Technical Analysis of Particle Chain: How Can It Help Merlin Achieve $4 Billion TVL?
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Technical Analysis of Particle Chain: How Can It Help Merlin Achieve $4 Billion TVL?
MerlinChain's ability to quickly and systematically absorb nearly $4 billion in TVL assets is directly related to the mature "chain abstraction" services provided behind the scenes by Particle Network, such as BTC Connect, AA account abstraction, and Paymaster.
Navigating Web3 tides with focused insightsAuthor: Haotian
Earlier I said that "chain abstraction" would be the next major focus after modularity, and many people didn’t take it seriously. But what if I told you that without the behind-the-scenes "chain abstraction" technology from @ParticleNtwrk, we wouldn't have witnessed MerlinChain — a BTC Layer2 project — achieving nearly $4 billion in TVL within just one month? Why? Let me explain my technical perspective:
"Chain abstraction" is a concept derived from account abstraction (AA), aiming to enhance seamless user interactions across different blockchains. When EVM-compatible chains dominated, AA was largely sufficient for user needs. However, with the rise of the BTC Layer2 ecosystem and the emergence of innovative UTXO-based chains, a cross-chain abstraction solution capable of bridging EVM and non-EVM environments has become crucial.
Take MerlinChain as an example. It's an emerging EVM-compatible BTC Layer2 chain designed to expand the application ecosystem for native BTC assets such as BRC20, ARC20, and BTC420 by leveraging Layer2’s high scalability. This allows these BTC-derived assets to overcome the performance limitations of Bitcoin’s mainnet, unlocking greater liquidity and market potential.
Thus, MerlinChain's primary technical challenge lies in seamlessly bridging BTC-native assets and other inscription-driven derivative assets onto its Layer2 network, while rapidly building an “application protocol” ecosystem that provides massive liquidity for inscriptions — thereby revitalizing the long-dormant inscription economy.
To achieve this, it requires seamless connectivity between BTC’s UTXO model and EVM-compatible chains, involving secure cross-chain transfers of BTC assets, seamless ledger migration of derivatives like BRC20, and rapid deployment of DeFi environments for BTC-related assets on Layer2.
Even if a Layer2 chain can be quickly developed using mature EVM frameworks, enabling interoperability between BTC’s native environment and EVM remains a significant hurdle. For most other chains, mutual compatibility can be achieved through joint adaptation — a “two-way embrace.” But BTC is special: other chains must adapt to BTC, not the other way around — even if those EVM chains offer far superior scalability. Yet EVM chains are fundamentally different from BTC and won’t redesign themselves to accommodate Bitcoin’s architecture.
So what’s the solution? A third-party "chain abstraction" platform must provide the interoperability "connector." Let’s use Particle Network’s technical support for MerlinChain as a case study to explore how this works. Specifically, how does Particle’s custom-built BTC-Connect function?
Most EVM-compatible chains only support wallets like MetaMask, while the majority of BTC users hold their assets in wallets like Unisat or Xverse. Connecting Unisat to EVM chains requires a layer of "wallet abstraction" to bridge the gap.
In simple terms, Unisat and MetaMask use different cryptographic algorithms and signature parsing mechanisms. Particle must mediate communication and coordination between them:
1) When a user initiates a transaction via Unisat, the wallet sends a transaction request through Particle’s SDK to the Particle Chain. The Particle Chain then generates an EVM smart contract address corresponding to the Unisat address. This AA (account abstraction) address subsequently triggers a transaction within the EVM environment and prompts MerlinChain to respond;
2) Upon initial connection, users must first bridge a portion of their BTC-chain assets into the AA address on Particle Chain. This address features Paymaster capabilities, enabling it to sponsor subsequent operations such as delegated transactions, gas fee payments, and multi-signature management;
3) After Particle completes the foundational interoperability setup via SDK integration, user transactions are sent to the Particle Chain. The Particle Chain verifies and executes the transaction, coordinating with MerlinChain. When Merlin receives the new transaction request, it directly parses and validates the Bitcoin wallet signature through the AA contract to complete the transaction.
Beyond wallet abstraction, Particle also plays a key role in asset migration and processing on MerlinChain. For instance, when users transfer assets from Unisat to MerlinChain, those assets are initially deposited into a custodial address provided by Cobo. Particle then immediately triggers the minting of corresponding wrapped assets and creates an AA address capable of multi-signature and delegated transactions. In effect, Particle becomes the mandatory gateway for BTC-native assets entering MerlinChain. This means:
1) ParticleChain will hold the wrapped versions of most native BTC assets migrated to MerlinChain. Therefore, a large portion of MerlinChain’s nearly $4 billion TVL resides under Particle Chain’s purview. Particle must manage the entire lifecycle of these wrapped assets — including minting, burning, and transfers — providing MerlinChain with clear visibility and control over asset circulation;
2) For incoming assets from other EVM-compatible environments — such as ETH, USDT, and USDC — Particle leverages its AA account abstraction features to manage their circulation records, supporting the development of various DeFi protocols on MerlinChain, including Swap, Staking, and Restaking;
3) The off-chain indexer system for inscription assets is equally critical. As a core tool for managing on-chain transaction data, once inscription assets move into the Layer2 EVM environment, indexers must accurately track and manage their circulation, especially when reconciling ledger discrepancies across different indexing systems.
In summary, MerlinChain’s ability to swiftly and systematically absorb nearly $4 billion in TVL is directly tied to the mature "chain abstraction" services provided behind the scenes by Particle Network — including BTC Connect, account abstraction (AA), and Paymaster functionality.
In conclusion,
"Chain abstraction" is an emerging sector with explosive potential, whose value and significance are self-evident. Some may argue, isn’t this just another cross-chain interoperability solution? True — but abstracting communication between fundamentally different blockchain species is far more complex than it seems.
A single standard like ERC-4337 AA can unify most EVM chains. Newer chains like Sui and Aptos can map assets via contracts and proxy contracts. The real challenge — both difficult and critical — lies in establishing abstraction with the Bitcoin chain. The evolution of BTC Layer2 depends heavily on sustained advancements in chain abstraction: abstracting incompatible wallet interactions, reconciling indexer inconsistencies, bridging off-chain custody with on-chain transparency, and unifying management of diverse inscription assets on-chain.
The stagnation in the inscription space stems largely from unresolved technical hurdles. Now that a wide variety of innovative assets are flourishing, applying abstraction to unify them under a single Layer2 chain is no small feat — the journey ahead is undeniably tough.
Note: At its core, BTC Layer2 exists to solve liquidity issues for BTC-derived assets. I look forward to continued breakthroughs from builders like @MerlinLayer2, @BSquaredNetwork, and @ParticleNtwrk who are pioneering this space.
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Haotian | CryptoInsight
