New Opportunities and Challenges After Bitcoin Halving

As Bitcoin is about to迎来 a new round of Halving, its ecosystem is undergoing comprehensive development. Emerging projects such as Layer2, (Re)Staking are continuously emerging, bringing new application scenarios and development opportunities for Bitcoin. So, why does Bitcoin need its own (re)staking mechanism? What is its rationale? For entrepreneurs and investors, what new opportunities will arise after the Halving? What is the market size of BTC staking? Is this a long-term opportunity or a short-term hotspot?

In response to these issues, several participants and long-term advocates of the Bitcoin ecosystem engaged in in-depth discussions. They unanimously believe that, whether in the short, medium, or long term, the Bitcoin ecosystem holds tremendous opportunities. The attending guests analyzed the breakthrough points and opportunities in the Bitcoin entrepreneurial track from their respective backgrounds and product perspectives, and expressed optimism about future development prospects.

The main points of discussion are as follows:

• The upcoming Bitcoin Halving is influenced by multiple factors, and there is uncertainty in the market outlook. The Halving primarily affects the supply side, leading to a significant reduction in miner income, particularly impacting miners using old mining machines. Miners will be forced to accelerate equipment upgrades, optimize costs, or migrate to areas with lower electricity prices. However, due to the strong risk resistance capabilities of large mining companies and traditional capital, the overall decrease in network hash rate is expected to be limited.

• The mining rewards for Bitcoin will gradually decrease, ultimately approaching zero. The true returns of Bitcoin in the future will come from using it as an investment asset, investing in Layer2, DeFi, CeFi, and other ecological projects, from which holders will gain profits. This will become an important development direction for the Bitcoin ecosystem.

• Miners' future earnings come from two parts: newly issued Bitcoin and transaction fees, the latter of which depends on the activity level of the Bitcoin ecosystem. More attractive staking projects can stimulate ecosystem development, leading to more on-chain activities and transactions, improving network security, and increasing miners' transaction fee income.

• The PoS mechanism lacks external economic incentives, and its security is limited by the size of the on-chain economy, posing a risk of control. Bitcoin staking and restaking protocols bring in large-scale external Bitcoin assets to provide security for the PoS network, addressing its inherent flaws. This is key to the rationality of Bitcoin (re) staking.

• An industry expert predicts that Bitcoin staking will become a market worth billions of dollars, comparable in scale to the early days of PoW mining, and can meet the needs of future high-performance application chains that require secure infrastructure.

• Four key areas to focus on for the future of the Bitcoin ecosystem: architectural innovation, Layer 2 development path selection, efficient asset circulation, and security guarantees.

• For ecosystem builders and entrepreneurs, the short term can focus on solving the BTC network congestion issue and accommodating overflow demand; the medium term can pay attention to the holders' income needs; and the long term aims at the ecological development prospects after the potential script language upgrade. It is worth noting whether more application scenarios closely related to Bitcoin will emerge in the future? Will there be better tools to facilitate Bitcoin usage? And will there be innovative programming models to break through its non-Turing completeness?

• As an innovative project in the Bitcoin ecosystem, the solution of a certain protocol addresses objective violation issues, which differs from other projects that deal with subjective attacks.

Overall, the Bitcoin Halving will bring new opportunities and challenges to the ecosystem. The emergence of innovative projects is expected to inject new vitality into Bitcoin, bringing more application scenarios and value. Ecosystem participants need to closely monitor industry trends and seize development opportunities.