Meet the Bitcoin L2 Ecosystem

Citrea: Zero-Knowledge Rollups for Bitcoin

Citrea is one of the first projects to implement a zero-knowledge rollup (ZK-rollup) on Bitcoin. Unlike traditional sidechains, Citrea uses validity proofs to confirm the correctness of off-chain computations before publishing succinct proofs on-chain. In doing so, it achieves scalable transaction throughput and finality guarantees without relying on fraud proofs or centralized sequencers. Built by Chainway Labs, Citrea launched its testnet in early 2024 and continues to evolve with community input and open-source contributions.

What distinguishes Citrea is its use of a decentralized bridge that locks BTC on the main chain and enables trust-minimized movement of value into the Layer-2. Because the bridge is governed by smart contracts using BitVMX-compatible logic, Citrea avoids the pitfalls of federated custodianship. This enables users to participate in lending, trading, and liquidity provision without ever giving up control of their native BTC. The use of ZKPs further ensures that any computation, no matter how complex, can be verified for correctness in a single transaction on Bitcoin.

Citrea also supports compatibility with Ethereum smart contracts through zkEVM translation, allowing for a hybrid composability model. This opens the door for developers familiar with Solidity to deploy dApps on Bitcoin-based infrastructure, extending Bitcoin’s reach into the broader DeFi and RWA ecosystems.

Bitlayer: Optimistic Execution Backed by Institutions

Bitlayer represents a different approach by leveraging optimistic rollup principles on top of Bitcoin. This project uses BitVMX to create an execution layer that verifies disputes rather than performing computation on-chain. Bitlayer launched with early institutional backing, including investment from Franklin Templeton, and aims to become the liquidity hub for Bitcoin-native DeFi.

Bitlayer relies on a vault contract that holds BTC on-chain while facilitating minting and burning of assets within the Layer-2 network. Transactions are executed off-chain and posted periodically to Bitcoin, where watchers and validators can contest invalid results using fraud proofs. By maintaining a relatively high dispute resolution period, Bitlayer ensures that honest actors have sufficient time to respond, thus maintaining the integrity of its Layer-2 system.

Because of its optimistic nature, Bitlayer can process a higher volume of transactions compared to ZK-based alternatives, making it more suitable for trading platforms, lending protocols, and liquidity aggregators. It also provides development support for RISC-V-based virtual machines, allowing developers to write smart contracts in general-purpose languages.

LayerBTC, Bitcoin Hyper, and Specialized Rollups

Beyond Citrea and Bitlayer, a number of emerging projects are developing Layer-2 solutions with specialized focus areas. LayerBTC is building infrastructure to support native BTC trading pairs and derivatives markets. Its design emphasizes high-frequency trading, minimal latency, and composability with Ordinals and Bitcoin NFTs. Although still in its early stages, LayerBTC represents a growing interest in merging the expressive potential of Bitcoin metadata (enabled via Ordinals) with DeFi primitives.

Bitcoin Hyper is exploring the use of BitVMX for gaming, digital identity, and peer-to-peer credit. Unlike Citrea or Bitlayer, which prioritize financial applications, Bitcoin Hyper focuses on programmable digital experiences that leverage native BTC for in-game transactions, on-chain reputation, and decentralized identity management. It operates as a modular stack, integrating data availability layers, decentralized storage, and verifiable randomness.

Some rollups are also experimenting with combining BitVMX with alternative execution environments such as WebAssembly (WASM) or EVM compatibility layers. These hybrid systems aim to attract developers from other ecosystems without compromising Bitcoin-native settlement and dispute resolution.

Design Patterns and Architecture Models

Each Bitcoin Layer-2 project employs a different architecture depending on its target use case, risk profile, and user base. ZK-rollups like Citrea prioritize correctness and cryptographic guarantees, making them ideal for long-term asset holding and enterprise-level compliance. Optimistic rollups like Bitlayer are more throughput-optimized, suitable for consumer-facing DeFi applications and composable financial tools.

Sidechains continue to exist but are increasingly viewed as transitional infrastructure. Projects like RSK and Liquid pioneered the concept of Bitcoin smart contracts through federated multi-signature models. However, their reliance on trusted signers and permissioned validators has limited their adoption among users seeking decentralized alternatives. BitVMX-based systems reduce this dependency by embedding security directly into Bitcoin’s on-chain dispute mechanisms.

A key architectural distinction among Layer-2s is their approach to bridging. In older models, bridges were external systems managed by multi-sig groups or centralized oracles. In BitVMX-enabled rollups, bridges are just dispute-resolved programs governed by verifiable execution. This shift reduces the attack surface and aligns bridge security with Bitcoin’s own validation logic.

Cross-Chain Potential and Composability

Bitcoin-native Layer-2s are not limited to the Bitcoin ecosystem. Some projects are integrating cross-chain communication protocols to support assets and dApps from other blockchains. For instance, bridging Bitcoin Ordinals to Cardano or Ethereum-based real-world assets becomes feasible through BitVMX-based communication bridges. These systems allow for the construction of multi-chain applications that settle in native BTC but interact with external execution environments.

Composability remains an open challenge. Because Bitcoin does not natively support synchronous contract calls, cross-contract composability must be emulated through asynchronous messaging and batched execution. Despite this limitation, tools like BitVMX provide mechanisms for state verification across chains, enabling developers to coordinate actions between different smart contracts on different rollups or L1s.