The Web3 ecosystem has evolved into a multi-layered and multi-track competitive landscape, encompassing core domains such as the Bitcoin ecosystem, infrastructure, NFTs, Meme coins, RWA (Real-World Assets), and DApp applications.

I. Introduction to the BTC Ecosystem

The Bitcoin ecosystem revolves around asset issuance protocols and scaling solutions, fostering a diversified competitive environment. In the asset issuance space, BRC20 holds a dominant position due to its first-mover advantage but faces challenges such as dust attacks and high gas fees. Runes, with its innovative UTXO model, has rapidly emerged as a foundational DeFi infrastructure by addressing these technical bottlenecks. Taproot Assets, deeply integrated with the Lightning Network, opens up new off-chain asset issuance scenarios. Meanwhile, BRC420, with its modular recursive features, drives innovation in the metaverse and blockchain gaming.

Scaling solutions exhibit a trend of "technological divergence" alongside "ecological synergy": The Lightning Network solidifies its position as the payment leader, with potential to transcend functional boundaries upon integrating asset protocols. Merlin Chain achieves explosive TVL growth through community-driven dual mining mechanisms. BEVM and BitVM lead technological originality with fully decentralized cross-chain capabilities and trustless interactions, respectively.

The competitive landscape revolves around two major technical camps: UTXO-native (e.g., Runes, Lightning Network) emphasizes security and native Bitcoin compatibility but faces challenges in development tools. EVM-compatible (e.g., BEVM, Stacks) leverages Ethereum's ecological momentum but is constrained by cross-chain centralization debates. Modular protocols, cross-chain interoperability, and regulatory variables will shape the future evolution of the ecosystem. BRC420 may usher in the era of Bitcoin application chains, while BitVM could drive multi-chain DeFi integration. Regulatory rulings by the SEC and the entry of exchange Layer2s may reshape the industry landscape. Risks include technological maturity, liquidity fragmentation, and geopolitical policies.

(I-1) Asset Issuance Protocols

1. Ordinals (BRC20)

• Technical Features: Enables native digital asset issuance by numbering Bitcoin's smallest unit, the satoshi, and attaching arbitrary content (inscriptions). Features pure on-chain storage and immutability.

• Representative Projects:

  • ordi: The first BRC20 token, with experimental symbolic significance outweighing functionality, accounting for over 50% of BRC20's total market capitalization.

  • sats: A token priced in satoshis, promoting micro-payments in Bitcoin.

• Limitations: Relies on off-chain indexers, and the UTXO dust problem causes network congestion.

1. Runes

• Innovation Value: Proposed by Ordinals' founder Casey, Runes combines OP_RETURN opcodes and the UTXO model to solve BRC20's dust problem, supporting asset splitting and unified on-chain management.

• Technical Breakthroughs:

  • Asset transfers are automatically completed through UTXO splitting, avoiding ARC20's "burn" risk.

  • Compatible with Ordinals protocols, enabling a unified FT/NFT issuance framework.

• Market Impact: After launching on the mainnet post-halving in 2024, Runes drained liquidity from protocols like BRC20 but did not fully replace them. For instance, RunesLend, a lending platform based on Runes, allows users to borrow and lend using Runes assets as collateral, automating matchmaking between borrowers and lenders through smart contracts, setting interest rates and repayment terms, effectively utilizing Runes' asset splitting and on-chain management capabilities to propel Bitcoin DeFi.

1. Taproot Assets

• Positioning: The asset issuance layer of the Lightning Network, supporting the issuance of stablecoins and other assets within Lightning Network channels, enhancing off-chain transaction efficiency.

• Progress: The mainnet is open and is gradually deepening integration with the Lightning Network to jointly construct a closed-loop system for "payments + asset circulation."

1. Atomicals (ARC20)

• Technical Features: A UTXO-based colored coin model, achieving decentralized minting through PoW mining, with high recognition from the technical community.

• Issues: Relies on segregated witness to store data, with flaws in token splitting functionality, resulting in permanent loss of some assets due to operational errors.

1. BRC420

• Innovation Direction: Modular recursive combinations of inscriptions, supporting metaverse asset formats and on-chain royalty agreements, expanding the functional boundaries of Ordinals.

• Case Study: The RCMS protocol enables multi-inscription nesting, driving complex on-chain applications such as game item synthesis.

(I-2) Scaling Solutions & Computational Layers

1. Sidechains & Scaling Technologies

• Rootstock (RSK)

  • A long-standing EVM-compatible sidechain, sharing Bitcoin's hashing power through merge mining, but the centralized bridging mechanism (sBTC) is controversial.

  • Current TVL of approximately $300 million, focusing on DeFi scenarios.

• Stacks

  • Introduces sBTC for cross-chain Bitcoin assets, supporting finality settlement after the Nakamoto upgrade. Its ecosystem includes DEXs and lending protocols.

  • Market capitalization surged over 300% in 2024, becoming a representative of the smart contract layer.

• BitVM

  • A Rollup-like scheme based on fraud proofs, enabling off-chain computations through logical gate verification. The technology is still in early validation stages.

  • Potential scenarios: Cross-chain bridges and state channel optimization.

  • Future Trends: If BitVM's fraud proof technology is successfully validated, it will facilitate trustless cross-chain interactions between Bitcoin and other blockchains (e.g., Ethereum, Solana). This could herald a new era of multi-chain DeFi integration, allowing native Bitcoin assets to directly participate in liquidity mining on Ethereum or engage in high-speed transactions on Solana, thereby enhancing asset utilization and market liquidity.

• BEVM

  • A fully decentralized Layer2, using Taproot multi-signatures and MAST scripts for BTC cross-chain capabilities, compatible with the EVM ecosystem.

  • Technical Highlights: Significantly reduces third-party custody risks, with on-chain applications initially covering DEXs, stablecoins, and other fields.

• Lightning Network

(I-3) Competitive Landscape & Trends

1. Market Landscape: Multi-dimensional Gameplay Between Protocol Standards & Scaling Solutions

(1) Asset Issuance Protocols: Accelerated Technological Iteration, Dual Hegemony Between BRC20 & Runes

• BRC20: Still dominates due to first-mover advantage but faces technological bottlenecks:

  • Market share of approximately 55%, with leading tokens like ordi and sats contributing over 70% of liquidity.

  • Dust attacks and high gas fees remain unresolved, prompting some developers to shift to the Runes ecosystem.

• Runes: Rapid rise driven by technological innovation:

  • Within three months of mainnet launch, protocol market capitalization rose to 30%, with a 300% increase in the number of ecosystem projects.

  • Asset splitting functionality based on the UTXO model has made it the preferred underlying protocol for Bitcoin DeFi (e.g., lending, DEXs).

• Divergent Development of Other Protocols:

  • Taproot Assets is deeply integrated with the Lightning Network, already supporting stablecoin issuance tests.

  • BRC420, with its modular characteristics, has become core infrastructure for blockchain gaming and the metaverse, with TVL exceeding $800 million.

(2) Scaling Solutions: Ecological Synergy & Technological Originality as Key Differentiators

• Lightning Network: The absolute leader in payment scenarios but faces functional limitations:

  • Over 60,000 nodes, with daily transaction volumes reaching $120 million.

  • Potential to initiate a new cycle of "payments + asset circulation" upon integrating Taproot Assets in 2025.

• Merlin Chain: An explosive sample of community-driven Layer2s:

  • TVL exceeds $25 billion, attracting miners through the dual mining mechanism. Cross-chain collateral of BRC420 assets accounts for 40%.

  • Joint exchange activities like "Inscription Mining + Trading Rebates" have added over 2 million new addresses in a single week.

• BEVM & BitVM: Technological originality drives developer migration:

  • BEVM's fully decentralized cross-chain solution has attracted over 500 DApp deployments.

  • BitVM is undergoing validation network testing, with successful outcomes potentially enabling trustless cross-chain interactions.

1. Technological Routes: Paradigm Conflict Between UTXO-Native & EVM-Compatible Camps

(1) UTXO-Native Camp (Runes, Lightning Network)

• Advantages:

  • Deeply integrated with Bitcoin's underlying infrastructure, achieving industry-leading security.

  • Asset issuance does not rely on external protocols, aligning with Bitcoin's minimalist philosophy.

• Challenges:

  • Lack of development tools, limiting smart contract functionality.

  • Severe ecological fragmentation, increasing cross-protocol interaction costs.

(2) EVM-Compatible Camp (BEVM, Stacks)

• Advantages:

  • Leverages Ethereum's mature ecosystem, with top DeFi protocols like Uniswap and Aave already adapted.

  • Low learning curve for developers, supporting rapid deployment of complex DApps.

• Challenges:

  • Centralization debates surrounding cross-chain bridges.

  • Reliance on Bitcoin's mainnet settlement, with transaction confirmation delays impacting user experience.

1. Future Trends: Ecological Integration & Regulatory Variables Reshape the Landscape

(1) Modular Protocols Initiate the Era of "Bitcoin Application Chains"

• BRC420's recursive inscriptions support multi-chain nesting, with three blockchain games already enabling cross-chain item synthesis.

• Taproot Assets may integrate with the Lightning Network to create the first Bitcoin off-chain stablecoin.

(2) Cross-Chain Technological Breakthroughs Drive "Bitcoin DeFi 2.0"

• Upon successful validation, BitVM will enable Bitcoin L1 to directly invoke smart contracts on Solana and Ethereum.

• The TVL of Bitcoin staking derivatives (LST) exceeds $5 billion, with top protocols offering annualized returns of 18%.

(3) Regulatory & Market Variables Pose the Greatest Uncertainties

• The US SEC may rule on the security attributes of BRC20 tokens in H1 2025.

• Post-halving, Bitcoin miners' earnings decline, prompting top mining pools to accelerate the deployment of Layer2 node hosting services.

• Exchanges like Binance and OKX plan to launch their own Bitcoin Layer2s, potentially disrupting the existing ecological balance.

1. Risk Warnings

• Technological Risks: Cutting-edge solutions are still in early stages, with potential code vulnerabilities leading to asset losses.

• Liquidity Risks: Protocol standard differentiation results in capital dispersion, making it difficult for long-tail projects to survive.

• Geopolitical Risks: Enhanced crypto regulation post-US elections may hinder the compliance process in the Bitcoin ecosystem.

II. Comprehensive Analysis of Infrastructure

The current blockchain infrastructure presents three major trends: "security upgrades, performance iterations, and ecological differentiation." In identity management, custodial wallets are driven by compliance towards institutional-grade multi-signature solutions, while non-custodial wallets reconstruct user experiences through MPC technology and account abstraction (AA). ENS and Space ID compete for identity ecosystem entry points with multi-chain domains and credit systems. Data services are developing vertically: ChainLink and Pyth form a dual oligopoly in the oracle sector for "general data - high-frequency finance," while Filecoin and Arweave construct a storage layered ecosystem, with FVM smart contracts activating storage financialization scenarios.

Blockchain network performance competition has entered a new phase: Layer1s exhibit a triangular game between "Solana's performance breakthrough, TON's traffic dominance, and EVM chain compatibility counterattacks." Layer2s face a confrontation between ZK Rollup technological maturity and OP-ecosystem first-mover advantages. Cross-chain bridges resolve the contradiction between security and efficiency through zero-knowledge proofs and intent matching mechanisms. The competitive landscape highlights three trends: wallets evolving from asset tools to DApp aggregation entry points, data services establishing barriers around real-time capabilities and vertical integration, and infrastructure layers competing for developer ecosystems through modular designs. Risks include regulatory pressure on cross-chain protocol compliance, ZK technology centralization concerns, and ecological resource dissipation risks from EVM chain homogenization.

The Web3 ecosystem has evolved into a multi-layered and multi-track competitive landscape, encompassing core domains such as the Bitcoin ecosystem, infrastructure, NFTs, Meme coins, RWA (Real-World Assets), and DApp applications.

I. Introduction to the BTC Ecosystem

The Bitcoin ecosystem revolves around asset issuance protocols and scaling solutions, fostering a diversified competitive environment. In the asset issuance space, BRC20 holds a dominant position due to its first-mover advantage but faces challenges such as dust attacks and high gas fees. Runes, with its innovative UTXO model, has rapidly emerged as a foundational DeFi infrastructure by addressing these technical bottlenecks. Taproot Assets, deeply integrated with the Lightning Network, opens up new off-chain asset issuance scenarios. Meanwhile, BRC420, with its modular recursive features, drives innovation in the metaverse and blockchain gaming.

Scaling solutions exhibit a trend of "technological divergence" alongside "ecological synergy": The Lightning Network solidifies its position as the payment leader, with potential to transcend functional boundaries upon integrating asset protocols. Merlin Chain achieves explosive TVL growth through community-driven dual mining mechanisms. BEVM and BitVM lead technological originality with fully decentralized cross-chain capabilities and trustless interactions, respectively.

The competitive landscape revolves around two major technical camps: UTXO-native (e.g., Runes, Lightning Network) emphasizes security and native Bitcoin compatibility but faces challenges in development tools. EVM-compatible (e.g., BEVM, Stacks) leverages Ethereum's ecological momentum but is constrained by cross-chain centralization debates. Modular protocols, cross-chain interoperability, and regulatory variables will shape the future evolution of the ecosystem. BRC420 may usher in the era of Bitcoin application chains, while BitVM could drive multi-chain DeFi integration. Regulatory rulings by the SEC and the entry of exchange Layer2s may reshape the industry landscape. Risks include technological maturity, liquidity fragmentation, and geopolitical policies.

(I-1) Asset Issuance Protocols

1. Ordinals (BRC20)

• Technical Features: Enables native digital asset issuance by numbering Bitcoin's smallest unit, the satoshi, and attaching arbitrary content (inscriptions). Features pure on-chain storage and immutability.

• Representative Projects:

  • ordi: The first BRC20 token, with experimental symbolic significance outweighing functionality, accounting for over 50% of BRC20's total market capitalization.

  • sats: A token priced in satoshis, promoting micro-payments in Bitcoin.

• Limitations: Relies on off-chain indexers, and the UTXO dust problem causes network congestion.

1. Runes

• Innovation Value: Proposed by Ordinals' founder Casey, Runes combines OP_RETURN opcodes and the UTXO model to solve BRC20's dust problem, supporting asset splitting and unified on-chain management.

• Technical Breakthroughs:

  • Asset transfers are automatically completed through UTXO splitting, avoiding ARC20's "burn" risk.

  • Compatible with Ordinals protocols, enabling a unified FT/NFT issuance framework.

• Market Impact: After launching on the mainnet post-halving in 2024, Runes drained liquidity from protocols like BRC20 but did not fully replace them. For instance, RunesLend, a lending platform based on Runes, allows users to borrow and lend using Runes assets as collateral, automating matchmaking between borrowers and lenders through smart contracts, setting interest rates and repayment terms, effectively utilizing Runes' asset splitting and on-chain management capabilities to propel Bitcoin DeFi.

1. Taproot Assets

• Positioning: The asset issuance layer of the Lightning Network, supporting the issuance of stablecoins and other assets within Lightning Network channels, enhancing off-chain transaction efficiency.

• Progress: The mainnet is open and is gradually deepening integration with the Lightning Network to jointly construct a closed-loop system for "payments + asset circulation."

1. Atomicals (ARC20)

• Technical Features: A UTXO-based colored coin model, achieving decentralized minting through PoW mining, with high recognition from the technical community.

• Issues: Relies on segregated witness to store data, with flaws in token splitting functionality, resulting in permanent loss of some assets due to operational errors.

1. BRC420

• Innovation Direction: Modular recursive combinations of inscriptions, supporting metaverse asset formats and on-chain royalty agreements, expanding the functional boundaries of Ordinals.

• Case Study: The RCMS protocol enables multi-inscription nesting, driving complex on-chain applications such as game item synthesis.

(I-2) Scaling Solutions & Computational Layers

1. Sidechains & Scaling Technologies

• Rootstock (RSK)

  • A long-standing EVM-compatible sidechain, sharing Bitcoin's hashing power through merge mining, but the centralized bridging mechanism (sBTC) is controversial.

  • Current TVL of approximately $300 million, focusing on DeFi scenarios.

• Stacks

  • Introduces sBTC for cross-chain Bitcoin assets, supporting finality settlement after the Nakamoto upgrade. Its ecosystem includes DEXs and lending protocols.

  • Market capitalization surged over 300% in 2024, becoming a representative of the smart contract layer.

• BitVM

  • A Rollup-like scheme based on fraud proofs, enabling off-chain computations through logical gate verification. The technology is still in early validation stages.

  • Potential scenarios: Cross-chain bridges and state channel optimization.

  • Future Trends: If BitVM's fraud proof technology is successfully validated, it will facilitate trustless cross-chain interactions between Bitcoin and other blockchains (e.g., Ethereum, Solana). This could herald a new era of multi-chain DeFi integration, allowing native Bitcoin assets to directly participate in liquidity mining on Ethereum or engage in high-speed transactions on Solana, thereby enhancing asset utilization and market liquidity.

• BEVM

  • A fully decentralized Layer2, using Taproot multi-signatures and MAST scripts for BTC cross-chain capabilities, compatible with the EVM ecosystem.

  • Technical Highlights: Significantly reduces third-party custody risks, with on-chain applications initially covering DEXs, stablecoins, and other fields.

• Lightning Network

(I-3) Competitive Landscape & Trends

1. Market Landscape: Multi-dimensional Gameplay Between Protocol Standards & Scaling Solutions

(1) Asset Issuance Protocols: Accelerated Technological Iteration, Dual Hegemony Between BRC20 & Runes

• BRC20: Still dominates due to first-mover advantage but faces technological bottlenecks:

  • Market share of approximately 55%, with leading tokens like ordi and sats contributing over 70% of liquidity.

  • Dust attacks and high gas fees remain unresolved, prompting some developers to shift to the Runes ecosystem.

• Runes: Rapid rise driven by technological innovation:

  • Within three months of mainnet launch, protocol market capitalization rose to 30%, with a 300% increase in the number of ecosystem projects.

  • Asset splitting functionality based on the UTXO model has made it the preferred underlying protocol for Bitcoin DeFi (e.g., lending, DEXs).

• Divergent Development of Other Protocols:

  • Taproot Assets is deeply integrated with the Lightning Network, already supporting stablecoin issuance tests.

  • BRC420, with its modular characteristics, has become core infrastructure for blockchain gaming and the metaverse, with TVL exceeding $800 million.

(2) Scaling Solutions: Ecological Synergy & Technological Originality as Key Differentiators

• Lightning Network: The absolute leader in payment scenarios but faces functional limitations:

  • Over 60,000 nodes, with daily transaction volumes reaching $120 million.

  • Potential to initiate a new cycle of "payments + asset circulation" upon integrating Taproot Assets in 2025.

• Merlin Chain: An explosive sample of community-driven Layer2s:

  • TVL exceeds $25 billion, attracting miners through the dual mining mechanism. Cross-chain collateral of BRC420 assets accounts for 40%.

  • Joint exchange activities like "Inscription Mining + Trading Rebates" have added over 2 million new addresses in a single week.

• BEVM & BitVM: Technological originality drives developer migration:

  • BEVM's fully decentralized cross-chain solution has attracted over 500 DApp deployments.

  • BitVM is undergoing validation network testing, with successful outcomes potentially enabling trustless cross-chain interactions.

1. Technological Routes: Paradigm Conflict Between UTXO-Native & EVM-Compatible Camps

(1) UTXO-Native Camp (Runes, Lightning Network)

• Advantages:

  • Deeply integrated with Bitcoin's underlying infrastructure, achieving industry-leading security.

  • Asset issuance does not rely on external protocols, aligning with Bitcoin's minimalist philosophy.

• Challenges:

  • Lack of development tools, limiting smart contract functionality.

  • Severe ecological fragmentation, increasing cross-protocol interaction costs.

(2) EVM-Compatible Camp (BEVM, Stacks)

• Advantages:

  • Leverages Ethereum's mature ecosystem, with top DeFi protocols like Uniswap and Aave already adapted.

  • Low learning curve for developers, supporting rapid deployment of complex DApps.

• Challenges:

  • Centralization debates surrounding cross-chain bridges.

  • Reliance on Bitcoin's mainnet settlement, with transaction confirmation delays impacting user experience.

1. Future Trends: Ecological Integration & Regulatory Variables Reshape the Landscape

(1) Modular Protocols Initiate the Era of "Bitcoin Application Chains"

• BRC420's recursive inscriptions support multi-chain nesting, with three blockchain games already enabling cross-chain item synthesis.

• Taproot Assets may integrate with the Lightning Network to create the first Bitcoin off-chain stablecoin.

(2) Cross-Chain Technological Breakthroughs Drive "Bitcoin DeFi 2.0"

• Upon successful validation, BitVM will enable Bitcoin L1 to directly invoke smart contracts on Solana and Ethereum.

• The TVL of Bitcoin staking derivatives (LST) exceeds $5 billion, with top protocols offering annualized returns of 18%.

(3) Regulatory & Market Variables Pose the Greatest Uncertainties

• The US SEC may rule on the security attributes of BRC20 tokens in H1 2025.

• Post-halving, Bitcoin miners' earnings decline, prompting top mining pools to accelerate the deployment of Layer2 node hosting services.

• Exchanges like Binance and OKX plan to launch their own Bitcoin Layer2s, potentially disrupting the existing ecological balance.

1. Risk Warnings

• Technological Risks: Cutting-edge solutions are still in early stages, with potential code vulnerabilities leading to asset losses.

• Liquidity Risks: Protocol standard differentiation results in capital dispersion, making it difficult for long-tail projects to survive.

• Geopolitical Risks: Enhanced crypto regulation post-US elections may hinder the compliance process in the Bitcoin ecosystem.

II. Comprehensive Analysis of Infrastructure

The current blockchain infrastructure presents three major trends: "security upgrades, performance iterations, and ecological differentiation." In identity management, custodial wallets are driven by compliance towards institutional-grade multi-signature solutions, while non-custodial wallets reconstruct user experiences through MPC technology and account abstraction (AA). ENS and Space ID compete for identity ecosystem entry points with multi-chain domains and credit systems. Data services are developing vertically: ChainLink and Pyth form a dual oligopoly in the oracle sector for "general data - high-frequency finance," while Filecoin and Arweave construct a storage layered ecosystem, with FVM smart contracts activating storage financialization scenarios.

Blockchain network performance competition has entered a new phase: Layer1s exhibit a triangular game between "Solana's performance breakthrough, TON's traffic dominance, and EVM chain compatibility counterattacks." Layer2s face a confrontation between ZK Rollup technological maturity and OP-ecosystem first-mover advantages. Cross-chain bridges resolve the contradiction between security and efficiency through zero-knowledge proofs and intent matching mechanisms. The competitive landscape highlights three trends: wallets evolving from asset tools to DApp aggregation entry points, data services establishing barriers around real-time capabilities and vertical integration, and infrastructure layers competing for developer ecosystems through modular designs. Risks include regulatory pressure on cross-chain protocol compliance, ZK technology centralization concerns, and ecological resource dissipation risks from EVM chain homogenization.