Bitcoin Layer 2 Projects Heat Up: Stacks and Bitlayer Lead the Charge
The world of Bitcoin Layer 2 projects is gaining momentum, aiming to turn BTC from a passive store of value into an asset usable for payments, lending, trading, and decentralized finance. Unlike Ethereum, 'Bitcoin L2' encompasses various architectures, including rollups, sidechains, and Bitcoin-linked smart-contract networks.
The most established scaling ecosystem is Stacks, using Proof of Transfer and Clarity smart-contract language while settling transactions with Bitcoin finality. Its sBTC asset allows Bitcoin to be used across DeFi applications, with a reported TVL of $545 million in Q1 2026 and nearly $121 million held by DeFi protocols on the network.
Bitlayer is building Bitcoin DeFi infrastructure around BitVM, allowing BTC to move into programmable environments with reduced trust assumptions. Its YBTC ecosystem has become a central growth driver, reporting a TVL of nearly $100 million in March 2026 and over $98.54 million in transaction volume.