📖 Bitcoin BRC2.0 protocol: From inscription token to the new era of smart contracts

📌 The BRC2.0 protocol introduces native modular smart contracts to the Bitcoin Mainnet, expected to spark a wave of BTCfi applications and drive Bitcoin into a true era of Programmability.

Key points

Research from major platforms indicates that BRC2.0 appears to be a significant upgrade that transforms Bitcoin from "digital gold" into a programmable financial platform, introducing smart contract capabilities compatible with the Ethereum Virtual Machine (EVM).

It may expand the application scenarios of Bitcoin, including DeFi, NFT, and SocialFi, but it has also sparked controversies regarding network congestion and rising fees.

The current ecosystem includes projects such as BiS SWAP and Trio DEX, and the market response is positive. However, there are differing opinions in the community, with some people concerned about its impact on the core use of Bitcoin.

With the on-chain innovations sparked by Ordinals and Runes continuing to heat up, the simple but historically significant BRC20 inscription token protocol is also undergoing a key upgrade. In the summer of 2025, the brand new BRC2.0 protocol will be launched on the Mainnet, bringing Bitcoin assets from "issuable" into the era of "Programmability," paving the way for deploying native smart contracts on the BTC Mainnet. BRC2.0 is becoming a new battlefield for Bitcoin ecosystem developers and DeFi projects to focus on, following Ordinals and Runes.

1. What is BRC2.0?

BRC2.0 is an upgraded version of the BRC-20 standard, designed to transform Bitcoin from a simple value storage tool into a platform that supports complex applications by introducing EVM-compatible smart contracts functionality. It will go live on the Bitcoin Signet testnet on March 31, 2025.

✅ Fully operates on the Bitcoin L1 layer, without relying on any Layer2 or cross-chain bridges.

✅ Compatible with Solidity smart contracts, supports native migration of Ethereum DApps, reducing migration costs for developers.

✅ Modular extension asset protocol, no need to migrate existing BRC20 to add smart contracts, solving the performance bottleneck of Bitcoin's 10-minute block time.

Application Scenarios

DeFi: Supports automated market makers (AMM), decentralized exchanges (DEX), and lending protocols.

NFT and inscriptions: Support inscription staking and dynamic rewards through the Ordinal Lockers mechanism.

SocialFi: Exploring on-chain social economy, such as content tipping and social token binding.

This means that Bitcoin can not only issue tokens but also run complete DeFi applications, DEX, NFT markets, blockchain games, and other complex ecosystems.

2. Upgrade Path: Phased Introduction of Smart Contracts Capability

The deployment of BRC2.0 Mainnet is divided into two phases:

⏳ Phase One: Enable 6-byte Ticker (Block 909,969)

Added support for 6-byte token symbols (such as BRCPRO, DAOSYS), automatically compatible with the BRC2.0 module system.

🧠 Phase Two: Full BRC20 Automatic Upgrade Contract Support (Block 914,888)

Core assets including $ORDI, $SATS, etc. will seamlessly integrate into the smart contracts system, supporting functions such as Staking, governance, and airdrop control, without the need for manual migration or authorization.

✅ No need for Layer2 Sequencer

✅ No need for multi-signature or oracle

✅ All calls are based on the standard BTC transaction structure, secure and native.

3. Comparative Analysis: From Inscription to Native Contracts

BRC2.0 can achieve:

Module contract deployment and invocation

DEX / SWAP / Launchpad

Token Staking and Governance Mechanism

The interoperability logic between NFTs and inscribed assets

Proxy smart contracts upgrade mechanism and multi-module combination

The Technical Innovations and Ecological Impact of BRC2.0 Introduction BRC2.0 is a milestone technical upgrade in the Bitcoin ecosystem, aimed at transforming Bitcoin from a simple value storage tool into a platform that supports complex smart contracts and multifunctional applications.

As an upgraded version of the BRC-20 standard, BRC2.0 introduces smart contract functionality compatible with the Ethereum Virtual Machine (EVM), running directly on Bitcoin Layer 1, enjoying the security and decentralization features of Bitcoin's Proof of Work (PoW). A comprehensive analysis of the profound impact of BRC2.0 on the Bitcoin ecosystem is conducted from the perspectives of technical features, ecological development, market impact, community sentiment, and potential risks. As of July 13, 2025, the testnet for BRC2.0 has shown strong development momentum, but its mainnet launch and long-term viability still require further observation.

4. Core Mechanism: The Modular Contract System on Bitcoin

BRC2.0 adopts an innovative Module architecture (Modular Contract System), with key components including:

UCode: Universal Contract Logic Module

Account Layer: Multi-account status recording and authorization management

Protocol Router: Invoking Permission Routing Center

This mechanism allows for a more transparent modular combination method than EVM, fully compatible with the UTXO model of BTC, and has the following advantages:

✅ Fully on-chain execution, no centralized nodes

✅ No additional Layer1 Token introduced

✅ Atomic operations, secure inheritance of Bitcoin POW network

BRC2.0 outperforms BRC-20 and Runes in programmability and interoperability, and compared to Alkanes, its ecosystem integration and developer tools are more complete, but maturity still needs time to be validated. In the security comparison, BRC2.0 inherits the complete security of the Bitcoin PoW network, outperforming Layer 2 solutions and sidechain solutions that rely on additional security assumptions. Scalability analysis shows that BRC2.0 achieves efficient state management through modular design, but is still limited by the underlying throughput of the Bitcoin network.

Five, Key Ecological Projects and Developer Tools

The BRC2.0 protocol has attracted multiple development teams and tool platforms to actively participate in ecosystem construction:

🌀 BiS SWAP

Native AMM protocol based on BRC2.0

Deploy an on-chain trading pool that supports slippage control and limit order functionality.

Promoting the early construction of the native liquidity market for BTC

💹 BiS DEX

Using an on-chain order book and matching mechanism, supporting strategy trading.

Aimed at professional traders, providing a richer operational space.

Form a model complement with BiS SWAP

🧩 Trio DEX

Provide contract templates, one-click deployment, Launchpad tools

Support for contract call data analysis and testing environment access.

Provide developers with visual on-chain operations.

🧪 CoinCooker

No-code asset issuance platform, supporting BRC20 / BRC2.0

Support for icon uploads, parameter settings, airdrop configuration

Lower the threshold for asset issuance, suitable for non-technical users.

🎮 Hippodrome

Game theory-based Web3 games on Bitcoin

Test the honesty of miners using the contract mechanism

Equipped with governance voting and on-chain behavior analysis mechanisms

💬 One2ThreeLabs

Build SocialFi applications based on wallet behavior and token binding.

Support for content tipping and identity binding mechanism

The design concept similar to Friend.tech has entered the testing phase.

🧱 100 Layer

BTC encapsulation scheme, providing Module-Asset mapping capability

Used for cross-protocol calls and unified standard output

can be used for DeFi cross-protocol fund flow management

6. Mainnet Deployment and On-chain Activity

BRC2.0 testing phase data shows active performance, indicating its real market demand and development potential:

📈 The daily trading volume in the testing phase has exceeded 120,000 transactions.

👨‍💻 Over 500 contracts deployed, with more than 200 developers participating.

$ORDI, $SATS and other mainstream assets will automatically be compatible with the BRC2.0 module system in September.

🔗 Wallets such as Unisat, Xverse, and Leather have completed integration, and more wallets are in the process of connecting.

From 2023 to 2025, the discussion volume of the #BRC20 和 #BRC2.0 topic on platform X significantly increased, with a total of over 8,000 posts, more than 5,000 shares, and over 100,000 likes. Discussion topics included technical analysis, market predictions, and community debates, reflecting the importance of BRC2.0 in the crypto community.

7. Development Experience: Native, Secure, Low Barrier to Entry

✅ No bridging required, no Layer 2, middleware, or oracle needed.

✅ All operations are based on Bitcoin Witness Data and standard transaction structure.

✅ Supports Hardhat, Ethers.js, Metamask compatible plugin development and testing

Bitcoin developers finally have a truly L1 native, EVM toolchain compatible smart contracts platform.

8. Conclusion: The era of Programmability for Bitcoin has already begun.

BRC2.0 is not just an update to the token protocol, but a leap from token experimentation to the capability of full-stack application deployment.

It gives Bitcoin the following capabilities:

✅ Supports the complete DApp lifecycle operation

✅ Access to DeFi, NFT, DAO and BTCfi application ecosystem

✅ Inherit the security, sovereignty, and transparency of the BTC network.

DeFi Potential: If BRC2.0 can support more complex applications, it is expected to become the DeFi engine within the Bitcoin ecosystem, unlocking hundreds of billions of dollars in on-chain locked value, with a projected total market value of the ecosystem potentially exceeding 10 billion dollars by the end of 2025.

NFT and Art: Combining Ordinals, BRC2.0 may become the main carrier of NFTs and artworks on Bitcoin, attracting more creators and collectors.

Market Position: If BRC2.0 can overcome the current technical and market challenges, it is expected to become an indispensable component of the Bitcoin ecosystem, with market predictions suggesting its market value may exceed 10 billion USD by 2026 (FameEX report).

📌 Ordinals is a turning point in Bitcoin culture, Runes is a new attempt at asset issuance, while BRC2.0 is the gateway for BTC to a truly Programmability future.