On July 25, Incrypted hosted an AMA session with Charlie Hu, co-founder of Bitlayer — the first modular Layer 2 (L2) protocol built on Bitcoin.
Bitlayer enables developers to launch decentralized applications and smart contracts without overloading the base layer, all while preserving Bitcoin’s core value proposition: security.
The conversation covered the current state of Bitcoin DeFi (BitcoinFi), the evolution of Bitlayer’s architecture, and key components of the protocol’s design. Hu also discussed investor participation, the challenges of building on Bitcoin, and what lies ahead for the project — including details about its native token.
How Bitlayer Was Born
The AMA began with a personal story. When asked about his first encounter with Bitcoin, Charlie Hu shared that he bought BTC as a teenager:
«I bought my first bitcoin when I was 13. Back then, I was attending Bitcoin meetups in Amsterdam. People were still mining BTC with FPGAs. I don’t remember the price. Honestly, I lost money on that first trade.»
His interest in crypto deepened in 2015 with Ethereum, and by 2017, he had become an early investor in Parity. He later focused on interoperability protocols, and in 2021 joined Polygon, where he worked on ecosystem development and developer outreach — experience that gave him a firm grasp of decentralized protocols and applications.
Eventually, Hu turned his attention back to Bitcoin. He saw untapped potential in the asset:
«Bitcoin is a leading digital asset, yet most of it has been sitting idle in cold wallets for the past 15 years.»
His renewed interest was sparked in 2023, when he began exploring Ordinals. That exploration became the foundation for Bitlayer. It was the emergence of new primitives and tools on Bitcoin that pushed him to investigate what DeFi could look like on the oldest blockchain.
The State of BitcoinFi: From Dormancy to Billions in TVL
In the past 18 months, BitcoinFi has undergone a radical transformation, Hu explained. What was once a virtually empty ecosystem is now home to billions of dollars in liquidity and a growing number of protocols.
According to Bitlayer’s co-founder, total value locked (TVL) across Bitcoin-based DeFi now exceeds $8 billion — including staking and other liquidity mechanisms.
A key driver of that growth is the emergence of wrapped BTC tokens. There are more than 10 types of wrapped BTC exploring yield in various DeFi protocols. These tokens are used across EVM-compatible chains and beyond.
The most prominent example remains WBTC, launched in 2018 as a centralized bridging solution. Over 120,000 BTC are currently wrapped through WBTC, but its role as the de facto standard for Bitcoin-based yield-bearing assets remains controversial within the community.
Bitcoin’s onchain ecosystem has also seen a surge in experimentation over the past two years, particularly with Ordinals, BRC-20 tokens, and the early iterations of BitVM. Much of that momentum came from grassroots enthusiasm, though interest has since cooled.
Hu highlighted the emergence of Bitcoin L2-solutions and metaprotocols in early 2024. While the space was crowded at first, many projects stalled or pivoted later in the year amid limited traction.
«Out of more than 50 — maybe even 80 — initiatives, only around seven are still active, and fewer than five have over $200 million in TVL.»
Looking ahead, Hu said institutional interest in Bitcoin is rising, along with regulatory clarity and market cap.
«Bitcoin will be the winning asset. We’re now seeing multiple layers of financialization develop around it. Many users are already earning yield through CeFi, and that activity will gradually move onchain.»
Trading activity is also shifting toward DeFi, with platforms like Hyperliquid leading the way. Over time, Hu expects to see more onchain lending, liquid staking, options trading, stablecoins, and tokenized real-world assets emerge on Bitcoin.
— but in enabling a financial layer for Bitcoin and adapting battle-tested DeFi models to fit the needs of the Bitcoin community.
Bitlayer’s Vision: Security-First L2 for Bitcoin
Hu went on to outline the evolution of Bitlayer’s product roadmap and why the team initially focused on bridging solutions before developing its own verification mechanism.
«Our goal is to combine Bitcoin-grade security with the ability to bring native BTC liquidity into decentralized ecosystems.»
Importantly, Bitlayer doesn’t rely on Bitcoin forks to scale the network. Instead, it uses a rollup-style model with transaction verification handled via a purpose-built system known as BVM — the Bitcoin Verification Mechanism (not to be confused with a virtual machine).
Thanks to EVM compatibility, Bitlayer can support any application that already runs on Ethereum, Polygon, Arbitrum, or Optimism.
«People trust Bitcoin. People trust Bitcoin’s security. When transactions settle on the Bitcoin base layer, they benefit from that trust. That’s the rollup model we’re pursuing — using Bitcoin Script and the BVM verifier.»
Another defining aspect of Bitlayer is its economic alignment with Bitcoin miners. A portion of transaction fees in the Bitlayer network is directed to miners as compensation for validating and finalizing transactions on the Bitcoin blockchain. This creates a new revenue stream and strengthens the L1–L2 connection.
Bridging Bitcoin
Hu placed particular emphasis on the fragility of current bridging infrastructure and the urgent need for more secure, trust-minimized alternatives. He pointed to the vulnerabilities in solutions like WBTC, which has become a central pillar of Bitcoin liquidity in DeFi.
«We’ve all seen the multisig exploits this year — over $5 billion in total, including $1.5 billion in Ethereum alone. These issues aren’t isolated to one bridge; they’re systemic.»
Bitlayer’s answer is a new generation of bridges built on Bitcoin Script and designed around the principle of minimal trust. Even if an attacker initiates a malicious transaction, a single honest operator can trigger a challenge mechanism to halt it — eliminating the need for majority multisig consensus and reducing systemic risk.
The team’s flagship product, BVM Bridge, is engineered to unlock Bitcoin liquidity and enable BTC integration into DeFi protocols across networks like Ethereum, Solana, and Sui.
Inside BVM: Architecture, Challenges and Miner Support
While often compared to bridges, BVM is fundamentally different.
«BVM is not a bridge. It’s a technical framework — like ZK or FHE. It’s a new paradigm that uses Bitcoin to build verifiable components within or around the Bitcoin network. There’s BVM 1, BVM 2, BVM 2.5 — the current version — and we’re working on BVM 3.»
Implementing BVM was one of the most complex engineering challenges Bitlayer faced. Hu said:
«It wasn’t easy. It took 18 months just to ship the first version. Technically, BVM V2 is our first working implementation. The team grew to nearly 50 engineers and researchers at peak development.»
The asset bridge — based on BVM 2 — is one of the first real-world applications of this framework. The toughest part, according to Hu, was dealing with the limitations of Bitcoin Script, a highly constrained scripting language that leaves little room for error.
«It’s expensive. We had to implement many optimizations without compromising security. We wanted to reduce size and cost — but every decision involved serious tradeoffs.»
A key breakthrough came with Bitlayer’s partnerships with top mining pools — including AntPool, F2Pool, and SpiderPool — which collectively account for over one-third of Bitcoin’s hash rate. These miners help process the nonstandard transactions required for BVM-based bridging.
«They’re processing our nonstandard bridge zone transactions. These are entirely new types of transactions. To ensure strong security without compromising UX, users can’t be left waiting hours or days for a bridge to settle.»
Beyond the technical lift, Bitlayer is also pioneering a new economic model. In the future, the protocol will share bridge revenues with mining pools, giving them a direct financial stake in its success.
«This is the first time major mining pools are supporting a startup this early. They’re enabling the infrastructure needed for next-generation Bitcoin transactions.»
Investors and Funding
Bitlayer launched its fundraising efforts in early 2024 and closed its seed round in just six days, with investor demand far outpacing supply. Framework Ventures, a prominent DeFi-focused firm based in Silicon Valley, led the round. The fund has since played a dual role as both capital provider and strategic partner.
The round was co-led by Alliance and included participation from OKX Ventures, ABCDE, Bitcoin Magazine, Asymmetric, and several well-known individual investors, including the founder of Messari.
Bitlayer later announced its Series A, led by Franklin Templeton. The investment marked one of the firm’s first moves into modular Bitcoin infrastructure.
In addition to large venture funds, Bitlayer has attracted backing from private investors worldwide — from Bitcoin-native enthusiasts to domain experts. The team aims to strike a balance between institutional capital and hands-on individual partners who can offer practical guidance and access to key industry networks.
According to Hu, the project also secured additional undisclosed backers during Q2 2025.
Ecosystem Growth and Developer Collaboration
Bitlayer is taking a selective, principle-driven approach to ecosystem development, distancing itself from the standard grant-heavy strategies that many earlier blockchain projects relied on. According to co-founder Charlie Hu, the team is focused on supporting initiatives that bring tangible value to users rather than chasing sheer numbers.
Hu emphasized that Bitlayer does not plan to launch broad grant programs or engage in dozens of loosely defined partnerships. Instead, the priority is on working closely with a handful of projects that align with the network’s vision and have the potential to drive sustainable adoption.
«We need to believe in each other’s vision and understand how we can mutually contribute. This can’t be a one-way street. In the last cycle, we saw too many one-sided relationships — most of those projects didn’t survive.»
Bitlayer aims to identify and support three to five high-impact applications that can serve as ecosystem flagships. These projects are expected to anchor the user base and stimulate ongoing growth.
The team is especially focused on the next generation of BitcoinFi products — beyond simple staking and lending. Priority areas include decentralized derivatives platforms, on-chain options protocols, and blockchain-native prediction markets.
Roadmap and Strategic Goals
During the AMA, Charlie Hu recalled that Bitlayer’s mainnet launched in April 2024. Since then, the network has processed over 65 million transactions and reached a peak TVL of $850 million. As of mid-2025, more than 200 projects have already deployed on Bitlayer.
Hu confirmed that the V2 bridge is fully operational, having passed audits and been publicly announced. The Bitlayer rollup is undergoing final security reviews by a top-tier audit firm, with a beta version expected in the coming weeks. This rollout marks the B2 milestone, while the B3 release is currently in its final design phase.
The team is also preparing an updated technical document — the yellow paper — set to include new research on scalability solutions. Publication is slated for late 2025 or early 2026.
In parallel, Bitlayer continues building institutional partnerships and exploring new yield-bearing instruments tied to bitcoin. These include trust-based products and offerings co-developed with leading asset managers.
The network is already integrated with several blockchain ecosystems, supports major wallets, and complies with AML standards. The next phase focuses on expanding real-world use cases for retail users, institutions, and enterprise players alike.
Institutional Focus
Hu highlighted the growing influence of institutional players in driving Bitcoin adoption. Over the past two years, demand for BTC has been fueled in large part by exchange-traded funds (ETFs) and other regulated financial instruments.
Bitcoin’s price has more than quadrupled in that time, and much of the capital inflow has come through ETF channels. The market activity around Bitcoin now extends far beyond spot investment — touching lending, structured products, and other financial services, with institutions leading the charge.
To meet this demand, Bitlayer is actively developing products tailored to institutional requirements. One example is its collaboration with Franklin Templeton, which led Bitlayer’s Series A.
«As I’ve mentioned, Franklin Templeton is our anchor investor in Series A. We’re in talks with their credit division and money market fund. We’re also exploring ETPs and trust structures — instruments we plan to launch or support as issuers. This is a B2B approach — we’re not targeting retail. It’s a different game.»
Bitlayer is also working with infrastructure partners such as Chainlink, and collaborating with leading firms like Bloomberg. Hu called attention to Susquehanna, one of the world’s top market makers, as another key investor in the round.
«We’re getting strategic guidance from ETF veterans — including Susquehanna, who participated in Series A. Bob Smith, founder of the Brokman Fund at Susquehanna, is one of the most connected and knowledgeable voices in the ETF space.»
For Bitlayer, building institutional-grade infrastructure is a new but essential frontier — one the team believes will unlock Bitcoin’s full financial potential.
Token and Token Sale
The AMA wrapped with a discussion about BTR — Bitlayer’s native token — and its role within the network. According to Charlie Hu, BTR is both a governance and utility token designed to serve multiple functions.
«BTR is our governance token. It allows holders to vote. In the future, it will also be used as the gas token in our network. Validators can stake BTR to participate in our validator program and earn a share of gas fees. These are the token’s core use cases.»
Bitlayer plans to onboard validators ranging from institutional infrastructure providers to technically proficient community members.
The public sale of BTR will take place across three platforms — CoinList, Echo, and GoMining — each targeting a different audience:
The main allocation will be sold via CoinList. Participation will be open to non-U.S. residents who are not subject to international sanctions and who complete KYC. The minimum contribution will be around $50, with exact terms listed on the sale page.
As for the token generation event (TGE) and potential exchange listings, Hu noted that dates are yet to be announced. Details regarding early community airdrops and rewards programs will also be shared soon.
He closed the session by thanking the community for their support and reaffirming Bitlayer’s long-term commitment to building a sustainable BitcoinFi ecosystem with a global reach.
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