Bitcoin layer-2 network Botanix is winding down a year after its mainnet went live.
The project cited market conditions and broader indifference within the cryptocurrency industry to establishing greater utility on the Bitcoin network in a post on X on Tuesday.
“It didn’t work,” Botanix summed up. “At least not in this market and not in this timeline.”
The purpose of Botanix was to bring Ethereum-equivalent functionality to the Bitcoin network so that applications and smart contracts could be efficiently copied and pasted onto the world’s first blockchain. The project raised $14.4 million across two funding rounds in 2023 and 2024. Despite this, its total value locked (TVL) at closing was just $119,500, according to data from DeFiLlama.
Botanix was one of many layer-2s and protocols that emerged in recent years, aiming to expand Bitcoin’s utility and help it evolve beyond being just a store of value.
The idea was that holders of bitcoin should not just let their asset sit still and hope for price appreciation. They can also use decentralized funding to generate income on the side. This could involve staking tokens on other blockchain networks or using smart contract-enabled DeFi tools, such as lending or decentralized exchanges (DEXs).
Botanix autopsy
However, things did not go as planned, at least not for Botanix.
The protocol highlighted that “making Bitcoin programmable, productive and integrated into real economic activity is not where real users are sitting right now.”
This post-mortem may raise questions about the broader viability of the Bitcoin development sector, which includes other tier-2s like Rootstock or rollups like Citrea, during an extended period of subdued crypto market sentiment.
CoinDesk reached out to these two projects for comment, but none were received as of press time.
BTC has lost more than 50% of its value since reaching its all-time high of nearly $125,000 last October, which may leave investors wondering why they should be interested in developing bitcoin’s uses when it currently does not serve its more basic function of storing value very effectively.
“It’s possible that bitcoin’s role as a reserve asset is simply where it sits. If that’s true, there will never be a market for what we’re building, and no amount of time or capital would change that,” Botanix said.
A simpler way to combine the secure store of wealth offered by BTC with the programmability and usability of other blockchain networks may lie in synthetic or “wrapped” bitcoin tokens. These are tokens that represent BTC on a 1:1 basis that can be traded and bet on networks like Ethereum.
The most established of these is wBTC, which was introduced in 2019, but recently Coinbase and Circle have developed their own synthetic bitcoin tokens to appeal to institutional investors and traders.
“For lending, returns, leveraged exposure, wBTC on a mature general L2 is really sufficient,” Botanix said.
“Users have voted their behavior and the verdict is that the trust assumptions of a wrapped representation on Ethereum are acceptable to almost anyone who wants Bitcoin-denominated DeFi.”
