Bitcoin Layer-2s Attract VC Funding Amid Rising Interest

Bitcoin Layer-2 (L2) solutions are attracting significant investment and gaining user attention. This growing traction suggests that the markets could be on the brink of a new narrative.

With ongoing development and investment in Bitcoin L2 technologies, a new chapter in the Bitcoin story may unfold.

Bitcoin Layer-2s Keep Gaining Traction

According to recent report by Michael Novogratz’s Galaxy, Bitcoin Layer-2 projects collectively raised an impressive $94.6 million in the second quarter of 2024. This represents a substantial 174% increase quarter-over-quarter, with experts noting that at least 65 projects identify themselves as Bitcoin Layer-2.

Bitcoin Layer-2 solutions are protocols built on top of Bitcoin’s base layer to increase scalability and functionality. These solutions process transactions off the main blockchain, addressing limitations in transaction throughput, block confirmation time, and costs. They maintain the security of the Bitcoin network while enabling advanced features like complex smart contracts. As a result, Bitcoin’s utility expands in areas such as payments, DeFi, NFTs, and other markets.

Read more: A Beginner’s Guide to Layer-2 Scaling Solutions

Notable examples include Mezo, Bitlayer, and Avalon Labs, which won BNB Incubation Alliance Round 2 at Bitcoin 2024. Mezo completed its $7.5 million strategic funding round on July 26, led by Ledger Cathay Fund. This brought total funding for Mezo to $30 million following its April 2024 debut. Mezo is a Bitcoin L2 that lets HODLers earn yield.

Bitlayer, on the other hand, raised $11 million in its Series A funding round, led by Franklin Templeton.

“Franklin Templeton’s participation marks a notable milestone as Bitlayer becomes the first Bitcoin Layer 2 infrastructure project to secure strategic investment from an ETF-licensed institution,” Bitlayer said.

The notable uptick in funding highlights the growing confidence and support for scaling solutions.

L2s Could Fuel New BTC Bullish Wave

Meanwhile, the Lightning Network stands among the most popular Bitcoin L2s. Another one, Stacks (STX), advertises as “the leading Bitcoin L2 for smart contracts, applications, and DeFi. STX community approved the Nakamoto upgrade earlier in the year, making the network faster and with rapid block times.

“Bitcoin Layer-2 has been a neglected category in crypto for too long but this narrative is about to explode. Stacks Nakamoto upgrade is coming at the end of August and will unlock Bitcoin’s programmability. By enabling smart contracts and dApps to interact directly with Bitcoin through sBTC. Stacks opens up a new realm of possibilities for Bitcoin-based applications,” popular user Sakemate commented.

The increasing focus on scaling solutions suggests a potential shift in the narrative surrounding Bitcoin in 2024. With Bitcoin continuing to mature and adapt to the evolving demands of the digital economy, this new narrative could drive a bullish wave for asset’s price, potentially attracting more traders to the BTC chain and network.

Read more: Beginner’s Tutorial to Start Using the Lightning Network

The resultant strength in the BTC market could see capital rotate into Layer-2 tokens alike, including STX, Elastos (ELA), SatoshiVM (SVM), and BVM (BVM), putting them in the spotlight once again.

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