Merlin Chain Project Analysis and Ecosystem Inventory | TrendX Research Institute

04/01/2024·9months ago

According to data statistics on March 2nd, the total TVL of the Bitcoin Layer 2 network Merlin Chain has reached 3 billion USD. The proportion of Bitcoin ecosystem assets is 90.83%, including 15.96 billion USD worth of BTC and 404 million USD of BRC-20 assets. Last month, within 14 days of launching the staking activity, the total TVL of Merlin Chain had already reached 19.7 billion USD, surpassing Blast, which was also launched in November last year and has recently gained attention. On February 26th, the total value of NFTs within the Merlin Chain ecosystem exceeded 420 million USD, making it the highest NFT market value public chain project outside of Ethereum.

Project Introduction

Merlin Chain is a new BTC Layer 2 solution supported by OKX, and its popularity lies in its direct solution to the core pain point of the Bitcoin network—scalability issues.

Merlin Chain adopts ZK-Rollup to compress a large number of transaction proofs into a simple checksum to improve transaction efficiency and scalability. The sequencer nodes on it are responsible for collecting and batch processing transactions, generating compressed transaction data, ZK state roots, and providing proofs through zkEVM. Then, the compressed transaction data and ZK proofs are uploaded to the Bitcoin L1 via a decentralized Oracle network to Taproot. This Taproot is available for the entire network to ensure transparency and security.

Team Information:

The team behind Merlin Chain, Bitmap Tech (formerly known as RCSV), has been deeply involved in the Bitcoin ecosystem for a long time and has contributed several native innovative projects to Bitcoin in the past year, with a total market value exceeding 5 billion USD. The BRC-420 "Blue Box" issued by Bitmap Tech has become one of the most popular assets in the Ordinals protocol, with its price soaring from $0.15 to $34,000, second only to BAYC and CryptoPunks.

Funding Information: On February 5th, Merlin Chain announced the completion of its financing, with 24 institutions including OKX Ventures, ABCDE, Foresight Ventures, and Arkstream Capital participating. The specific amount of financing has not been disclosed.

Operational Activities

Launchpad Staking Airdrop Activity

Total MERL token supply: 2,100,000,000

Sale price: 0.00004762 USDT

On February 5th, Merlin Chain announced that 1% of the total token supply (21 million MERL) would be used for the Launchpad through People's Launchpad, with an initial price of 0.00004762 USDT.
On February 8th, Merlin Chain launched a total of 6 phases of mainnet staking activities and announced that 20% of the token allocation would be used for airdrops, a proportion significantly higher than the common 5% airdrop allocation for L2 projects. This staking activity not only supports BTC native assets (BTC, BRC-420 assets, and BTC-20 assets), but also supports EVM assets (assets that can be deposited on the Ethereum mainnet or Arbitrum, and can also earn exclusive native staking rewards), and can also earn rewards by providing liquidity to Merlin Chain's native Dex, Merlin Swap.
On February 16th, Merlin Chain continued to launch the second phase of Merlin's Seal, adding mainstream assets such as Blue Wands, Dragon Balls, and assets on ZKFair for staking.
On February 19th, Merlin Chain launched the first BRC-20 token $VOYA airdrop, and further added staking assets such as NodeMonkes, Bitcoin Puppets, and Bitcoin Frogs.

Image Source: Zhihu Column Cryptocurrency Brother

Interactive Cooperation

On February 13th, the full-chain liquidity distribution network StakeStone established a strategic partnership with Merlin Chain, providing staking for ETH pledged in the Merlin Seal activity and upcoming Restaking re-staking rewards for users.
On February 16th, the Bitcoin Layer 2 network MAP Protocol reached a cooperation with Merlin Chain, bringing Bitcoin-level point-to-point cross-chain interoperability between different Bitcoin L2 networks and EVM ecological chains.
On February 21st, the BTC native stablecoin protocol bitSmiley reached an official strategic cooperation with the BTC Layer 2 network Merlin Chain. The bitSmiley native asset bitDisc-Black NFT joined the Merlin Seal activity, becoming one of the recognized BTC assets in the Merlin mainnet activity.
On February 26th, the crypto exchange BIT announced a cooperation with Merlin Chain, serving as the official custodian to support users in pledging ETHS assets on Merlin Chain, becoming the exclusive channel for users to pledge ETHS and accumulate airdrop M points.
On February 27th, OKX Web3 Wallet announced that it has integrated with the Merlin Chain network, allowing users to switch to the Merlin Chain network with one click without manual configuration, and interact with the DApp ecosystem of the Merlin Chain network in the discovery section of the OKX Web3 Wallet.
On February 27th, TRON announced a strategic cooperation with Merlin Chain to jointly expand the interoperability, practicality, and financial accessibility of Bitcoin.

KOL Operation and Maintenance

The Merlin Chain team is also very proactive and enthusiastic in operating and maintaining KOLs. The rapid start of Merlin Chain is not only due to the positive development of the Bitcoin chain environment, but also to the project team's textbook-like operation methods. The focus of the project team has always been on the community, and the 20% airdrop ratio and the promotion and publicity of KOLs are the most efficient ways to ignite the enthusiasm of the masses.

Ecosystem Inventory of Projects Launched

Attracted by excellent operational activities, a large number of players and attention have been drawn to the Merlin Chain, and the team's construction of Merlin Chain is constantly being enriched. The following 6 projects have already been deployed on the network:

Cross-chain Bridge:

Official cross-chain bridge Merlin Bridge: This is the official cross-chain bridge project of Merlin Chain, which now supports a wide range of assets for pledging to Merlin Seal.

Third-party stablecoin cross-chain bridge Meson: Meson is a stablecoin trading protocol that promotes free flow of stablecoins between Ethereum, Layer 2, and major high-performance public chains. With its new product design and technology stack, Meson provides point-to-point trading of major stablecoins on any supported network, with significant advantages in fast confirmation, low fees, and zero slippage.

Swap

Merlin Swap: This is the official DEX of Merlin Chain, and according to the official whitepaper, it has the following 4 characteristics:

Revolutionary DL-AMM DEX: Utilizes the most advanced liquidity algorithm for fast and efficient asset swaps, thereby improving capital efficiency and optimizing yield.
Adaptive liquidity mining: Provides static and dynamic liquidity mining options, allowing users to implement dual incentives at any price range, thereby minimizing unused liquidity.
CEX-level user experience: Provides an interface that reflects the efficiency and simplicity of centralized exchanges, adapting to the decentralized environment.
Cross-chain operations: MerlinSwap supports interoperability with other chains, allowing users to trade on different blockchains and enjoy the convenience of cross-chain transactions.

And the current product services provided by Merlin Swap according to the official introduction are:

Limit orders: Corresponding to CEX orders, this feature allows users to execute trades with higher precision and control.
Enhanced gas transaction efficiency: Using Merlin Chain to reduce gas fees, ensuring a more efficient trading experience.
User experience equivalent to CEX: An intuitive and familiar interface helps users seamlessly transition from centralized exchanges to decentralized exchanges.

MEME Coins:

$VOYA:

$VOYA is the first fair-launched BRC-20 token on the Merlin Chain. The project will airdrop all 10 million $VOYA tokens to early supporters of the Merlin Chain through MerlinSwap, encouraging adventurers to join the Grand Voyage and explore the unknown areas of the Merlin Chain.

$HUHU:

HUHU is a dog project on the Merlin Chain, and holding a certain amount of $HUHU tokens can participate in the $VOYA token airdrop activity. There are three options for receiving the $VOYA token airdrop, one of which is to hold HUHU assets in the on-chain wallet on the Merlin Chain: the total amount reaches/exceeds 140K $HUHU or the token quantity of HUHU in the HUHU-BTC LP * 0.00000007 + BTC value reaches/exceeds 0.01 $BTC.

Gamefi:

Merlin Land (ERC1420)

Merlin Land is a GameFi token inscription exchange protocol built on the Merlin Chain, creating the ERC-1420 protocol standard, and is compatible with BTC (L1) BRC-420 and Bitmap assets. In addition, Merlin Land has officially launched the MLAPP construction based on land metadata on February 27th.

Project Risk Warning

The time required for user assets to be transferred from other chains to the Merlin Chain is within the normal range, but if you want to move assets from the Merlin Chain to other chains, you need to wait for 2 days or several days.
After participating in the Merlin Seal staking activity, the pledged assets cannot be withdrawn, and users need to wait for the official token mapping to their wallets in March or April in order to use the products in various projects in the Merlin ecosystem.
The internal proportion of the 20% token airdrop is questionable. Many suspected investment or project addresses have staked large amounts of funds early (i.e., staked in their own addresses without the risk of facing counterpart fund security as retail investors do). According to the airdrop rules, if airdrops are based on the proportion of points, they will receive the majority of the airdrops, and the proportion of airdrops that retail investors can actually receive is extremely low.
Lack of official information. In February, the Merlin Chain made frequent moves, but the information on the official Twitter account often lagged behind the messages from community KOLs, which is a significant disadvantage for retail investors. It can be understood that there are many promotional collaborations with KOLs in the initial stage of the project, and many KOLs can get first-hand information, but there is still room for improvement in the channels for retail investors to obtain information. The benefits of following KOLs in a rush can only be short-term, and cultivating trust in the official project is the cornerstone for a project to go further.

To learn more about the Merlin Chain project, you can keep track of the project's trend hotspots through TrendX, follow the Smart Money dynamics, participate in community discussions, and refer to the insights of industry experts:

https://app.trendx.tech/project/b016ce168452cc76289293156cc5ddb359d746c918da6aae0b89729c0bce40f1

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