Bitcoin Alternatives Deep Dive: L2s, Wrapped BTC, and Cross-Chain/Omnichain Bitcoin

Since inception, Bitcoin (BTC) has been the domineering force behind the crypto space — dictating where the rest of the market follows. However, over time, and with the introduction of new projects and tokens, BTC transaction speed and limited scalability have increasingly became painfully apparent.

These bottlenecks led to the rollout of alternative applications aiming to solve BTC functionality shortcomings and to integrate more easily with other blockchain networks. These alternative include Layer 2 (L2) solutions, wrapped Bitcoin (wBTC), and cross-chain/omnichain Bitcoin — each with specific focuses to solve the aforementioned limitations.

Why Bitcoin Alternative Applications are so Important

Built to be decentralized and secure, the BTC blockchain tradeoff has become more apparent as the userbase and transaction load increases. As adoption of BTC increases, the network steadily becomes more congested, more expensive due to higher fees, and results in longer transaction times.

To address these issues, developers introduced several solutions to improve BTC functionality while ensure the fundamental principles behind the blockchain are maintained. 

L2 Solutions

L2 solutions are secondary frameworks or protocols that work parallel to the BTC blockchain, built on top of the existing network to enhance scalability and efficiency. This solution ensures security is never compromised in exchange for cheaper and faster BTC transactions.

One such example could be the Lightning Network which facilitates instant transactions between participating nodes on the network. This L2 solution creates off-chain transaction channels to help reduce transaction fees and to handle millions of transactions per second to remove BTC scalability bottlenecks.

L2 solutions offer the potential for improved practicality in daily life, like making everyday transactions with BTC and improving adoption for becoming a global payment option. By enabling microtransactions and use cases previously not possible, L2 solutions offer a secure alternative to the slow transaction time and expensive fees of the BTC blockchain.

Wrapped Bitcoin (wBTC)

wBTC is hosted on the Ethereum (ETH) blockchain as an ERC-20 token and backed at a ratio of 1:1 by BTC. The ensures that all wBTC issued remains equivalent to the amount of BTC held by the custodian, while enabling BTC holders to participate in the ETH ecosystem — including decentralized finance (DeFi) opportunities.

By combining the liquidity and stability of BTC into the wBTC alternative, holders can participant in lending, borrowing, and trading activities on the DeFi platforms only accessible on the ETH blockchain. The wrapping process also improves the access to liquidity for both BTC and ETH blockchain networks.

wBTC quickly became a key player in the DeFi ecosystem, allowing those with BTC holdings to not be confined to the limitations of the BTC blockchain. By enabling cross-chain functionality between BTC and ETH blockchains, DeFi integration and growth has thrived for both sides of the fence.

Cross-Chain/Omnichain Solutions

Cross-chain or omnichain solutions enable different blockchain networks to connect interoperably, facilitating data and asset transaction across otherwise disconnected chains. This smooth transaction flow has made it possible for BTC to interact with other blockchains and drastically improve its use cases throughout the crypto space.

One example of cross-chain infrastructure at its finest is the Zeus Network, developing cross-chain potential using the Solana blockchain — a blockchain famed for performance, affordability, and transaction speed. By utilizing the Zeus Layer, a pluggable and programmable network of nodes on the Solana Virtual Machine (SVM), the Zeus Network aims to create seamless cross-chain potential throughout crypto. 

Setting its sights to onboarding the next billion users into Web3 by overcoming modern interoperability restrictions, the Zeus Network is introducing BTC liquidity to Solana through the decentralized application (DApp), APOLLO. With support from the Solana Foundation and other significant investors, the crypto industry already portrays strong confidence for its mission.

Zeus Network: Leveling up Bitcoin

The Zeus Network’s approach to cross-chain infrastructure involves chain-agnostic transactions proposed and stored on Solana — programmable signatures aggregated on the Zeus Layer. 

Through this method, the Zeus Network maintains cross-chain communication security via fraud proofs and ensures the efficiency and integrity of cross-chain transactions — setting an entirely new standard for BTC interoperability.

Ultimately, this kind of cross-chain solution levels up the BTC blockchain; overcoming scalability challenges, introducing DApp flexibility, and utilizing advanced security methods to develop a trusted system. With this improved blockchain flexibility, developers can deploy DApps across multiple blockchains with ease — without having to overcome different blockchain coding requirements.

By broadening the usability of the BTC blockchain through cross-chain interoperability, the Zeus Network enables users to move BTC without having to convert or liquidate their BTC holdings.

Considering Future Implications

The development of BTC alternative applications has brought about both drastic improvements and completely new challenges. Although L2 solutions, wBTC, and cross-chain infrastructure can make the BTC blockchain more adaptable and future-proofed, they still face barriers to adoption. 

From complex technical requirements to regulatory uncertainty, these advancements in alternative application solutions have tough road ahead. However, cross-chain innovators like Zeus Network are set to overcome the hurdles again by launching a variety of upgrade in the future. 

From the roll out of staking options, improving node operations, and maintaining focus on permissionless cross-chain functionality, protocols like the Zeus Network are one such alternative that will stand the test of time.