Blockstream Infrastructure Firm Foresees Rapid Growth in Bitcoin’s Layer 2 Technologies

An engineer at the Bitcoin-focused development firm Blockstream has said she sees a “Cambrian explosion” coming for the development of layer 2 technologies on the Bitcoin network.

The rapid growth eyed for layer 2 technologies will, in part, be fueled by coming updates such as Bitcoin Improvement Proposal (BIP) 118, known as SIGHASH_ANYPREVOUT, or APO for short, as well as a new programming language for Bitcoin smart contracts called Simplicity, Blockstream engineer Lisa Neigut said at the Consensus 2023 conference.

“APO is going to, hopefully, unlock a Cambrian explosion with these script updates and new covenants,” Neigut said, while expressing optimism about the future for Bitcoin layer 2 technologies:

“I think a lot of new layer 2 stuff will come in the future.”

The remarks were made during Neigut’s State of the Chain presentation at the conference, which was held last week in Austin, Texas.

Mature Bitcoin layer 2 ecosystem already exists

Although less known among DeFi users than Ethereum-based layer 2 networks, Bitcoin already has one of the most developed second layer ecosystems of any blockchain network.

Current Bitcoin-based layer 2 networks include the Lightning Network, which is used extensively for payments, as well as Blockstream’s Liquid sidechain, and new technologies known as Fedimint and Cashu.

Blockstream is a Vancouver-based firm working on infrastructure for the Bitcoin network.

The firm is led by the veteran cypherpunk Adam Back who is known as the inventor of Hashcash, a Proof-of-Work mining algorithm later used in Bitcoin.