Bitcoin is evolving with the introduction of Layer-2 networks that enable the creation of decentralized finance (DeFi) applications on the Bitcoin ecosystem. These "BTCFI" applications allow Bitcoin holders to earn yield on their tokens, similar to Ethereum and other altcoins. There are several projects driving this evolution:

1. exSat aims to address the problems associated with the dependence on Layer-2 networks in the Bitcoin ecosystem by creating a "docking layer" that facilitates the seamless flow of assets and data. Its main innovation is the exSat Data Consensus Extension Protocol, which uses a hybrid consensus mechanism to enhance Bitcoin's core functionalities.

2. Fractal Bitcoin is a sidechain project focused on scaling Bitcoin's transactional capabilities. It aims to mirror the base layer of Bitcoin as much as possible, allowing developers to build on Bitcoin itself. Fractal Bitcoin achieves scalability through recursive scaling and utilizes its own native miners for security.

3. Liquid Network is a sidechain project that aims to increase transaction speed and privacy for Bitcoin users. It uses a stablecoin called Liquid Bitcoin or L-BTC, which is pegged to the value of BTC, to enable faster transactions. Liquid Network also supports confidential payments and atomic swaps for complex DeFi operations.

These projects address scalability challenges, reduce network fees, speed up confirmation times, and enhance Bitcoin's core functionality. They make Bitcoin more versatile and usable for high-frequency trading, DeFi strategies, and other crypto applications. By anchoring the final settlements of each transaction on Bitcoin's secure blockchain, these projects contribute to the emergence of a global financial economy powered by Bitcoin.



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