BOB 101: What exactly is Hybrid Layer 2?

On

May 28th, the hybrid Layer2 project BOB (Build on Bitcoin) launched the "BOB 101" user education column on its official website and released the first article "What is a Hybrid Layer2? What exactly is Hybrid Layer 2? It aims to let more people understand the underlying logic and superstructure of BOB with zero threshold and foolishness through this column, as well as how BOB achieves the vision of "Bitcoin DeFi Home".

on the original article published on BOB's official website, this article focuses on BOB's unique hybrid Layer 2 model and how it combines the advantages of Bitcoin and Ethereum to put Bitcoin at the heart of the DeFi world

Imagine you have a large bank vault full of gold coins, and it's very, very secure, almost unbreakable. But there's a problem with this vault: it only allows you to deposit or withdraw gold coins, but you can't do any complex financial "Lego" operations to earn interest.

That's the current state of Bitcoin. As we all know, Bitcoin is a good store of value and the oldest, most well-known, and most secure blockchain and asset in the crypto space. Recently, it has continued to renew its all-time highs by hitting new all-time highs and breaking through the psychologically significant $110,000 mark.

However, Bitcoin is not like Ethereum to build "Lego bricks" for financial applications through smart contracts, such as Restaking, revolving lending, etc., and the vast majority of Bitcoin is still idle in wallets and fails to generate income, and the capital utilisation rate of Bitcoin holders is almost zero.

As you can see from the chart below, Bitcoin's TVL accounts for only 0.2% of Bitcoin's market capitalisation, while Ethereum's TVL accounts for 35% of Ethereum's market capitalisation, a 150-fold difference in the utilisation rate of funds in the DeFi space. And BOB's goal is to close that gap by unlocking trillions of dollars in Bitcoin liquidity and bringing it into the DeFi space.

– Bitcoin

the > Bitcoin network is very secure, like gold in a bank vault, but once you put it elsewhere to earn yields, there may be a certain amount of risk at this point. Because you need to cross-chain Bitcoin from the native Bitcoin network to other public chains in order to use their smart contracts to carry out DeFi combination operations, and the cross-chain process needs to rely on third-party custodians or multi-signature bridges to exchange and wrap BTC, there is a risk that centralised institutions will do evil, and your BTC may be swept away by them without you knowing.

If we can make Bitcoin flexible in the DeFi world, while still maintaining a high level of security throughout the process, starting from the first layer of Bitcoin, crossing to another public chain, and then deploying it in the application to earn yields, then Bitcoin DeFi will explode like the Ethereum DeFi ecosystem, or even more prosperous than the Ethereum DeFi ecosystem. Building a Bitcoin-native DeFi ecosystem will be one of the hottest emerging sectors in the crypto space in 2025 and a once-in-a-decade opportunity for the crypto industry.

Bitcoin is at the heart of the DeFi world

and BOB's unique hybrid L2 model blends the best of both worlds – Bitcoin's security and dormant BTC capital, and Ethereum's DeFi innovation and versatility.

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Bitcoin's unmatched security combined with all the innovative DeFi features on Ethereum aims to put Bitcoin at the heart of the DeFi world, unlocking trillions of dollars in liquidity that are currently sitting idle on the Bitcoin network.

one-of-a-kind hybrid L2 model makes BOB the best and safest place to earn yield with Bitcoin for three main reasons

• : Bitcoin security: In December last year, BOB announced the integration of the Bitcoin Secure Network (BSN) with Babylon, creating a more secure, low-barrier, and easy way for users to participate in Bitcoin staking, from BTC cross-chain to DeFi transactions, which are secured by billions of dollars worth of Babylon BTC staking assets.

• Ethereum DeFi: BOB is not only BSN, but also an Ethereum rollup in the Hyperchain ecosystem, offering fast, low-cost transactions and access to a variety of innovative DeFi applications such as DEXs, lending, NFTs, and chain gaming.

• Trustless Bitcoin Deposits: Using BOB's BitVM bridge, it's possible to send Bitcoin directly from the main Bitcoin network to BOB without having to trust a third-party agency, all secured by the security of Bitcoin itself, which is more secure and decentralised than other Bitcoin bridges that require escrow from a third party.

To sum it up: all DeFi operations on the BOB network will be secured by the security of the Bitcoin network itself, rather than relying on any other third-party institution, which is not available in other Layer 2s.

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Hybrid L2 is the best place to use Bitcoin in DeFi

Thanks to the hybrid L2 model, BOB is the best platform for using Bitcoin and Bitcoin Liquid Staking Tokens (LSTs) in DeFi. Since BOB has the Bitcoin security provided by Bitcoin LST, there is a strong self-reinforcing flywheel effect.

The more LST staked on BOB and used in DeFi, the more transaction fees generated by the BOB network will be returned, some of which will be returned to stakers in the form of yields. The more LST on BOB, the higher the yield earned by the staker, which in turn attracts more LST stake, which further increases the yield...... And so on and so forth.

Use BitVM bridges for more secure Bitcoin cross-chains

As we all know, existing Bitcoin cross-chain bridges often rely on centralised entity organisations, such as Wrapped Bitcoin (wBTC), and the security of these cross-chain bridges depends on the honesty of these centralised entities and the cost of being evil, there is a certain centralised single point risk, once they run away, you will lose all your assets. The BitVM bridge introduces a more superior security mechanism: as long as BTC L1 is secure and there is at least one honest node in the network capable of executing on-chain disputes, users can safely deposit and withdraw BTC. The user does not have to trust any one company or organisation to keep his assets safe.

Completely eliminating the need for third-party cross-chain bridges in BTC DeFi applications is an important step in unlocking Bitcoin's trillion-dollar potential in the DeFi market. The BitVM Bridge has also successfully cemented BOB's position as the home of Bitcoin DeFi, providing the most secure and trust-minimised way for Bitcoin DeFi and Bitcoin interest-bearing businesses.

Make Bitcoin DeFi more

convenientBOB can provide users with first-class BOB network, Bitcoin network and Ethereum network cross-chain services, making it easier and more convenient for users to access Bitcoin DeFi on BOB. In addition, BOB Earn allows users to deploy to Bitcoin liquid staking tokens (LST), Uniswap, and many other top DeFi applications with one click.

Going forward, any blockchain network that is able to read the Bitcoin network – such as Solana, Tron, Sui, Polkadot, and others – will be able to connect to the BOB network via the BitVM bridge. This means fewer detours, simpler cross-chain and transactions, and, of course, the security underneath Bitcoin.

What does BOB's hybrid L2 model mean to you?

• BTC holders: Users can transfer idle BTC to BOB's hybrid L2 layer and easily earn yield in Bitcoin DeFi through BOB's "one-click Bitcoin DeFi" feature.

• DeFi enthusiasts: For those DeFi enthusiasts who are often active in the Ethereum DeFi space, you can easily cross-chain ETH and stablecoins to the BOB network and quickly exchange them for Bitcoin derivatives. BOB's BitVM bridge features Bitcoin Finality, which can greatly improve the security and decentralisation of Bitcoin across chains. Users also have direct access to new liquidity from BTC's vast pool, which also means greater trading volumes and new earning opportunities.

• Developers: In the BOB network, developers have access to the same tools as the Ethereum network, while also taking advantage of Bitcoin's large audience. Developers can leverage Ethereum's best development infrastructure to quickly launch DApps, and if they want to access other chains, BOB's hybrid L2 model makes it easy to connect BOB to other public chain networks – and all with the security of the Bitcoin network.

BOB's hybrid Layer 2 aims to build a DeFi ecosystem that is fully secured by Bitcoin's underlying security, helping to unlock trillions of dollars of BTC liquidity that are waiting for the right opportunity to generate yield. For Bitcoin holders, whether they are small retail investors or large institutional investors, achieving this goal requires the security of the Bitcoin network itself, and all thanks to BOB's hybrid Layer 2 model.