Bitcoin and Ethereum remain steadfast at the pinnacle of the cryptocurrency hierarchy, but what is it that allows these two legacy blockchains to maintain their relevance and popularity in 2024 despite facing relentless competition?

In the first part of our exploration, we delved into how restaking has solidified Ethereum’s position as the premier ecosystem for both development and liquidity. This achievement stems from a meticulously balanced set of incentives that benefit developers, stakeholders, and the Ethereum ecosystem as a whole. Crucially, Ethereum’s shift away from the proof of work consensus mechanism has been pivotal in enabling this transformation.

The question arises: how can the Bitcoin community leverage this momentum?

Since Ethereum’s inception, various factions within the Bitcoin community have dedicated themselves to enhancing the Bitcoin blockchain’s capabilities. This journey began back in 2015 with the advent of smart contract platforms like RSK and the Lightning Network payment channels. More recently, innovations such as BRC-20 tokens and Ordinals have emerged, alongside the rise of Layer 2 platforms like Stacks.

Remarkably, Bitcoin continues to garner unprecedented attention without altering a single line of its sacred code. However, Bitcoin’s proof of work consensus has historically placed restaking out of reach. That changed when Babylon introduced self-custodial Bitcoin staking via its mainnet.

From a user perspective, this operates similarly to Ethereum’s restaking model. Users lock their idle BTC, generating yields by participating in proof-of-stake validation on other chains. This creates economic opportunities akin to those found in ETH-based restaking setups.

While restaking offers significant benefits to BTC holders and protocol developers, Bitcoin’s proof of work mechanism introduces another critical stakeholder group: miners. Rising mining difficulty has drastically reduced revenues for miners, prompting companies like Marathon Digital to adopt Michael Saylor’s strategy of selling debt to purchase BTC instead of investing in mining equipment.

Finding alternative revenue streams for miners is crucial for anyone concerned with Bitcoin’s network security. Transitioning to alternatives such as powering AI comes with its own set of challenges and may not offer a quick solution. Enter project exSat, a docking layer for Bitcoin that provides an innovative solution. By enabling miners to monetize their existing configurations and access UTXO (unspent transaction output) data, exSat creates an additional revenue stream for miners.

Successful blockchain initiatives align incentives to attract a diverse community that can both contribute and benefit. The exSat model achieves this by simplifying access to on-chain UTXO data, thereby fostering ongoing Bitcoin adoption by developers. This approach poses no threat to the network’s operation, unlike pivoting resources towards industries like AI, which could potentially divert focus away from Bitcoin.

With a robust ecosystem of Layer 2 solutions emerging on both Ethereum and Bitcoin, and with ETH and BTC remaining the market-leading assets, it’s clear that these two longstanding giants will spearhead future bull runs. Their continued dominance suggests that collaboration with these networks, rather than competition, is the only viable strategy for future builders seeking success.