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In case you missed it, Bitcoin Season 2 released part of their Spring/Summer collection last week.
Among other things, Mezo, a “Bitcoin economic layer” has come out of stealth with a $21 million fundraising round. Alpen Labs announced $10.6 million in funding to start a native Bitcoin zero-knowledge infrastructure.
Another group of blockchain designers, including the folks at Starkware, got together and launched the L2O Consortium “to set standards for trustless and Layer 2 applications.”
Of course, no one knows what all this means, but it is provocative. It makes people go, capital foams and industry buzzes. Eight-figure seed rounds are being rolled out, and some very big company players are returning. Almost every day, a new layer is announced, or some “native Bitcoin” protocol you've never heard of announces that its users have locked up a million dollars worth of bitcoins in their “trustless” multisig protocol.
So it's going in a bull market, I guess. Interestingly, some of the people involved will admit that it feels more like performance art than legitimate engineering. Remember the Rick Owens catwalks? It's flashy, but who's going to wear this stuff?
Keep in mind that most of the new gadgets being proposed have yet to get their training wheels off wherever they are implemented. Rollups on Ethereum, for example, are still multi-sig dressed. Similarly, this new crop of Bitcoin-adjacent protocol appears to release content without products or “decentralization on the roadmap.” Underneath the layers of bland marketing and technical idiocy, it's hard to find a trust model that's much better than Liquid's simple and oft-maligned federated sidechain.
Forget the unilateral exit, most of the “layer 2s” offered today hardly qualify for the term under our arguably lax policy here at Bitcoin Magazine.
To make matters worse, playtest variants have crept into the design space despite Ethereum's dismal performance since its transition. Not surprisingly, the conversation has already turned to ponzinomics to start the speculative flywheel. Colloquially styled “dots”, a new symbolic artifact has entered the scene and is all the rage among the designer crowd. This new fad of liquidity farming requires users to deposit their bitcoins (and those of friends and family) somewhere in exchange for, you guessed it, returns.
This time they call it gamification. I think it's the height of cryptonihilism. Fast fashion has officially become Bitcoin!
Does the emperor have no clothes?
Speaking of catwalks and individuals dressed as clowns, the Taproot Wizards crew recently unleashed pandemonium on the would-be Layer 2 community by going to their most prized science project, BitVM.
My esteemed colleague Shinobi did a decent summary of the event. I won't bore you with the technical details, but of course the claims are still hotly contested to this day. The fate of at least a dozen new companies is at stake here, so you can imagine the smell when they were publicly announced to the fashion police.
Although I support the arguments of the assistants, we should probably wait to write BitVM's obituary. Jumping through liquidity hoops seems to be one of the pervasive trade-offs to be made when designing minimized trust protocols on top of Bitcoin. Lightning has given us incoming liquidity headaches for years. Proposals like Ark have been dismissed because of the huge UTXO operators they have to fund. Perhaps BitVM bridges can be designed to mitigate operators' initial liquidity requirements. At the very least, the problem probably isn't enough to make everyone drop everything and go home.
The unfortunate conclusion to this saga is that everyone involved comes off looking a bit buff. Despite claims to the contrary, some due diligence was clearly omitted. The issue could have been analyzed through a little more collective brain cells before posting and you can tell that all the targets felt pretty blindsided by the ad.
To tie it all together, the wizards have just come out with their derivative proposal. It's hard not to get the impression that this was a somewhat marketing-driven setup. Then again, they're grown men wearing wizard hats, what do you expect?
On the other hand, it's a valid problem and the response from the BitVM “team” wasn't exactly kind either. You would expect a thicker skin from researchers who have been around the block. Liberally banning people from a Telegram workgroup and taking the whole premise out of hand does not serve the interests of the community they are building for. They may disagree with the conclusions, but the obvious result is that the audience and interest in BitVM has grown beyond the small engineering circles where it was fostered. Many suggested that it was probably the first time the mechanism had communicated in an accessible way. It was a missed opportunity for its advocates to take advantage of this attention and direct their way if they thought the project was misrepresented.
Hopefully this is all just a failed dress rehearsal because I don't see how this is very inspiring for anyone seriously interested in contributing to this space.
A great ending
Of course, a circus show is not complete without the clown act.
The hottest protocol designer in town is getting ready to show off his latest line just in time for the halving this Friday. Runes, a protocol for fungible tokens, is probably the most anticipated drop since the Jordan 1s. As we speak, hundreds of users are syncing Bitcoin nodes for the first time in their lives in preparation for the festivities. Blockchain is expecting a record crowd for this event, so keep in mind that tickets can be expensive.
As for me, I probably just watch from my balcony in the comfort of my safe and ever-reliable Bitcoin jeans. Tick tock, next block.