for a "true L2" because it we believe that users should not have to tradeoff the custody of their assets for improved performance and/or utility. This doesn't discount that there are scaling protocols that don't enable unilateral exit.

Currently, the only two protocols that enable this for users are the Lightning network and (possibly) statechains. Other protocols, like sidechains and rollups, currently have bridging limitations that do not see them fit within this criteria. However, proposed bridging protocols are an improvement over the status quo, and are creating a path towards more flexible L2 designs.

Still, we feel that we should analyze all of these protocols against one, holisitic framework.

Bitcoin Layers

Bitcoin Layers are separate, offchain protocols that extend utility for BTC the asset or pay fees to Bitcoin miners. These protocols include sovereign rollups, sidechains, and more.

These protocols are becoming increasingly more popular in the Bitcoin community due to limitations around current scaling models. They're also modeling their designs after scaling solutions in other ecosystems (e.g. Ethereum).