Layer 2 Bitcoin network Botanix is shutting down a year after its mainnet went live.
The project cited market conditions and greater indifference within the cryptocurrency industry towards establishing greater utility on the Bitcoin network, in an article on X on Tuesday.
“It didn’t work,” Botanix summarized. “At least not in this market and not in this time frame.”
Botanix’s goal was to bring Ethereum-equivalent functionality to the Bitcoin network, allowing applications and smart contracts to be efficiently copied and pasted onto the world’s first blockchain. The project raised $14.4 million in two funding rounds in 2023 and 2024. Despite this, its total value locked (TVL) at close was only $119,500, according to DeFiLlama data.
Botanix was one of several Layer 2 protocols and protocols that have emerged in recent years, aiming to expand Bitcoin’s utility and help it evolve beyond just being a store of value.
The idea was that Bitcoin holders did not have to leave their assets idle and hope for price appreciation. They can also use decentralized finance to generate additional income. This could involve staking tokens on other blockchain networks or using DeFi tools compatible with smart contracts, such as lending or decentralized exchanges (DEX).
Botanix Autopsy
However, it didn’t go as planned, at least not for Botanix.
The protocol emphasizes that “making Bitcoin programmable, productive, and integrated with real-world financial activity is not currently the task of real-world users.”
This post-mortem may raise questions about the viability of the broader Bitcoin development sector, which includes other layer 2s like Rootstock or rollups like Citrea, during a prolonged period of muted sentiment in the crypto market.
CoinDesk reached out to both projects for comment, but none was received at the time of publication.
Roshan Dharia, CEO of digital asset investment firm Echo Base, said Botanix’s closure is a sign of things to come in an “overbuilt industry, with many more networks competing for users, developers and capital.”
“We expect this dynamic to drive further consolidation and reductions through 2026, as activity continues to be concentrated in a relatively small number of ecosystems,” he told CoinDesk in a Telegram message.
BTC has lost more than 50% of its value since reaching its all-time high of nearly $125,000 last October, which could leave investors wondering why they should be interested in expanding the use of bitcoin when it currently does not perform its more fundamental function of storing value very effectively.
“It’s possible that bitcoin’s role as a reserve asset is simply limited to where it sits. If that’s true, there will never be a market for what we’re building and no amount of time or capital will change that,” Botanix said.
A simpler way to combine the secure store of wealth offered by BTC with the programmability and utility of other blockchain networks may lie in synthetic or “wrapped” Bitcoin tokens. These are tokens that represent BTC on a 1:1 basis and can be traded and staked on networks like Ethereum.
The most established of these is wBTC, which was introduced in 2019, but more recently Coinbase and Circle have developed their own synthetic Bitcoin tokens to attract institutional investors and traders.
“For lending, yield and leveraged exposure, wBTC on a mature general purpose L2 is truly sufficient,” Botanix said.
“Users voted based on their behavior, and the verdict is that the trust assumptions of a wrapped representation on Ethereum are acceptable to almost anyone who wants Bitcoin-denominated DeFi.”
UPDATE (June 10, 12:35 UTC): Adds a comment from Dharia.
