Bitcoin Layer 2 Botanix to shut down network due to low demand

Botanix Labs is ceasing operations for its Bitcoin Layer 2 network after nearly four years of development, citing a lack of sufficient demand for Bitcoin-native decentralized finance to sustain its economic model. The project team stated on X that organic transaction demand was insufficient to cover baseline infrastructure costs.

Despite achieving technical milestones such as 100% uptime and zero security incidents on its Spiderchain infrastructure during its year of mainnet operation, Botanix processed 25 million transactions across 200,000 wallets, moving tens of millions of dollars in assets. Integrations were made with providers including Chainlink, Morpho, and OKX Wallet.

However, the team observed that user activity primarily focused on long-term asset storage rather than frequent transactions, which impacted revenue generation from fees. The project concluded that its model did not succeed within the current market conditions and timeline.

Key takeaways from the shutdown include the observation that most users continue to view Bitcoin primarily as a reserve asset. The team also pointed to the underperformance of token launches, a shift of Bitcoin-denominated DeFi demand towards wrapped Bitcoin on Ethereum networks, and a growing concentration of activity on centralized exchanges and traditional finance firms where convenience outweighs decentralization for many users.

The closure raises further questions about the viability of Bitcoin Layer 2 solutions beyond the Lightning Network without token incentives. Botanix has urged users to withdraw their assets by July 9, after which any remaining funds will be swept by the network's federation.