A Bitcoin layer-2 executive discussed the current disappearance of previously “overhyped” narratives within the Bitcoin ecosystem as it continues to evolve.
In a recent interview, Bitlayer co-founder Charlie Hu identified three Bitcoin narratives he felt were exaggerated — notably those linked to Ordinals, layer-2 solutions, and re-staking.
Hu noted that one of the overhyped ideas surrounding Bitcoin was non-fungible tokens (NFTs). While he acknowledged that NFTs had previously skyrocketed in popularity, he believes that phase has “completely passed.”
Data from CryptoSlam reveals that Bitcoin NFTs generated a volume of $1.4 billion in the first quarter of 2024, but this dramatically fell to just $280 million by the first quarter of 2025, reflecting an 80% decrease. Hu believes the days of dramatic gains in Bitcoin NFTs are likely behind us, with no expectation of similar “crazy” price movements in the future.
Are Bitcoin layer-2s losing momentum?
Besides NFTs, Hu remarked that interest in Bitcoin layer-2 solutions and re-staking has also diminished among venture capitalists.
At the start of 2024, numerous layer-2 networks were seeking funding, capitalizing on the original excitement surrounding the narrative. Many projects approached investors, the media, and various communities, but Hu suggested that the hype has “definitely faded.”
This perspective is shared by many within the crypto space. On February 20, Stacks co-founder Muneeb Ali stated that the “honeymoon phase” for Bitcoin layer-2s is over, predicting the majority of projects will become obsolete as initial enthusiasm wanes.
Moreover, Hu highlighted a third narrative that has been deemed overhyped: Bitcoin re-staking. He mentioned that currently, there are only 2 to 3 projects still operational following the peak of this narrative’s popularity in 2024.
Despite the decline of some once-popular narratives, Hu sees several promising developments on the horizon for the Bitcoin ecosystem. He regards layer-2s as a powerful engine propelling Bitcoin’s decentralized finance (DeFi) sector, offering holders various yield opportunities. He stated:
“Bitcoin layer-2s provide infrastructure that is programmable and trust-minimized, potentially generating yield for Bitcoin whale holders or institutions. This is a crucial narrative, and I believe we will witness expanding use cases as adoption grows.”
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Bitcoin DeFi still has potential
Meanwhile, Dominik Harz, co-founder of the hybrid layer-2 Build on Bitcoin (BOB), suggested that Bitcoin layer-2 solutions should be viewed as a long-term investment.
“Examining Bitcoin Layer-2s through a short-term perspective misses the crux. Hype cycles may come and go, but meaningful advancements in crypto, similar to Bitcoin itself, are inherently long-term opportunities,” Harz remarked.
Harz also pointed out that Bitcoin DeFi hasn’t yet realized its complete potential. “Bitcoin DeFi is still in its early stages. Currently, merely 0.3% of Bitcoin’s market cap is utilized in DeFi, compared to 30% for Ethereum,” he noted.
He highlighted this substantial discrepancy, projecting it to diminish rapidly as Bitcoin DeFi gains traction. Additionally, he emphasized that layer-2s are essential technological enhancements for Bitcoin DeFi to thrive.
Max Sanchez, the chief technology officer of layer-2 protocol Hemi Labs, also contended that Bitcoin layer-2s aren’t slowing down. He indicated that the sector is entering a maturation phase where fundamental factors are becoming significant. Sanchez noted that many early Bitcoin layer-2 projects adopted technology from Ethereum without truly adjusting it to Bitcoin’s distinctive architecture in a way that fully extends its capabilities.
Sanchez, involved in a hybrid project connecting to Ethereum, asserted that developing a layer-2 in isolation without considering interoperability with Ethereum-based protocols is a “misguided notion.”
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