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In 2024, we saw a lot of interest around bridges, rollups and meta-protocols. Themes this year seem to point to payments, stables, and bringing BTC cross-chain. Here’s a round up of what we see as the key topics driving innovation around Bitcoin layers for 2025.
New here? The primary motivation of all Bitcoin layer projects is to extend the functionality of Bitcoin without losing the resilience and security guarantees that make Bitcoin so powerful in the first place. Check out our Beginner’s Guide to Bitcoin Layers for some helpful background.
New Opcodes and Protocol Upgrades Might Be Closer Than You Think
Bitcoin’s technical community is constantly discussing how to improve, strengthen, and upgrade Bitcoin. Most updates go under the radar (we recommend Bitcoin Optech’s Newsletter if you want to follow updates more closely), but for the last year, one topic has been gaining traction, and gaining that traction loudly: Bitcoin covenants.
Covenants refer to a category of possible upgrades that require adding new opcodes, or re-introducing previously deprecated opcodes. For context, “opcodes” are the basic operation functions of Bitcoin Script, and these new opcodes would enable conditional spending and more programmability at the Bitcoin base layer. So where do covenants stand today?
One covenant proposal has stood out as a clear frontrunner among core devs: a combination of BIP119 CTV and BIP348 CSFS, commonly referred to as CTV+CSFS. Compared to other proposals, CTV+CSFS is neither the most conservative nor the most aggressive in terms of the functionality it enables and potential risks it introduces, which is likely why it’s the frontrunner.
The popularity of CTV+CSFS shows up not only in the Covenants support wiki page, but also at technical conferences such as OPNEXT and Bitcoin++. The demand from builders (such as Ark Protocol and Lightning) as well as larger stakeholders (such as miners and institutions) is loud and clear: most people want a soft fork in order to enable both CTV and CSFS.
CTV+CSFS would address several meaningful pain points for Lightning that have inhibited its growth and adoption to date. These include things like channel rebalancing and liquidity management. Covenants, and another approach called Ark protocol could make managing channels and channel backups much easier. Ark protocol and covenants are synergistic (meaning they aren’t redundant so much as complementary, offering even greater improvements when implemented together).
Ark hinges on shared UTXOs - essentially when multiple parties need to agree in order to approve a transaction (yes, like a multisig). This technology isn’t new - Ark leverages battle-tested protocols like CoinJoin to create virtual UTXOs or “vTXOs” within a channel. Worth noting that Ark is still in development, meaning there isn’t yet a mainnet implementation, but exciting nonetheless.
While consensus around covenants is mounting, there’s still a long road ahead before something would hit Bitcoin mainnet. For a soft fork to take place, first there needs to be an activation plan, a signaling period where miners indicate their support. If over 90% of miners are in favor, then a block height is set for activating the fork. That being said, there’s a good chance that we’ll see a covenant-related soft fork as early as 2026.
With all this momentum behind CTV+CSFS, where does that leave other proposals, namely the wildly popular OP_CAT? While it’s unlikely that CAT gets activated alongside CTV+CSFS, there’s always the possibility that that opcode might be included in a future Bitcoin upgrade. Regardless, CAT enjoyoors will probably be just fine. Projects like Taproot Wizards (who have been a major advocate for OP_CAT) have a huge community, an ample treasury, and plenty of gigabrains on the team. Whatever they focus on, it promises to be magical, wacky and good for Bitcoin.
Stables Get Struck by Lightning
Lightning, one of the oldest projects scaling Bitcoin in the ecosystem has had a slew of beefy headlines recently, after a relatively quite 2024.
Stablecoin Giant Tether Announces USDT on Taproot Assets
Taproot Assets, first proposed in 2021, was meant to bring non-fungible and fungible tokens to Bitcoin’s favorite state channel. While there are over 180K taproot assets minted on Lightning today, the protocol has not captured the attention or imagination of the developer community to the same extent that metaprotocols like Ordinals and Runes have. That might be about to change.
At the Plan B conference this past January, Lightning Labs and Tether announced USDT support on Bitcoin and Lightning via the Taproot Asset protocol. Tether is the largest stablecoin issuer by market cap, and stablecoins are a critical and obvious component for digital payments.
Lightspark, the high-profile startup helmed by David Marcus of Diem fame, kicked off the Lightning stables frenzy last fall by announcing Spark, a Bitcoin L2 laser-focused on stablecoin support on Lightning.
Whether Lightning will be able to handle the increased demand or whether Bitcoin maxis are comfortable losing the fight for sat-denominated payments, are still open questions.
There are also several meaningful pain points for Lightning that have inhibited its growth and adoption to date. These include things like channel rebalancing and liquidity management. The good news is that improvements to the Bitcoin L1 like covenants or Ark Protocol could make managing channels and channel backups much easier.
Regardless, this stablecoin news is definitely good for bringing more users to Bitcoin.
Meta-Protocols Chase More Programmability
Meta-protocols are a category of projects that cleverly repurpose existing functions and features on Bitcoin to introduce new functionalities and use cases. Ordinals and Runes are the two main Bitcoin metaprotocols, both created by Casey Rodarmor. BRC-20s, a subset fungible token standard within Ordinals, was originally proposed by Domo Data. Ordinals are mostly used for NFTs on Bitcoin, and BRC-20s and Runes specifically focus on enabling fungible tokens.
Ordinals and Runes enjoyoors are hard at work finding ways to introduce more programmability into these token standards. Most folks agree that art, memecoins or fungible tokens on Bitcoin might struggle unless they can harness some promise of utility which requires more programmability at the L1 or better integrations with L2.
“Fungible tokens are [only] as useful as they are programmable, or potentially programmable.”
Red, cofounder of Lemon Drop and Bitcoin Layers, describes this as capturing the Threat of Utility. So what work is being done to make these metaprotocols more programmable?
On the Ordinals side, you have BRC2.0, an upgrade coming to BRC-20s introduced by Best In Slot. On the Runes side, people are buzzing about Alkanes or ProtoRunes, a project from the Oyl Wallet team.
Both approaches essentially require specialized indexers to interpret additional rulesets or compute smart contract logic - in the case of BRC2.0, an EVM compatible smart contract is inscribed, for Alkanes, it’s a g-zipped WASM file. These additional rulesets attempt to bring the type of smart contract programmability that users expect from blockchains like Stacks, Ethereum and Solana.
Regardless of all this programmability, the downside is you’re still moving at the cost, speed and scale of Bitcoin L1, which is to say expensive, slow and limited. Not great for degens slinging coins and making bags.
Trading, particularly for fungible tokens, demands a fantastic user experience if you want Bitcoin DeFi to flourish.
"Ultimately, every metaprotocol is destined to become a sovereign rollup, in pursuit of speed and user experience." - Bob Bodily, Founder of Bitcoin DEX ODIN•FUN
A hot take indeed! Or maybe these metaprotocols integrate directly with Stacks, Bitcoin’s leading L2, to seamlessly get the benefits of speed, UX, and programmability.
Bridges and Rollups Still Have a Lot to Prove
Bridges and rollups dominated the Bitcoin layers narrative in 2024. BitVM kicked off a flurry of technical debates around trust assumptions, honest minorities, unilateral exits and building better bridges for Bitcoin. Better bridges for Bitcoin unlock the possibility of Bitcoin rollups, specialized blockchains that depend on a basechain (in this case Bitcoin) for transaction validity and data availability. Bitcoin, with it’s limited script and virtual machine, cannot validate proofs from other blockchains, that is until BitVM proposed a novel way to perform arbitrary computations.
2024 also brought about major developments in Bitcoin projects like Babylon (which introduced Bitcoin staking with over $4B now staked in the protocol) and Stacks (which introduced its sBTC bridge while increasing security guarantees through Bitcoin finality - two things that rarely happen in tandem). Last month, Babylon launched their $BABY token, as a lead up to their next phase of product development. While the token launch had its fair share of bumps, it’s safe to say Bitcoin staking will continue to gain traction in 2025 as other teams like Core and Mezo grow their own staking solutions. sBTC recently enabled withdrawals, unlocking phase 2 of the larger sBTC rollout plan.
All of these developments sparked discussion around what a bridge actually is, and what a good bridge design looks like. At a high level, the main purpose of bridges is helping people carry their Bitcoin from the base layer, where use cases are limited by high fees, slow transaction times and lack of programmability, to other layers, where more programmability is possible but often at the cost of higher trust assumptions (whether trusting bridge operators, BTC custodians, the security and resilience of that other layer, etc).
Alongside the mainnet developments by Babylon and Stacks, in 2025 several teams are working on bridge implementations with BitVM, with mainnets expected to launch this summer. Citrea, Fiamma, Alpen Labs are all highly respected teams, each working on their own bridge and rollup implementations leveraging or inspired by BitVM’s designs.
One thing is to build a bridge, it’s another thing entirely to have people use it. For that you need liquidity and a vibrant DeFi ecosystem in place to see cross-chain value transfer really take off. So have we seen that in 2025?
Yes and no.
Yes in the sense that users have never had more options for BTC synthetic assets across a variety of chains. Coinbase launched cbBTC in September of 2024, and it’s since grown to a TVL of 43,900 BTC across Ethereum and Solana. That’s over one-third of the TVL of wBTC, the leading wrapped Bitcoin asset. sBTC, which launched in December 2024, has already eclipsed Rootstock with over 3,000 BTC TVL, and may soon pass Lightning once the minting hard cap is removed.
No in the sense that the total value of BTC locked across all BTC wrappers has not increased overall in the last year. The combined BTC supply in May 2024 was around 388K BTC, and today it sits slightly below that at 370K BTC.
The real question is whether these Bitcoin bridges, which represent novel breakthroughs in cryptography, can also deliver on user experience and gain mainstream adoption. In today’s Bitcoin landscape, users have the option of centralized solutions from trusted providers (think Coinbase’s cbBTC), trust-minimized solutions with distributed signer sets (think sBTC on Stacks) or a new crop of rollups and bridges. Regardless of the approach, users are looking for fast, easy, reliable ways to put their Bitcoin to work.
Conclusion
The Bitcoin layers ecosystem is evolving fast, and getting weirder, more creative, and more competitive along the way. Whether it’s new opcodes like CTV+CSFS, Lightning’s stablecoin-fueled comeback, programmable metaprotocols, or trust-minimized bridges, one thing is clear: Bitcoin builders are determined to realized Satoshi’s vision of programmable money.
While all this innovation is fun to geek out about, the challenge now is to translate these breakthroughs into a truly meaningful user experience, solving real problems and unlocking the next generation of finance. Bitcoin was invented to empower people to build, accumulate, and transfer value. Bitcoin layers are necessary to scale that vision to a billion people—making Bitcoin programmable and unstoppable.
Special thanks to Bob Bodily, Jacob Brown, Red Sheehan, and Charlie Spears for providing their time and insights to this piece.
