Absurd BTCFi has no explainability

Source: Zuoye Waiboshan

After a year of hard work and failure, we finally reached a consensus that people’s demand for BTC is the demand for BTC itself, which cannot be extended to BTC pledge assets, BTC L2 and BTC-based DeFi.

Replicating the success and failure of Ethereum

Babylon is not a new project, but it has been unable to complete financing for a long time and remains in the field of academic research.

Solv is not the initial entrepreneurial direction. After adjusting the direction many times, it is a timely move and has risen to Binance.

Are BTC L2s such as Bitlayer/BEVM/Merlin considered new projects? Only a 50% chance is given. Most of them were established at the same time as WBTC. Facts have proved that the road that did not work did not witness miracles in the second attempt.

Even Runes did not replicate the miracle of the inscriptions. In the end, it chilled people's hearts, but said that the cool weather was a good autumn.

In the 2025 Q1 quarterly report, only BTC Spot ETF was successful. In addition to Bitcoin itself, ETF is the most reliable investment tool, in sharp contrast to ETH ETF.The Ethereum chain ecosystem is flourishing, and BTC chain transactions are in full swing.

It has to be admitted that BTC does not need L2 and pledge and other scenarios of reinventing the wheel. The absence of smart contracts is not the market space for Babylon, but an inevitable choice for robustness.

Although people are cynical about Vitalik and Ethereum at this stage, most of the innovations of BTC and Solana are imitations and transformations of Ethereum. Solana took away DeFi and Meme, BTC took away the pledge system and interest-bearing scenarios, and played with the RWA of digital gold.

But Solana is at least successful in stages, while BTC itself is strong. It fell back at $80,000. SOL 100 is bitter at the beginning, and what is even more uncomfortable is BTCFi, which has been falsified in stages.

ETH L2 is not a failure. At least it has cultivated successors such as Base. The failure of price does not mean the lack of practical scenarios, but BTCFi's pledge layer, L2 and DeFi have only failed and failed more.

In short, BTCFi did not replicate the success of Ethereum, but instead followed all the failed parts of Ethereum.

The tragedy of mainnet security monetization

As mentioned earlier, Eigenlayer hopes to monetize Ethereum's security space, and then split it into partitions to rent to projects with security needs. In essence, Eigenlayer does not provide security, but is just a porter of security.

Why can't this be migrated to other public chains?

LSD/LRT, Meme, DEX, etc. can be learned by various public chains, and there is no acclimatization problem. Is it only BTC that cannot be replicated?

In fact, each chain only prefers one model: asset issuance products, regardless of whether its outer packaging is L2 or pledge/re-pledge system.

If everyone also has a favorable impression of the SVM L2 track, then we can predict in advance that Solana with a market value of 100 billion cannot support suburban economics. Beijing needs a sub-city center, and Tongliao obviously does not.

The same is true for BTC. The trillion-dollar Bitcoin ecosystem has only one product, namely BTC itself. If you use BTC to do some marginal arbitrage, such as WBTC and ETF, then the market value of BTC will be enhanced, and it will be recognized and rewarded by the market.

But if you go beyond the line and hope to transfer the value of BTC to your own token, you will face an eternal problem. How to make people exchange big cakes for your token is 100 levels more difficult than Sun Ge making people exchange USDT for USDD.

Various BTC pledge agreements are in full swing, but the world's major BTC is distributed in the hands of exchanges and asset management companies. The BTC on-chain pledge system is just a noun and can hardly be called an entity.

In the final analysis, the Bitcoin pledge system cannot be equated with the sense of security that comes from holding BTC. If the pledge system cannot be established, then BTC L2 and BTC DeFi cannot be established.

Two dragons do not meet

ETH L1 was crowded, and a large-scale L2 infrastructure was carried out, and finally Pump Fun stole the home. This is the whole story of the cryptocurrency circle in the past six months.

Recently, if BTC L2 had not started to build momentum before the coin issuance, the fast-paced cryptocurrency circle may have forgotten this ancient memory. In my personal opinion, the only winner is Merlin Chain's fast coin issuance + long-term operation.

The earlier you issue coins, the worse your character will be; the later you issue coins, the harder it will be to control the market. If you are destined to be scolded by retail investors, you might as well choose a way to make more money. This is the whole story of BTC L2 in the past year.

Compared, ETH itself needs L2 to share traffic. The current game is just an adjustment of the fiscal relationship between the central and local governments. The weakness of the EVM ecosystem itself has little to do with L2s. Even if Ethereum collects more taxes on L2s, retail investors will not return to the EVM ecosystem.

SVM L2 is the same. Pump Fun has entered the end of the profit curve, and the way to prolong its life is to grab the cash flow of AMM DEX. If it is in the Ethereum ecosystem, it is likely that Pump Fun Chain will appear.

BTC L2 is the most embarrassing. Compared with the support and guidance of Vitalik and the Ethereum Foundation, the technical solution of BTC L2 is chaotic and disordered. There are imitators who imitate the ZK/OP route by cutting their feet to fit, and there are also detail-oriented people who are obsessed with patching existing operation codes, and there are also reformists who want to complete the functions of Bitcoin scripts.

Compared to the decentralization of SVM L2, BTC L2 seems to have a stronger color of "project party + VC" gathering. After all, the attitudes of Anatoly and Solana Foundation towards SVM L2 are "no support, no opposition, no encouragement, no rejection". Unexpectedly, Solana, which has long been known as the computer room chain, is the OG in the currency circle that truly implements the concept of decentralization.

In this way, I lived like this for 365 days until I entered the Listing node in the post-VC and post-market maker era. In the misunderstanding and shock of the onlookers, BTC L2 announced the airdrop plan and token economics mechanism.

It's just that BTC itself chooses to ignore these disturbances. Whether it is 80,000 or 1 yuan, digital gold or the savior of US bonds, they are all external things. What can I do?

Conclusion

Since the birth of BTC, people have developed large-scale wallets, mining, wrapped assets and other industries, laying the foundation for the Ethereum ecosystem. Even Vitalik himself is a seed cultivated by Bitcoin Magazine.

However, BTC is too special. Compared with many competitors that need to face Mass Adaption and externalities, Bitcoin itself has no leading personnel and does not need to attack the political system like its successors such as Movement.

Just like the internal mechanism of AI, this absurd world is not explainable. BTC chooses not to explain. BTCFi hopes to explore a new path, but it turns out that the old path is more robust.