Botanix Labs, the firm behind the Botanix blockchain network, is set to wind down its operations in the coming days. Botanix was launched as a layer-2 blockchain built atop the Bitcoin chain as an EVM-compatible network.
After nearly four years of development, Botanix Labs said that the broader macroeconomic shifts in user behaviours and market fluctuations has nudged it to exit the market.
The platform has directed its users to withdraw their funds from the protocol not later than July 9.
Here’s what the Botanix team said
In an official statement shared on Tuesday, the Botanix team said, their aim behind launching this L2 chain was to bring real utility to Bitcoin. Essentially, the platform wanted to establish itself as a platform for Bitcoin applications, without using token incentives to drive growth, manufacture users, or simulate utility.
Botanix used a decentralized multisig architecture called “Spiderchain” to let developers build Ethereum-style smart contracts and DeFi applications using native BTC for gas fees.
“We wanted to know whether a Bitcoin chain could earn its users on the strength of what was built on top of it, the value it brings in the market with Bitcoin itself as the only meaningful economic primitive in the system,” the statement said. “Twenty-five million transactions, two hundred thousand wallets, and tens of millions of dollars in assets moved across the chain, every single number of that earned organically without a token, without airdrops, without points programs, or any of the manufactured-demand machinery.”
Botanix Labs was planning the launch of a native BTC-backed token as a form of equity for the network users. The plans kept getting delayed as the platform kept waiting for the market to stabilize. Observations through the last one year showed all new tokens launched into the market ended up underperforming causing Botanix to not launch its token, it said.
The Botanix team also pointed out that capital inflow and user priorities eventually hinge to centralized institutional players who brought convenience and credibility to the table.
“Convenience and institutional credibility win, every time, as soon as they’re available. As retail participation thins, that concentration only deepens. We were, and still are, believers in decentralisation, but the current direction of on-chain growth is running through distribution, and any team building base-layer infrastructure today is rowing upstream against that current,” the statement noted.
Unsustainable infrastructure costs and a lack of high-frequency transactional fee revenue have been cited as reaons that the firm is sunsetting its operations in the next one month. According to Botanix Labs, users primarily used the chain to store Bitcoin for passive yield rather than executing transactions on it. After a point, the economics just did not work, the team said.
“When users choose the convenient option and economic gravity pulls toward distribution, what’s left on a decentralised infrastructure layer is a user base that costs more to serve than it generates. Infrastructure costs are what they are, and the fee income never came close to covering them.
What’s next?
After July 9, Botanix’s founding federation will sweep any remaining Bitcoin on the network. This is why users have been advised to withdraw their assets from the network before July 9.
The Botanix founding federation consisted of a group of 16 crypto companies that operated the network’s validator nodes and secured the bridge. These companies included Galaxy, Fireblocks, Alchemy, and Antpool among others.
User funds who are not fetched out of the network by the deadline would not be able to do so after the July 9 window.
The platform had managed to raise a total of $11.5 million in funding which included an initial $3 million pre-seed round followed by an $8.5 million seed funding round. The project had investors like Polychain Capital, Placeholder Capital, and Valor Equity Partners as its backers.
