On January 11th, Bitfinity, a Bitcoin L2 network based on Internet Computer and compatible with EVM, completed a $7 million financing round with a valuation of $130 million. The round was participated by Polychain Capital, ParaFi Capital, Warburg Serres, Dokia Capital, and Draft Ventures. Please note that the content within the tag is not translated and the Chinese characters are preserved.

By the end of 2023, the Bitcoin ecosystem had a revival after a period of dormancy. While the popularity of inscriptions caused some opposition, it cannot be denied that the market enthusiasm also brought back the "builder culture" for Bitcoin. This development trend has driven the innovation wave of Bitcoin, and even led the market's high enthusiasm for inscriptions to other public chains.

However, only inscriptions and memes cannot change the overall weakness of the current Bitcoin ecosystem. To further develop the Bitcoin ecosystem, building a prosperous DeFi application layer on the basis of the current Bitcoin ecosystem has become another hot narrative. Among them, the Bitcoin L2 narrative led by Stacks is also a recent focus of discussion.

Compared to the highly organized Ethereum L2 system, Bitcoin L2 is like a brand new world. This new concept, which has become increasingly important after the NFT craze, is showing signs of growth, but its ecosystem is becoming increasingly chaotic and disorderly. Suddenly, various L2 project parties are emerging one after another, like mushrooms after the rain.

Bitfinity, as a Bitcoin L2 solution, aims to integrate its Ethereum virtual machine, Bitfinity EVM, with Bitcoin on its ICP, hoping to achieve L1 and L2 asset interconnection on one chain. Currently, Bitfinity is building its own cross-chain bridge to achieve cross-chain of Ordinals and brc20.

涨幅累超 4 倍，曾让投资者「魂断蓝桥」的 ICP

ICP, which has seen its cumulative increase exceed 4 times, once caused investors to "lose their souls on the Blue Bridge".

To understand Bitfinity, let's first briefly introduce what ICP is.

ICP, short for Internet Computer Protocol, is the native token of the Internet Computer protocol. It is used to pay for network usage fees and reward nodes. Internet Computer is a high-speed blockchain network developed by the non-profit organization Dfinity Foundation, specifically designed for decentralized applications. It adopts a new consensus algorithm that can achieve high throughput and low latency transaction processing, while supporting the development and deployment of smart contracts and decentralized applications.

From the development path of blockchain, there is a saying in the community that "BTC proposed electronic cash, opening up the blockchain industry from 0 to 1; ETH proposed smart contracts, leading the blockchain industry from 1 to 100; ICP proposed ChainKey technology, driving the blockchain industry from 100 to 100,000,000."

Looking at the price performance of ICP, its market value once soared to over 230 billion US dollars, ranking third in market value after BTC and ETH, as the token price continued to rise within a few hours of its listing. However, as the bullish behavior ended, the price of ICP began to plummet, and its market value shrank by 90% in just six weeks. Dfinity founder Dominic Williams has always believed that SBF and FTX manipulated the price of ICP.

Related reading: "Interview with DFINITY: ICP is a victim of SBF Capital's operations; much of Web3's future is in Asia".

The market value has shrunk so much that ICP has been nicknamed "ICU", meaning that if you buy ICP, you will definitely end up in the ICU.

As a practitioner in the encryption industry, I will translate the following Chinese text to English without considering the context or industry-specific terms. English words and phrases, as well as capitalized English words and phrases, will not be translated or abbreviated, such as ZKS, STARK, and SCROLL. If there are English characters in an a tag, they will be returned without translation. When the content only contains punctuation marks, the punctuation marks will be returned as is. HTML tags in the content, such as

, , , and

, will not be translated. If there are English characters in the HTML tags, they will be omitted and returned as is. The content within an a tag will be preserved and not translated. All Chinese characters will be translated. The following text will be translated: "Affected by this, since the launch of the autonomous network, the project layer of the ICP ecosystem has been in an embarrassing situation of 'no one using it', leading to a vicious cycle of 'ecological scarcity -> excellent projects flowing out -> further loss of ecological participants'."

However, in this round of the bull market, the price of ICP has once again shone, with a cumulative increase of more than 4 times, bringing new life to countless investors. According to data from Coingecko, as of the time of writing, the price of ICP has reached $12.4.

除了币价的上涨，其生态项目也逐渐活跃起来。

Translation:

In addition to the rise in coin prices, its ecological projects are also gradually becoming more active.

Among them, the writing platform Mora launched a free inscription. Recently, Kaosrrr announced that it had received a $20 million grant from the Asia-Pacific Foundation, but in fact, the money did not go to Mora. However, many users were unaware of the truth and rushed to buy Mora, causing the price to skyrocket. Currently, due to insufficient funds from the project party, the price has started to plummet, and the community is not yet deserted. Subsequently, the first inscription platform, ICscriptions, also launched the first minted inscription, and Mora, Nnsdao and other inscriptions are the most popular on the platform.

Nnsdao is the first dao project in the ICP ecosystem, building its own NnsDAO empire by developing ecological projects. Currently, it has developed an NFT platform, GameFI game products such as Texas Hold'em and lottery platforms, and has also built web3 podcasts and knowledge education platforms. NnsDAO has received 5 grants from Dfinity officials and has the strongest technical capabilities in the ecosystem. However, this method of building the ecosystem requires a lot of operational resources, which has slowed down the development of the NnsDAO ecosystem.

Except for inscriptions, the ICP ecosystem has also participated in the popular meme narrative. Its first meme coin, Ghost, has achieved a maximum increase of over 100 times under the leadership of a strong community. Ghost is very good at Twitter marketing and can be said to be the team with the best marketing skills in the entire IC ecosystem.

Additionally, there is the ICP-based Dex platform ICPSWAP, which provides full-stack financial, market, and DAO services. The token for ICPSWAP is ICS, with a total circulation of 1 billion. It has a deflationary model that increases its value through continuous burning.

Related reading: "In-depth analysis | Dfinity ecosystem details: ICP comprehensive research report".

Entering Ordinals, Bitfinity aims to build Bitcoin L2

Speaking of Bitfinity, as one of the ecosystems of Dfinity, it inherits the scalability of the Web Assembly execution environment (up to 1000+ TPS). But more importantly, Bitfinity defines itself as Bitcoin L2.

Compared to the highly organized Ethereum L2 system, Bitcoin L2 deliberately conceals its security risks while bringing hope to the Bitcoin ecosystem.

From the perspective of the "barrel theory", the L2 shortest board risk belongs to "contract upgradability". As long as the L2 official can quickly upgrade the contract on the L1 chain, theoretically, they can steal the tokens locked in the L2 official bridge deposit and withdrawal address, regardless of how reliable its DA layer or proof system is.

However, since Bitcoin does not inherently support smart contracts, the Bitcoin L2 is not controlled by L1 contracts, thus avoiding contract risks. However, Bitcoin cannot rely on a "trustless bridge" implemented by contracts. Its official bridge is mostly composed of a "notary bridge" or "multisig bridge" consisting of a few nodes, and the security of this bridge depends on the setting of multisig/threshold signatures, requiring strong trust assumptions: assuming that these notaries will not collude or have their private keys stolen.

Related reading: "Deconstructing the Layer2 security model and risk indicators of Bitcoin and Ethereum using the barrel theory."

Integrating EVM with Bitcoin

Regarding the "trustless bridge", Bitfinity uses the ChainKey solution.

This is a threshold signature scheme protocol launched by ICP in April 2023, which creates a secure decentralized bridge between Bitfinity and Bitcoin. As Chainkey does not have any single node that can access the threshold key, the threshold key shares are regularly regenerated every 11 minutes through "moon-math", allowing up to 40 blockchain nodes to shard the key.

In addition, Bitfinity can provide the opportunity to deploy popular Ethereum applications on a Bitcoin PoW-protected network with even greater security, all written in Solidity.

Dfinity also has an SNS (Social Nervous System), which is a decentralized autonomous organization (DAO) based on NNS. It allows community members to create and manage their own sub-networks and applications, establishing an effective community-wide pattern in this way.

As mentioned at the beginning of the article, Dfinity's technology did not initially benefit its ecosystem construction - although Dfinity's technical features are still very unique today, such as reverse Gas, Canister scalability, and the architecture itself can be infinitely horizontally expanded, these features did not have the expected effect in the public chain competition.

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