Layer 2 protocols are often associated with the Ethereum blockchain. But what if an L2 protocol was built on top of the Bitcoin network? This is the innovative concept behind Merlin Chain. It aims to revolutionize Bitcoin by making it faster, more affordable, and easier to use. But what exactly is Merlin Chain, and how will it improve Bitcoin’s scalability? And how far has this ecosystem progressed? Dive into this article to find out!
Article Summary
- 🗳️ Merlin Chain is a Layer-2 (L2) Bitcoin protocol that integrates the Zero Knowledge Rollup technology to achieve greater scalability.
- 🔥 Merlin Chain aims to make Bitcoin Fun Again by developing the Bitcoin ecosystem and its native assets.
- 🏆 Merlin Chain ecosystem is filled with innovative protocols such as MerlinSwap, Solv Protocol, Avalon Finance, and Surf Protocol. It supports various native Bitcoin assets, including BTC, BRC-20, NFT Ordinals, BRC-420, Atomicals, and Stamp.
- 🪙 MERL is a native token in the Merlin Chain ecosystem that serves as a governance token, a means of payment, provides liquidity, and is used for staking.
What is Merlin Chain?
Merlin Chain is a Layer-2 (L2) Bitcoin protocol that integrates Zero Knowledge (ZK) Rollup technology. This empowers Bitcoin’s ecosystem by enabling efficient off-chain transaction processing, ultimately leading to faster, cheaper, and more scalable use of native assets, protocols, and products.
The team at Merlin Chain believes that Bitcoin’s L2 should be utilized more than just to facilitating low-cost transactions or create DApss. They envision L2 Bitcoin as a platform for further innovation, unlocking Bitcoin’s full potential through its native assets, users, and protocols. They emphasize that only “Bitcoin-native” innovations can truly empower the ecosystem, rather than merely replicating Ethereum’s approach.
If detailed, the following are Merlin Chain’s goals in improving the Bitcoin ecosystem:
- Increasing the transaction speed.
- Reducing transaction fees during the congested network.
- Making it easier for developers teams who want to build dApps.
- Creating an Ethereum Virtual Machine (EVM)-compatible chain for Bitcoin.
- Designing a system that can maximize the Bitcoin Ordinal’s potential.
- Supporting the creation of native, on-chain asset storage.
Based on DeFi Llama data, Merlin Chain’s total value locked (TVL) has reached $1.18 billion. This figure is the largest among other Bitcoin sidechain protocols, such as Frax Finance. Merlin Chain even outperforms other L1 protocols, such as Avalanche and Polygon.
How Merlin Chain Works
The Merlin Chain architecture is built using ZK-Rollup technology, a cryptographic algorithm that allows blockchains to verify transactions without revealing their information content. This technology reduces the amount of data that must be transmitted between chains, speeding up the transaction process while maintaining its integrity and security.
Learn more about how zero-knowledge technology works in the following article.
Merlin Chain’s sequencer nodes use ZK-Rollup to collect and aggregate transactions, generate compressed transaction data, and create ZK Proofs using zkEVM. Subsequently, the compressed data and ZK Proofs are uploaded through the decentralized Oracle network.
Oracle nodes have an important role on the Merlin Chain. In addition to verifying ZK Proofs on Merlin Chain, they must also upload L2 data to the taproot on the Bitcoin mainnet. Once uploaded to the taproot, the data can be accessed by the entire network. This process also inherits the security of the Bitcoin consensus mechanism to the Merlin Chain network.
For the data availability layer, Merlin Chain uses Celestia’s data availability. Data availability ensures that anyone can access every published block of data. By integrating ZK-Rollup technology, data availability, and the Oracle network, Merlin Chain can create an efficient, scalable, and secure native Bitcoin L2 network.
Merlin Chain’s Feature
One of the Merlin Chain’s features is that the network supports Bitcoin-native wallets such as Unisat Wallet. Using Particle Network’s account abstraction technology, users can use their Bitcoin wallet to swap between L1 and L2 seamlessly.
Users can also swap BTC or other native Bitcoin tokens for other tokens at any time without having to switch to an EVM-compatible wallet. The swap process can be done through MerlinSwap, a native decentralized exchange (DEX) built to support the Merlin Chain ecosystem.
MerlinSwap uses the Discretized Liquidity-Automated Market Maker (DL-AMM) mechanism to provide efficient and low-cost liquidity and swap services on the Merlin Chain. Merlin Chain supports all native tokens on the Bitcoin network. Starting from BTC, BRC-20 such as ORDI, SATS, RATS, NFT Ordinals, BRC-420, Atomicals, to Stamp.
Merlin Chain also has a bridge feature, but this feature is still in Beta. It allows users to move their native Bitcoin assets from Merlin Chain to Bitcoin or vice versa.
Another recently added feature is Cross-Chain Withdrawal. Through this feature, users can send assets from Merlin (L2) to Bitcoin (L1). This feature supports all native Bitcoin tokens except Runes. Meanwhile, the gas fee for cross-chain withdrawal transactions is 0.00005 BTC.
Learn about Runes, the latest token innovation on the Bitcoin network through this article.
Merlin Chain Ecosystem
Merlin Chain has an inclusive ecosystem compared to other networks, as they support a variety of native Bitcoin protocols. As a result, the Merlin Chain ecosystem has become home to a diverse range of dApps. Alongside MerlinSwap, the three protocols with the largest TVL on Merlin Chain are:
- Solv Protocol. It is a native yield platform that performs tokenization strategies and aggregates high-quality yield across the industry. It acts like a liquid staking protocol where users can stake their BTC and get solvBTC tokens in return. It is the dApp with the largest TVL on Merlin Chain, at $732.48 million.
- Avalon Finance. It is a lending protocol based on Collateralized Debt Position (CDP) and Real-World Assets (RWA). With Avalon Finance, users can borrow and become liquidity providers for various native Bitcoin assets. Currently, Avalon Finance’s TVL has reached $203 million.
- Surf Protocol. It is the first DEX derivatives protocol on the Merlin Chain network. With Surf, users can do perpetual trading or become liquidity providers for various native assets in the Bitcoin ecosystem. Surf already has a total trading volume of $315.2 million and a TVL of $31.8 million.
Merlin Chain’s Advantages
The following are some of the advantages of Merlin Chain:
- 🔐 Security: As the L2 of the Bitcoin network, Merlin Chain inherits Bitcoin’s security aspects with its Proof-of-Work consensus mechanism. It also implements Oracle’s decentralized network mechanism to strengthen security.
- ⚡ Scalability: As an L2 with ZK-Rollups technology, Merlin Chain can process more transactions quickly at a lower cost.
- 🌐 Interoperability: Merlin Chain has interoperability with the Bitcoin network. This allows users to send assets seamlessly from Merlin Chain to Bitcoin and vice versa.
- ✨ EVM compatible: Merlin Chain supports the use of smart contracts, developer tools, and existing wallets, making it easy for development teams to build dApps on it.
MERL Token as Investment
MERL is the native token of the Merlin Chain ecosystem. It was recently launched through a Token Generation Event (TGE) on April 19, 2024. There are currently only 226.5 million MERL tokens, or about 11%, circulating in the market from its total supply of 2.1 billion MERL.
As a utility token, MERL has several uses in the Merlin Chain ecosystem. Apart from being a governance token, MERL can also be staked to improve the security of the Merlin Chain network and receive rewards. Furthermore, MERL is also used to pay transaction fees and provide liquidity in the Merlin Chain ecosystem.
Unfortunately, since its launch, the MERL token has underperformed. Initially priced at $1.31, it has seen a continuous decline and currently sits at $0.44, reflecting a roughly 66.4% drop from its launch price.
The Merlin Chain developer team has announced several planned ugprades to improve their product. They are preparing three upgrade: a mainnet upgrade with Lumoz, an account abstraction upgrade with Particle, and a cross-chain withdrawal feature for Runes. All three updates are targeted to be completed by the end of May 2024.
Conclusion
The emergence of Merlin Chain presents a compelling solution for scaling the Bitcoin network. This Layer 2 protocol utilizes ZK-Rollup technology, facilitating significantly faster and more cost-effective transactions. At the same time, it also inherits the robust security from the Bitcoin blockchain. The main goal of Merlin Chain is to make Bitcoin Fun Again.
Beyond speed and affordability, Merlin Chain offers a diverse ecosystem. It supports all native Bitcoin tokens, from classic BTC to BRC-20 tokens like ORDI and SATS, and even NFT Ordinals. Additionally, BRC-420 tokens like Atomicals and Stamp are also integrated. The ecosystem continues to expand with the addition of innovative protocols such as MerlinSwap, Solv Protocol, Avalon Finance, and Surf Protocol.
How to Buy MERL on Pintu
After knowing what Ethena is, you can start investing in MERL by buying it on Pintu app. Here is how to buy crypto on Pintu application:
- Create a Pintu account and follow the process of verifying your identity to start trading.
- On the homepage, click the deposit button and top up the Pintu balance using your preferred payment method.
- Go to the market page and look for MERL.
- Click buy and fill in the amount you want.
- Now you have MERL!
In addition to MERL, you can safely and conveniently purchase a wide range of cryptocurrencies such as BTC, ETH, SOL, and others safely and easily on Pintu. Pintu diligently evaluates all its crypto assets, highlighting the significance of being cautious.
Pintu is also compatible with popular wallets such as Metamask to facilitate your transactions. Download Pintu app on Play Store and App Store! Your security is guaranteed because Pintu is regulated and supervised by Bappebti and Kominfo.
In addition to buying and trading crypto assets, you can expand your knowledge about cryptocurrencies through various Pintu Academy articles. Updated weekly, all Pintu Academy articles are made for knowledge and educational purposes, not as financial advice.
References
- Merlin Chain, Introducing Merlin Chain Token ($MERL), Medium, accessed on 16 May 2024.
- Merlin Chain Docs, Merlin Chain Overview, accessed on 16 May 2024.
- Tindorr, Here are key things you need to know about Merlin ecosystem, X, accessed on 16 May 2024.
- Lambro, The mystery force of BTC Merlin Chain, X, accessed on 16 May 2024.