Of course, it depends on if you’re asking about growth in nominal terms or relative terms.

Bitcoin L2s (in this category I’ll include a bunch of things which I wouldn’t normally, like Stacks Nakamoto, Botanix, BOB, Bison Labs, Merlin, B², Alpen Labs, Citrea and so forth) will undoubtedly grow faster in relative terms, at least when you factor in the coming newcomers that we haven’t even seen yet. I think you’ll be surprised to see the amount of muscle that will soon flock to this space.

Right now it’s still very early days for Bitcoin L2s. We’ve yet to see the kind of buttoned-up monster-launches that we see in the Ethereum ecosystem (like Starknet, zkSync, Arbitrum and many new players like Monad and Blast that come with VC war chests in the hundreds of millions).

If you take all the Bitcoin L2s today and combined them, they haven't even raised as much as a single top-shelf Ethereum L2. So as a sector, Bitcoin L2s will grow much faster in relative terms because of how nascent and small it still is.

Regarding whether Bitcoin L2s can eclipse Ethereum L2s in size also in nominal growth terms (TVL, token market caps), this I find quite unlikely over the next 3 years.

Bitcoin L2s struggle for several reasons. First of all, there isn’t even support at the Bitcoin L1 to host the kinds of L2s we’re familiar with on Ethereum. The closest we have today are sidechains/sovereign rollups with BitVM-bridges.

While fascinating as a science experiment, BitVM-bridges come with considerable limitations; there’s large amounts of data that need to be exchanged in the setup phase between BitVM "channel" participants, dispute resolution is extremely slow (order of months), bridging in/out assets is not trivial—and this is before the full clunkiness of the system is completely uncovered. The BitVM implementation led by the ZeroSync team is not complete yet.

You also need to factor in that the ZeroSync is a non-profit and has limited resources to work with.

But even if we imagine that BitVM crushes all expectations and all its clunkiness is hidden from the user, the Bitcoin L1 throughput is still extremely limited compared to Ethereum. Meanwhile Ethereum is converting its CALLDATA into blobspace over the next few weeks with the Dencun upgrade in order to turbocharge the capacity of its L2s, Bitcoin is unlikely to budge at all in that regard.

The Ethereum roadmap is rollup-centric. The Bitcoin roadmap is rollup-hostile. It will simply not be possible to host the same quantity of apps on Bitcoin L2s, unless you start building Frankenstein BitVM-drivechains, optimiums and sovereign validiums and MPC-sidechains (with offchain DA-components) dreamt up by the absolutely deranged.

But hey—anything is possible! It’s entirely possibly that we degrade the term “L2” to mean “Bitcoin-aligned” in the same way the Polygon PoS sidechain LARPed as an Ethereum L2 into the billions of dollars. It could be the case that in a post-Bitcoin-ETF-pre-Ethereum-ETF-world, large VCs will be pressed to have large Bitcoin-aligned allocations such that any and all technical inadequacies are forgiven.

If that happens, it’s still going to take time. Ignoring fugazi L2s like Merlin Chain for a minute, it’ll likely be around 3 years from now when we could start seeing such efforts come to fruition, and I only give it about a 25% chance that it happens at all ("it" being Bitcoin-aligned L2s of impressive magnitude of comparative size to Ethereum L2s).

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As a sidenote, one should stop to ask—why? What is the purpose of shoe-horning in all of these constructions into Bitcoin? We can understand if from the builder-perspective. Bitcoin is a less competitive arena! We can understand it from a VC-perspective. VCs need Bitcoin bets in their portfolios, with a tried-and-tested playbook to get a return on their capital!

But what is the reason for the end-user? What kinds of L2s are we even talking about? If we’re talking about replicating the EVM, we’re essentially talking about Rootstock with a different flavour of peg. But there was never really any interest in doing ‘Ethereum DeFi’ on a Bitcoin sidechain—and I don’t think the reason for this is that Rootstock’s peg wasn’t ‘trust-minimized’ enough.

WBTC is less trust-minimized than Rootstock RBTC, but it has a flourishing level of adoption because it exists in the Ethereum ecosystem, rather than on a barren sidechain. The sentiment change and interest around Bitcoin L2s as of late could probably make a difference here, but I’m not entirely sold on it yet.

So what then? Are we building payment solutions for BTC, a better Lightning Network, without channels?

Unironically, that would be a more sensible product to build because bitcoin desperately needs better scaling solutions. But no matter how great of a system you build, there’s just very little demand for making bitcoin payments right now when bitcoin is still an investment to most people.

A payments system is not going to compete in growth with DeFi L2s this decade.

The type of Bitcoin L2 that would be interesting is something spun out of the Ordinals ecosystem. Bitcoin NFTs and fungible tokens could benefit a lot from a type of rollup that still embeds the necessary data into the L1 for provenance and posterity, while unlocking features that help the Ordinals ecosystem to grow and evolve. In my opinion, that would probably not be achieved via the path of EVM, for cultural and psychological reasons.

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Your question around Universal Synchronous Composability is interesting. Indeed, for the rollup-centric roadmap to even play out well on Ethereum, we’re going to have to see a lot of progress on the shared sequencing side, as well as getting ZK-proving times to be as fast as Ethereum block times or faster. Optimistic settlement windows will always require a lag in order to be safe, that's why ZK is an important pillar to getting something like Universal Synchronous Composability working.

I’ve been keeping an eye on Polygon’s AggLayer and this seems like the correct direction to go in.

Like Justin, I also think this is a multi-year effort to get right, if we can get it right at all and it does not devolve into a situation where there’s lots of Universal Synchronous Composability standards fighting with each other (see xkcd 927). But indeed, the fact that you need a native ZKP-verifier on the L1 means it’s much more challenging for Bitcoin L2s to catch up in this regard (see this for my recent discussions around native ZKP-verification opcodes in Bitcoin).

My brain explodes when trying to think through how BitVM-resolved ZKPs or other optimistically-resolved ZKPs on Bitcoin would even attempt to tap into Universal Synchronous Composability, so I cannot give you a good answer, but my intuition is that it would come with some barely-acceptable to un-acceptable tradeoffs if Bitcoin tried to inherit it (also keep in mind here that even if we could by some magic do away with optimistic dispute windows, Bitcoin's block time does not permit for 12-second finality anyway—which means you couldn't provide this composability with Bitcoin security, you'd have to introduce some slashable collateral of some kind for fast soft-confs, which is ugly and breaks apart in the seams at the things that Universal Synchronous Composability is trying to hold together).

Indeed, the more I think about this, the more challenging I see it that Bitcoin L2s could truly catch up with Ethereum if we're talking also about technological equivalence rather than market caps and TVL alone. It seems like a 5-year-out target, and more likely that Bitcoin L2s will always lag behind due to its L1 constraints.

Now, while putting on my wizard hat, I would say that the potential and future of Bitcoin L2s could change dramatically if we can get a new opcode activated in Bitcoin via a softfork. OP_CAT, which is one of the simplest opcodes (and used to exist in Bitcoin over a decade ago) is in my opinion the most probably one. It would unlock recursive covenants and merkle commitments. These building blocks have the potential of redrawing the battlefield for Bitcoin drastically.

(Maybe not on the Unified Synchronous Composability front to satisfaction, but in terms of actually getting real channel-free L2s on Bitcoin, which is really where the puck is at for the moment).

The part I'm least worried about from your question are the network effects. Rollups have already split up the network effects of Ethereum on their own accord—it should not be decisively more challenging for a Bitcoin L2 to compete than a brand new Ethereum L2. Perhaps in a "Unified Synchronous Composable"-world there will once again be Ethereum network effects that Bitcoin L2s will need to fear.

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As a final note, I cannot give any estimates at all on a 8-year time horizon. I’ve become quite taken aback by the advancements in LMs and general intelligence over the last year and I feel like the odds of this new emerging intelligence changing so much of what we know over the next 8 years are so high that I simply cannot predict anything about what the world will look like when we peer that far into the future. There are too many factors to consider and my uncertainty becomes too high.