It is the elephant in the room, and nobody wants to talk about it.
When block rewards trend to zero, miners will no longer be incentivized to secure the network. The only way out of this is fees. The Bitcoin network will eventually find itself in a position where it must be generating sufficient fees to incentivize miners to secure the network—otherwise, it is curtains.
Block rewards are stimmy checks for miners, and their payment for securing the network. Every four years, their salary gets chopped in half, glossing over the fascinating and evolving dynamic that is the hash rate.
It should be understood that block rewards are the main course for miners, and transaction fees make up a tiny fraction of their income. But with the BTC tokenomics being what they are, one day, like it or not, transaction fees need to become the primary source of miner revenue.
Why Bitcoin Pepe decided to build on Bitcoin
Layer 2 blockchains are built on top of foundational, or “parent”, chains. In Bitcoin’s case, they offer the optimal route out of this looming future scenario.
L2s increase Bitcoin’s core utility by offering smart contract platforms and ramp up scalability aggressively, making the network usable for a larger pool of market participants. They also pay fees to Bitcoin to have their aggregated transactions settled there.
The key point is that even though the bulk of these transactions occur off-chain, all L2s increase the network’s overall transactional throughput and open the network to new markets and new participants. And at the end of the day, all settle on the parent chain, generating a meaningful increase in transaction fees if done at scale.
Bitcoin Pepe is building a proprietary meme layer for Bitcoin, and everybody knows that memes attract the bulk of trading volume. It is the most dynamic vertical in crypto, and Bitcoin has been left out in the cold. That’s why we are building the solution.
Short term, we plan to unlock BTC’s capital and security for meme coins, but long term, we plan to be a serious source of revenue for the parent chain and play our part in the movement to onboard more economic activity into the Bitcoin economy and allow it to generate meaningful revenue via transactions instead of being insanely reliant on block rewards.
Growth is the only way out, and that’s precisely what we are here to do.
Running the numbers
In a snapshot, Bitcoin Pepe is building a chain that derives all its security from Bitcoin but will not be shackled by the same limitations.
We are building EVM compatibility on top of BTC and will achieve a high execution environment. The easiest analogue is Ethereum and Arbitrum. Arbitrum unlocked a whole new pool of capital that could not, or did not want to, pay to transact on Ethereum. But the real retail hub of activity is Solana, and that’s where our north star comes in—‘Building Solana on Bitcoin.’
Declining block rewards threaten Bitcoin’s long-term security model. L2s offer a scalable solution to increase transaction fees while innovating aggressively on capabilities without having to tinker with the base chain, and Bitcoin’s calcification is a large part of what makes it great.
Bitcoin Pepe is planting its flag in the ground to kickstart an innovation flywheel. More L2 adoption leads to more settlements on Bitcoin, leading to higher fees, leading to stronger security, leading to more trust in Bitcoin, leading to more developers deploying L2s on Bitcoin.
Game time. Bitcoin’s security spend problem is not a flaw, merely a design challenge—and L2s like Bitcoin Pepe are the new wave of economies out to solve it.
