Merlin Chain: An EVM-compatible ZK Rollup Layer 2 network supporting multiple types of Bitcoin native assets.

Merlin Chain is a ZK Rollup Bitcoin second-layer network that supports multiple types of native Bitcoin assets and is compatible with EVM. This project was launched by the development team of BRC-420 Blue Box and Bitmap. From a market performance perspective, BRC-420 and Bitmap had good data performance in the early stages.

BRC-420 is a new type of protocol in the Bitcoin ecosystem, and Blue Box is the asset on it. The total amount of Blue Boxes is 10,000, with a floor price of 0.6 BTC and a total trading volume of nearly 480 BTC, currently giving a floor market value of approximately 400 million USD. Bitmap is the metaverse version of the Ordinals protocol, generated as Bitcoin blocks are produced, with 144 new Bitmap blocks added daily. On a certain trading platform, the trading volume is about 600 BTC, equivalent to 40 million USD, with a floor price of 0.0037558 BTC and a total amount of 833,200, giving a floor market value of approximately 200 million USD.

The success of BRC-420, the Blue Box, and Bitmap has accumulated a good community consensus for Merlin Chain. Since the launch of Merlin's Seal, which focuses on Fair Launch and Community First, in early February this year, the TVL has quickly surpassed $3 billion in less than a month. Partners include MPC wallet service providers, staking service providers, Layer 2 projects, and Bitcoin data service platforms. Among the $3 billion TVL, Bitcoin accounts for over 50%, with ETH and stablecoin assets each around $100 million, while other Bitcoin ecosystem assets such as ORDI and SATS also have a good amount of staking.

It is worth noting that Merlin's Seal is not equivalent to Merlin Chain. For example, the current TVL data assets supporting Merlin's Seal are not directly associated with Merlin Chain. According to data statistics, the BTC asset balance corresponding to Merlin Chain's TVL is approximately 500+ BTC, which is around 32.5 million dollars.

Next, we will analyze the project's prospects from the technical solutions and ecological development of Merlin's account structure, asset types, security, and more.

Chain-Agnostic Account Abstraction

Merlin Chain adopts the Ethereum public and private key address system to achieve EVM compatibility. In order to map and associate the Bitcoin public and private key addresses, Merlin uses the BTC Connect solution from Particle Network. This solution calculates the EVM EOA address using the Bitcoin public key, and then uses the EOA to control smart contract accounts for on-chain interactions.

Merlin Chain does not directly adopt the EOA address calculated from the Bitcoin public key as an account, but instead adds a smart account that implements the ERC-4337 protocol. This design is beneficial for the future rapid upgrade and iteration of features such as signature abstraction, Paymaster, and Bundler, but it also requires adaptation from wallets and blockchain explorers, and ecological projects need to be synchronized for transformation. For users, some usage habits need to be adjusted.

In and Out of Bitcoin Native Assets

Merlin Chain currently only supports BTC asset bridging and does not support emerging assets such as BRC-20, EVM series tokens, and NFTs. The UTXOs bridged by users are transferred to a unified receiving address of Merlin Chain on the Bitcoin network, which is a single-signature controlled P2WPKH address. We speculate that an MPC joint custody scheme is being used.

The bridging asset module of Merlin Chain is managed by the BTCLayer2Bridge contract, which is responsible for the minting and burning of assets. The minting logic function unlockNativeToken realizes the minting of bridging assets after authentication and verification. The burning logic function lockNativeToken handles the bridging fees. In addition, this contract has included ERC20 and ERC721 minting and burning code, and may support the bridging of EVM assets such as ETH in the future.

The user experience of the Merlin Chain official bridge is good, with clear information display. In contrast, the third-party cross-chain bridge Meson has lower fees, but it requires a certain amount of time to confirm assets on the chain.

Inheriting the Security of Bitcoin

Merlin Chain is developed based on the Polygon CDK framework, using the CDK Validium architecture. Its sequencer is responsible for collecting and verifying user transactions, which are then processed by a ZKP-proven aggregator and Prover. A decentralized oracle packages, hashes, and signs the layer two transaction data before sending it to the Bitcoin network.

This solution takes into account both the Bitcoin and Ethereum communities, maintaining EVM compatibility while inheriting Bitcoin's security. Some technical details, such as the adaptation of the EVM account model and the Bitcoin UTXO model, still need to wait for official documentation updates.

Clear Stream-like Ecology

The ecological development of Merlin Chain faces some challenges, currently showing only one mainstream dApp on the DeFi data platform. However, the actual cooperative ecological projects cover multiple fields such as wallets, infrastructure, and DeFi.

It is worth noting the bitSmiley project, which combines the characteristics of stablecoins and lending protocols, and has designed an innovative mechanism adapted to the Bitcoin network. As a key product for releasing Bitcoin liquidity, bitSmiley is worth looking forward to.

To ensure ecological safety, Merlin Chain has established the Merlin Security Council in collaboration with several well-known security companies to provide protection for ecological development.

In summary, Merlin Chain demonstrates great potential. As the ecosystem continues to improve, its TVL is expected to reach tens of billions. For users, deeply experiencing the Merlin Chain ecosystem may be a journey of growing together with the ecosystem.