Hemi Network, a Layer 2 Network Facilitating Ethereum Smart Contract Functionality Secured by the Bitcoin Network, Launches Incentivized Testnet

By approaching Bitcoin and Ethereum as components of a single supernetwork, Hemi delivers the capabilities of both, Hemi Labs said.

Former Bitcoin core developer Jeff Garzik, who once worked closely with Satoshi Nakamoto, is now launching a Layer 2 network.

On July 24, a development team co-founded by Garzik, called Hemi Labs, announced Hemi Network, a modular Layer 2 network that enables Ethereum smart contract functionality and is secured by the Bitcoin network.

“By treating Bitcoin and Ethereum as components of a single supernetwork, Hemi provides the capabilities of both,” said Hemi Labs. “Attempts to integrate and scale Bitcoin and Ethereum have typically sought to address the problem within their respective communities, ultimately resulting in a fractured ecosystem.”

Hemi’s incentivized testnet is now live, while the Hemi Network will be launched on mainnet during the Bitcoin 2024 conference in Nashville, which begins on July 25. Hemi will reportedly host decentralized finance and artificial intelligence applications.

Hemi Network

Hemi Labs was also co-founded by Maxwell Sanchez, the co-founder of VeriBlock, a blockchain security and software development firm.

The chain introduces the Hemi Virtual Machine (hVM), which integrates a full Bitcoin node within the Ethereum Virtual Machine (EVM) — the core smart contract engine of Ethereum.

HVM enables developers to create smart contracts that interact with the state of Bitcoin, unlocking Bitcoin-based DeFi applications such as staking, lending markets, and “democratized MEV marketplaces.” According to Hemi Labs, trustlessly launching such Bitcoin-based applications was previously “impractical or impossible.”

The network leverages the Proof-of-Proof (PoP) consensus mechanism, pioneered by Sanchez, which allows Hemi to inherit its security from Bitcoin’s Proof of Work miners.

“Hemi inherits Bitcoin’s full security in a truly decentralized and permissionless manner, achieving better-than-Bitcoin finality, or ‘superfinality’ in just a few hours,” said Hemi Labs. “PoP’s modularity allows Hemi to extend this security efficiently to other blockchains.”

According to Hemi Labs, its Tunnels protocol enables cross-chain asset transfers without using conventional bridges.

Bitcoin Layer 2s expand

Hemi’s launch comes amid a competitive landscape to bring DeFi functionality to Bitcoin.

As reported by DeFi Llama, Bitlayer has recently become the largest Bitcoin L2 by total value locked (TVL), with 15 protocols hosting $394.4 million. On July 23, Bitlayer announced the closing of an $11 million Series A funding round led by Franklin Templeton and ABCDE.

Second place is held by Merlin with $306 million, followed by the sidechains Stacks with $211.3 million, and Rootstock sidechain with $178.5 million. Bouncebit, a Bitcoin staking protocol, also has a TVL of $318.6 million.

Citrea, Bitfinity, Botanix, and Conflux are among the other Layer 2 projects that intend to launch EVM functionality on Bitcoin and are now all operational on testnet.