Bitfinity Introduces Bitcoin Layer 2 Solution Backed by $12 Million Funding
On November 19, 2024, Bitfinity Network launched its Bitcoin Layer 2 (L2) solution, backed by $12 million in funding. This initiative aims to integrate Ethereum-compatible decentralized finance (DeFi) capabilities into Bitcoin, enhancing its utility beyond being a store of value.
The project has received strong institutional backing from investors such as Polychain and ParaFi. Additionally, it raised $5 million through over-the-counter (OTC) token sales, primarily supported by contributions from the Bitcoin community.
Bitfinity’s Bitcoin L2 Boosts Scalability and Versatility
The launch of Bitfinity’s Bitcoin Layer 2 solution marks a significant advancement in Bitcoin's scalability and functionality. Utilizing Internet Computer Protocol’s (ICP) Chain Fusion Technology, Bitfinity facilitates seamless interaction between Bitcoin-native assets and Ethereum’s ecosystem. With Bitcoin attracting institutional investment and surpassing $92,000, there is an increasing need for integration into decentralized applications (DApps) and smart contracts.
The network secured $7 million from institutional investors, including Polychain’s Beacon Fund and ParaFi. This financial support positions Bitfinity to enhance scalability and broaden Bitcoin's use cases. The platform aims to improve scalability while enabling cross-chain compatibility, extending the range of Bitcoin-based applications, which were previously limited to platforms like Ethereum. A spokesperson noted the influence of institutional ETFs and improved access for financial institutions as indicators of market evolution.
“With institutional ETFs on the horizon and a new regime marking Bitcoin more accessible to institutions [...] At Bitfinity, we’re [...] pioneering a side-chain infrastructure layer to boost scalability, unlock cross-chain functionality, and broaden Bitcoin’s applications,” a Bitfinity spokesperson stated.
Security and Smart Contracts at the Core
Bitfinity’s Layer 2 solution emphasizes security through a proof-of-stake protocol enhanced by Chain-Key technology, ensuring transaction integrity. This method utilizes large signing committees to manage Bitcoin Schnorr and ECDSA transactions, providing greater security than traditional multi-signature methods used by other Layer 2 platforms.
The platform plans to host decentralized applications such as Sonic, Chapswap, Lendfinity, and Omnity Bridge. Backed by Liquity’s founder, Bitfinity aims to introduce advanced DeFi solutions to strengthen its ecosystem.
The impact of ICP’s Chain Fusion technology has increased, with a reported 1,230% year-over-year rise in usage as of November 2024, according to the Dfinity Foundation. This growth is driven by Bitcoin-native applications like Bitfinity, Rainbow Protocol, and Tap Protocol, which leverage Chain Fusion to enable direct deployment of smart contracts and advanced programming on Bitcoin.
Chain Fusion enhances Bitcoin’s smart contract functionality by allowing direct interaction with the network, bringing Bitcoin closer to Ethereum’s capabilities in supporting DApps and complex contract systems.