What is Merlin Chain? All You Need to Know About MERL

Introduction

Bitcoin is the foremost cryptocurrency utilizing blockchain technology and has a singular use case of being a store of value and a means of boundless transactions. However, it doesn’t permit further innovations. Hence, Bitcoin has a scalability problem, mired with network congestion and a high gas fee. It is almost impossible to build applications and products, or implement conventional blockchain innovation on the blockchain. This is where the Merlin chain comes in.

Merlin chain is encouraging innovation in the Bitcoin ecosystem using a layer-2 technology. It has integrated unique features in its platform to enable interaction between the Bitcoin (layer-1) blockchain and the Merlin chain to boost scalability, reduce transaction costs, and foster continuous innovation on the Bitcoin network. Thus, in this article, we will explore the Merlin chain, its unique features, and all you need to know about the native token, MERL.

What is Merlin Chain?

Merlin chain is a layer-2 technology built on the Bitcoin blockchain to solve its scalability challenges. It aims to power the Bitcoin application system for continued blockchain innovation. Merlin chain integrates a zero-knowledge rollup (known as ZK-Rollup), a decentralized oracle network, and on-chain fraud proofs into the Bitcoin blockchain. These features enable innovation in the Bitcoin ecosystem, compressing ample transaction proofs into batches to reduce congestion and improve transaction speed. It also introduces a new method for the Merlin chain to connect easily to the Bitcoin layer-1, thus enabling access to external data sources and execution of smart contracts using a decentralized oracle network and on-chain fraud proofs.

Further, Merlin chain’s unique layer-2 features are also geared towards reducing transaction cost, and improving transaction speed while interacting with Bitcoin blockchain for security. In essence, the Web3 platform is poised to solve the Bitcoin scalability challenges by using a layer-2 solution. This technique aims to build innovations that tap into the Bitcoin ecosystem while maintaining its Web3 outlook.

Brief History of Merlin Chain

Source: GeniiData

Merlin chain is an offshoot of Bitmap technology founded by Jeff. The project was released on January 19, 2024, and launched the Merlin chain testnet bridge on January 26, 2024. It deployed the Particle Network launchpad for the launch of the Merlin chain mainnet and for its token allocation in February 2024.

There are 2,100,000,000 billion MERL tokens. The total Merlin tokens have a fully Diluted Valuation (FDV) of $100,000 when launched. The Particles Network launchpad was used for the launch of MERL tokens. They are entitled to a 1% share of 2,100,000,000 billion MERL tokens. This is equivalent to 21,000,000 million MERL tokens.

Merlin’s Seal staking later went on a fair launch, allocating over 20% of MERL tokens as staking rewards in February 2024. The total value locked as of February 23, 2024, had surpassed $2 billion.

Key Features of Merlin Chain

Merlin Chain offers the following features:

ZK-Rollup

ZK-Rollup is an acronym for Zero-Knowledge Rollup. It is a layer-2 technology that hastens transaction speed. It does so by computing transactions on the layer-2 blockchain and recording them in the blockchain layer-1. It also compresses large sums of transaction proofs into smaller batches to process them faster while recording them in the layer-1 blockchain to reduce congestion.

ZK-Rollup also uses a solution called ZK-proof to verify transactions. ZK-proof is an encryption solution that allows two entities in the blockchain to prove and verify information without knowing the actual information. It is used on the Merlin Chain to ensure transaction privacy, security, and scalability in the Bitcoin Layer-1.

Some of the benefits of ZK-Rollup on the Merlin Chain include reducing gas fees and processing more transactions (10 times) faster than the layer-1 network. It also promotes off-chain computation and on-chain transaction data storage, which reduces transaction costs and increases transaction speed.

Decentralized Oracle Network

Decentralized Oracle Network (DON) is a unique feature on the Merlin Chain. It bridges the gap between on-chain and off-chain data sources. DON allows Web3 smart contracts to interact with data sources outside the blockchain, supplying needed data to perform smart contracts on the Merlin Chain platform.

On-Chain Fraud Proof

On-chain fraud-proof is a verifier that challenges the validity of transaction proofs on the Merlin Chain. Since the ZK-Proof assumes all transactions it verifies are true, the layer-1 blockchain fraud-proof runs through the compressed batches of the transaction proof again. This is to ensure that each transaction is valid. On-chain fraud-proof fosters on-chain data availability and ensures data accuracy on the Merlin Chain.

Merlin Chain Ecosystem

The Merlin chain ecosystem is meant to be built around the Bitcoin layer-1 network to enhance Bitcoin interoperability with other blockchain networks. The operational projects under its ecosystem include:

MerlinSwap

MerlinSwap is a decentralized exchange built to support the Merlin chain ecosystem. It uses a Discretized Liquidity-Automated Market Maker to provide liquidity and swap services on the Merlin chain cost-effectively and efficiently.

Discretized Liquidity-Automated Market Maker (DL-AMM) is a technology model that allows liquidity providers to focus on specific price points and the most traded price ranges, thus ensuring that users benefit from lower slippage and accurate prices when swapping tokens on MerlinSwap. DL-AMM also helps users to enter a specific amount of tokens they want to swap, thus providing the services of an order book and Automated Market Maker (AMM).

MerlinStarter

MerlinStarter is the foremost launchpad built on the Merlin chain ecosystem that supports all the Bitcoin layer-2 projects. It provides technical support, marketing strategies, tokenomics consultancy, human resources, and startup funding.

In addition, MerlinStarter facilitates a fair launch on the Merlin chain. Fair launch is a model of token distribution that considers inclusion and equal distribution of tokens at launch, hence giving equal opportunity to everyone to purchase tokens at launch on Merlinchain.

Other functions of MerlinStarter include bringing multi-chain tokens into the Merlin chain while issuing Merlin chain native tokens to other chains. This supports the issuance of BRC-20, BRC-420, ERC-20, and ERC-404 assets.

Partnership

Merlin chain has partnered with Particles Network to use its Account Abstraction Solution to enable easy switching between Bitcoin layer-1 and Merlin chain layer-2. Other platforms that Merlin chain has a partnership with include Tron blockchain, OKX, GeniiData, Bit Smiley, and Stakestone.

Merlin Chain Testnet

Source: 720/format:webp/1*tL5U98cwnOUUxKZ0EwMfpA.jpeg">miro.medium

The Merlin chain testnet is the trial interface of the platform. To navigate the testnet, users need to acquire assets like BTC and BRC-20 tokens via the Bitcoin faucet and connect their testnet wallets to either Unisat or Bitget. Using the acquired assets from the faucet and connecting their wallets, they can switch from the BTC chain to the Merlin chain and equally transfer BRC-20 tokens between the Merlin chain and the Bitcoin blockchain.

All assets used on the Merlin chain testnet are not real assets. They are strictly for testing the platform and, hence, have no real-life value.

Merlin Chain proposed to launch its mainnet by February 2024. Part of the plans includes kickstarting its staking activities and distributing the governance token to users who participated via a fair launch on Particle Network.

Source: Particle NTWRK

How Does Merlin Chain Work?

Merlin Chain integrates a layer-2 technology solution into the Bitcoin network to enhance functionality, reduce transaction costs, and increase transaction speed. Bitcoin (layer-1) blockchain is characterized by network congestion, slow processing time, high transaction fees, and inability to build new products, but Merlin chain layer-2 solution introduces the opposite. It has no capacity limit for transactions, is cost-effective, has high transaction speed, and enables innovation on the Bitcoin layer-1.

Merlin chain’s functionality hovers around a ZK-Rollup network, a decentralized oracle network, and an on-chain fraud-proof. The ZK-rollup works by compressing multiple transaction proofs into batches. This helps to reduce network congestion, thereby increasing transaction speed, reducing processing time, and improving efficiency.

Additionally, Merlin chain, with the help of a decentralized oracle network and on-chain fraud proofs, works by interacting with the Bitcoin layer-1 to verify the uploaded transaction. The decentralized oracle network stakes BTC as security while verifying transactions to guide against fraud cases. When the transaction is verified and confirmed successfully, the staked BTC is released. Thus enhancing security and trustworthiness between the Bitcoin layer-1 and the Merlin Chain layer-2.

What is MERL Token?

MERL is the native token of the Merlin chain. It will be used to settle transactions and for voting. In addition, MERL is used to reward users who stake their assets on Merlin’s Seal and to facilitate transactions on the platform.

MERL Token Use Cases

MERL token is used:

• as a governance token on the Merlin chain
• to settle staking rewards on Merlin’s Seal
• as a store of value
• to settle partnership shares

Tokenomics

Source: Merlin Layer2

MERL token has a maximum supply of 2,100,000,000 and a fully diluted valuation (FDV) of $100,000. 1% of the MERL token, which amounts to 21,000,000 $MERL, was used as shares on the Particle Network launchpad. 20% of the MERL token, which amounts to 420,000,000 $MERL, will be deployed to settle Merlin’s Seal staking.

Although MERL tokens have neither been fully released nor listed on any exchange, a timeline has been issued to release 20% MERL tokens for Merlin’s Seal. Thus, February 2024 marks the first phase of the staking period. Users staked relevant assets through Merlin’s Seal to earn Merlin points.

In the second phase, March 2024, users will claim their MERL tokens based on how many Merlin points they have.

The Third phase is slated to take place in April 2024. In this phase, users can retrieve their staked assets, scheduled for release on the Bitcoin halving day estimated on April 20, 2024.

Is Merlin Chain a Good Investment?

Merlin Chain is still a new project; hence, it is highly speculative to be considered a viable investment, although it offers a great layer-2 solution for Bitcoin. Most of these technologies and features have not been implemented, and their functionality is not operational. Thus, investors are strongly advised to do their own research and apply caution when considering Merlin chain as an investment.

Understand that every information provided here is for educational purposes and shouldn’t be mistaken for financial advice. Consult financial experts before considering any financial investment, particularly in cryptocurrency.

Highlights — Recent Partnerships

Merlin Chain Partners with Tron Network

Merlin chain partnered with the Tron network to boost interoperability between the Bitcoin and Tron networks. Furthermore, this will enable cross-chain accessibility, and functionality and thus expand its use cases. The main goal of this partnership is to initiate an interaction between the Tron network and the Bitcoin ecosystem. It is also seen as a way of extending the utility of Tron on the Bitcoin blockchain while marrying the strengths of the Tron network and Merlin chain.

Essentially, interoperability between the two blockchains will allow users to explore a wide range of financial services in the blockchain space through a seamless interaction with the Merlin chain.

Merlin Chain and OKX Partners for Wallet Integration

Merlin chain and OKX have partnered to integrate the OKX wallet with the Merlin chain. This is meant to foster easy connectivity to the protocol using the OKX web extension. Users will be required to download the OKX wallet web extension, create a new OKX wallet or add the existing wallet, and then connect their OKX wallet to the Merlin chain using the web extension.