The Future of Bitcoin L2s according to Vitalik

The Future of Bitcoin, according to Vitalik

by Bob Bodily

Vitalik just gave us the future roadmap for Bitcoin, and the future roadmap is a wild world of interesting Layer 2 solutions, all making different trade-offs to support different use cases, collectively increasing the decentralization of the Bitcoin Layer 2 ecosystem.

Vitalik mentions that instead of all L2s consolidating to the same kind of structure, that we are instead gradually seeing more variety in L2s on ETH, meaning there isn’t a single kind of L2, rather there is a broad spectrum of L2s with different trade-offs.

The trade-offs here can still be best explained by the blockchain trilemma (coined by Vitalik himself), which states there is trade-off between three critical aspects of blockchain technology: security, scalability and decentralization.

Vitalik mentions 3 kinds of L2s:

1. Rollups are the zero knowledge rollups we all know and love because you can always trustlessly bring the asset back to L1. 

2. Validiums are a step down from rollups. In a Validium you store data off-chain somewhere else, and only store the proof on the L1. This means Validiums are much cheaper than Rollups, but they add an additional trust assumption of off-chain data storage.

3. A disconnected L2 is essentially a sidechain. You have a completely separate blockchain or server, you trust some multi-sig or group of people to keep your coins safe, and then you receive all of the benefits of a sidechain (faster txn speeds, cheaper costs, etc).

On Bitcoin we currently have:
Ordinals, BRC-20, Counterparty, Stamps, SRC-20, Colored coins, ARC-20, Atomicals, TAP, PIPE, BRC-100, BRC-69, BRC-21, ORC-20, ORC-CASH, Runes, Runestone, BRC-721, Lightning Network, Taproot Assets, RGB, Omni, MVC, Libre, Chia, Babylon, Interlay, Liquid, Stacks, ICP, RSK, ETH, BitVM, Bitcoin Script, TapScript, DLCs, Drivechains, Sidechains, Spacechains, Spiderchains, Statechains, Softchains, Ark, Optimistic Rollups (kind of), Sovereign rollups (in development), ZK-Rollups (someday), and many many more.

All of these Bitcoin layers have trade-offs (well explained by the Blockchain trilemma), and explain why we are likely to see MANY layers continuing to be built on Bitcoin.

Additional Resources
1. My deep dive into Vitalik’s arguments on X: https://x.com/BobBodily/status/1719552010536759589?s=20
2. Vitalik’s original blog post: https://vitalik.eth.limo/general/2023/10/31/l2types.html