Marathon Digital Introduces Bitcoin’s Layer 2 Solution

Key Takeaways:

Scalability enhancement: Anduro aims to address Bitcoin’s scalability issues by providing a Layer 2 solution. Layer 2 solutions operate on top of the leading blockchain (Layer 1) and enable faster and cheaper transactions by handling them off-chain. This could alleviate congestion on the Bitcoin network and improve transaction throughput.

Reduced transaction fees and confirmation times: By using Anduro, users may experience lower transaction fees and faster confirmation times than conducting transactions directly on the Bitcoin network. This can make Bitcoin more practical for everyday transactions and microtransactions, which have been challenging due to high fees and slow confirmation times on the main blockchain.

Increased adoption and usability: With a Layer 2 solution like Anduro, Bitcoin becomes more scalable and user-friendly, potentially leading to increased adoption among retail users and institutional investors. Transaction speed and cost improvements could encourage more businesses to accept Bitcoin as a means of payment, further integrating the cryptocurrency into mainstream finance and commerce.

Marathon Digital, one of the leading cryptocurrency mining companies, has made a groundbreaking announcement with the unveiling of Anduro, a layer two solution intended to enhance the efficiency and scalability of Bitcoin (BTC) transactions.

Overview

In a blog post on February 28 2024, the company revealed that it has been incubating the scaling platform designed to accelerate BTC development and adoption. With the increasing request for faster and cheaper transactions on the Bitcoin network, Anduro is a significant advancement that promises to address these challenges while maintaining the security and decentralisation that BTC is known for. Anduro aims to serve as an application layer and encourage innovation within the BTC ecosystem by allowing the creation of multiple sidechains. 

The firm noted:

“The programmable layer-2 is designed to systematically integrate decentralised governance, with a focus on becoming the most reliable, developer-centric BTC layer-two.”

Although Marathon has helped incubate Anduro, the company suggested that it is intended to be community-led and driven. Chairman and CEO at Marathon, Fred Thiel, indicated that the firm has A vested interest in supporting innovation in the BTC ecosystem, which includes projects such as Anduro. Thiel said, “We believe in testing, iterating, and letting the market decide what ideas succeed.” He added, “Anduro is one of those ideas that provides value to Bitcoin holders and application developers, all while reinforcing the long-run sustainability of Bitcoin’s Proof-of-Work.”

Addressing Scalability Challenges

One of the primary issues facing the BTC network is scalability. The network faces congestion as transactions grow, resulting in slower confirmation times and higher fees. Anduro aims to tackle this problem by introducing a layer two solution that operates on the BTC blockchain. By leveraging off-chain channels, Anduro enables users to conduct transactions more efficiently and at lower costs than traditional on-chain transactions.

The implementation of Anduro marks a significant milestone in the ongoing efforts to improve BTC’s scalability. By offloading a significant portion of transactions onto layer two networks like Anduro, the main Bitcoin blockchain can remain focused on securing transactions while enjoying increased throughput and reduced congestion. This scalability solution unlocks new possibilities for BTC adoption and usage, making it more convenient for a broader range of users and applications. Litepaper suggested that governance happens through a “diverse consortium of Bitcoin-forward entities known as the Collective.”

Enhancing Transaction Efficiency and Affordability

Anduro also aims to enhance transaction efficiency and affordability. Traditional on-chain BTC transactions often incur high fees, especially during network congestion. This can be a barrier to entry for many customers and businesses looking to use BTC for everyday transactions.. The mining giant highlighted that it works on the first two side chains on Anduro, Alys and Coordinate. 

Alys is an Ethereum-compatible side chain for institutional asset tokenisation, and Coordinate offers a cost-effective unspent transaction output (UTXO) stack for the Ordinals community. Anduro uses a novel system called merge-mining, which could allow miners such as Marathon to earn revenue from Anduro side chain transactions while continuing to mine BTC. 

Maintaining Security and Decentralisation

Despite operating on a layer two solution, Anduro remains committed to upholding the security and decentralisation principles underpinning the BTC network. By utilising advanced cryptographic techniques and leveraging the security guarantees of the BTC blockchain, Anduro ensures that transactions conducted on the network remain secure and immutable. Marathon unveiled a new direct BTC transaction submission service called Slipstream earlier this month. 

Anduro’s architecture is planned to be trustless, meaning that customers do not need intermediaries to facilitate transactions. Instead, transactions are executed directly between parties using smart contracts, ensuring that funds remain under the control of the users at all times. This decentralised approach not only enhances the security of transactions but also preserves the censorship-resistant nature of BTC, ensuring that it remains a genuinely permissionless and borderless form of digital currency.

Fhumulani Lukoto Cryptocurrency Journalist

Fhumulani Lukoto holds a Bachelors Degree in Journalism enabling her to become the writer she is today. Her passion for cryptocurrency and bitcoin started in 2021 when she began producing content in the space. A naturally inquisitive person, she dove head first into all things crypto to gain the huge wealth of knowledge she has today. Based out of Gauteng, South Africa, Fhumulani is a core member of the content team at Coin Insider.

View all posts by Fhumulani Lukoto >

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