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name: bitcoin-l2-bitlayer description: | Bitlayer: Bitcoin L2 with ZK proof system, BTC staking, EVM compatibility. Early BTCFi entrant (2024); TVL down ~99.9% from peak as of September 2026. USE WHEN: evaluating Bitlayer for deployment, BTC staking products. allowed-tools: Read, Grep, Glob

Bitlayer

Bitcoin L2 with focus on BTC staking for yield, plus EVM smart contracts.

Architecture

• ZK rollup with state commitments to Bitcoin.
• EVM compatibility for Solidity contracts.
• BTC staking — bridged BTC earns yield via Bitlayer's protocols.
• Federation peg (planned BitVM upgrade).

Position

Among the "BTCFi" Bitcoin L2s competing on yield products, but the TVL has collapsed. DefiLlama chain TVL peaked at ~$406.9M on 17 December 2024, was ~$361.2M on 1 January 2025, ~$2.98M on 1 January 2026 and ~$463k on 16 September 2026 — a ~99.9% drawdown from peak. The contraction is sector-wide rather than Bitlayer-specific (Merlin and BSquared fell on the same curve), but size any deployment against the current figure, not the 2024 headline numbers.

Use cases

• BTC staking for yield.
• DeFi protocols (lending, AMMs).
• Bridge integrations to Ethereum L2s.

Limitations

• Federation trust until BitVM bridge.
• Yield sources sometimes unclear / require careful audit.

See also

• bsquared/SKILL.md
• merlin/SKILL.md
• babylon/SKILL.md
• citrea/SKILL.md