Bitlayer, a Bitcoin layer-2 network supported by asset management giant Franklin Templeton, has launched its BitVM Bridge on mainnet, enabling secure Bitcoin integration into decentralized finance. The trust-minimized solution locks BTC on Bitcoin's mainnet via multi-signature addresses and issues Peg-BTC (YBTC) tokens on Bitlayer for DeFi use, eliminating reliance on centralized custodians.
The bridge leverages BitVM technology – using Bitcoin's scripting language and fraud proofs to verify transactions without altering Bitcoin's base layer. This allows disputes over malicious activity to be settled on Bitcoin's blockchain, enhancing security while maintaining decentralization. Bitlayer has secured partnerships with Sui, Base, and Arbitrum to expand cross-chain compatibility.
This development addresses Bitcoin's historical underutilization in DeFi, where $384 million is currently locked on Bitlayer. By unlocking Bitcoin's $1.2 trillion liquidity pool, the bridge enables new use cases like BTC collateralization and yield generation. It contrasts with competitors like BabylonChain ($5.2B TVL), Stacks, and BounceBit.
Security improvements respond to past bridge exploits like Wormhole's $321M hack, replacing multi-signature models with single-signer verification. The launch follows Bitcoin ecosystem advancements including the 2021 Taproot upgrade and 2023 Inscriptions, which expanded scripting capabilities and data embedding.