5 Bitcoin Sidechains in 2024: What Are They Even For?
When there are limitations with some type of technology, other solutions often come into play. For example, if a computer needs to cope with more data or to process more tasks simultaneously, the user can add more RAM. In the case of Bitcoin, sidechains can expand the Network’s capabilities and use cases.
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Bitcoin sidechains operate as independent chains, connected to a main network typically through a two-way peg. The peg acts like a bridge between the main chain and the sidechain, allowing users to transfer assets between the two.
Sidechains offload some computation of the main network, improving its speed and lowering costs.
Apart from improved performance, sidechains support smart contracts, enabling developers to create decentralized applications on Bitcoin.
Typically, Bitcoin sidechains are compatible with Ethereum, which means developers can deploy Ethereum smart contracts on the Bitcoin Network. Protocols can interact with each other and other blockchains via cross-chain solutions.
Next, we’ll mention 5 popular Bitcoin sidechains in 2024 to see what they offer and how they operate.
1. Core Chain: First to Enable Non-Custodial Bitcoin Staking
Core Chain. Source: coredao.org
Core is currently the largest Bitcoin sidechain, with a total value locked (TVL) of over $446 million, according to DefiLlama. The platform was launched on the mainnet in January 2023 and has a native coin CORE, which is used for payments, staking, governance, and rewards. CORE token holders can stake their tokens and participate in the network governance through the Core DAO.
Core’s main features are:
- Non-custodial Bitcoin staking: As the Bitcoin Network doesn’t support direct staking, users need to deposit their coins in other platforms, get wrapped BTC and then participate in staking. Through Core, BTC holders can directly stake their coins on the mainnet, having full control and not converting their tokens into wBTC. Dual staking of BTC and Core coins is also possible.
- Satoshi Plus consensus: This mechanism combines the benefits of Delegated Proof of Work and Delegated Proof of Stake to provide security and flexibility.
2. BSquared (B² Network): The First Data Availability Layer for Bitcoin
B² Network. Source: bsquared.network
The B² Network is among the youngest Bitcoin sidechains, launched on the mainnet on April 7, 2024. Currently, it has a TVL of over $112 million.
The platform has its native B² token used for staking rewards, network fees, and more. Users can earn the token through the B² Buzz program by depositing cryptocurrencies from Bitcoin, Ethereum, BNB Chain, and Polygon.
The main focus of the B² Network is practicality, and to achieve it, the network uses a Zero-Knowledge proof verification mechanism as a scaling solution.
BSquared’s main features are:
- Data Availability Layer: This layer ensures that data is stored and accessible to all network participants without delay. There are different data availability networks on Ethereum, and B² brings this functionality to Bitcoin, too.
- ZK-Rollup Technology: B² uses ZK rollups to speed up Bitcoin's transaction verification process. By taking a part of computations off-chain, rollups increase Bitcoin’s speed and reduce costs.
3. Bitlayer – First to Use BitVM Technology to Scale Bitcoin
Bitlayer. Source: bitlayer.org
Like B², Bitlayer was launched in April 2024, although a bit later, on the 15th. It’s based on the concept of the Bitcoin Virtual Machine and zero-knowledge proofs to fully inherit Bitcoin’s security while maximizing flexibility. For network operations, Bitlayer uses Bitcoin as its native cryptocurrency. Currently, the platform is the second-largest Bitcoin sidechain, with a TVL above $390 million.
Bitlayer has received strong support from investors. In July 2024, the startup raised $11 M in Series A funding from companies like Franklin Templeton and ABCDE.Bitlayer’s main features are:
- OpVM Verification Layer: This upcoming feature helps blockchain apps finalize (confirm transactions) on the Bitcoin Network while providing security, low gas costs, and faster speeds.
- Communication between Different Blockchains: Bitlayer allows users to make transactions between different blockchains due to its support for bridging solutions.
4. RootStock – The First Bitcoin Sidechain With Smart Contract Functionality
RootStock: Source. rootstock.io
Launched in 2018, Rootstock (RSK) is the pioneer among Bitcoin sidechains. It ranks third by TVL, with over $177 million.
Rootstock uses Bitcoin as its native coin to reward miners and process gas fees. Moving to RSK from the mainnet, the coins are converted into RBTC.
In September 2024, Rootstock launched its own DAO, where users can stake RIF tokens to take part in the protocol governance. RIF is also used for governance and payments in the Rootstock Infrastructure Framework, which provides tools for developers.
Rootstock’s main features are:
- Merged mining: The technology allows the mining of Bitcoin and RSK chains simultaneously and receives rewards in both BTC and RBTC.
- PowPeg Bridge: RootStock’s two-way bridge to Bitcoin, called PowPeg enables moving BTC to RBTC and vice versa through native and fast modes.
5. Merlin
Merlin Chain: Source. merlinchain.io
Merlin Chain supports the development of various decentralized apps: games, assets, DeFi protocols, metaverse projects, and more. It was launched on the mainnet in February 2024, and the native MERL token went live in April 2024. MERL is used for governance, staking, transaction fees and other network operations. Merlin Chain uses decentralized oracles, ZK rollups and security measures to ensure EVM compatibility, transparency, scalability and low costs. Merlin’s TVL is above $150 M.
Merlin’s main features are:
- BRC-420, BRC-20 and other standards: This supports the creation of different types of Bitcoin-native virtual assets.
- ZK Rollups: Through the technology, Merlin Chain batches transactions and reduces data size, increasing scalability.
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