Botanix Labs is shutting down its Bitcoin Layer 2 network after nearly four years of development, saying demand for Bitcoin-native decentralized finance remained too limited to support the network's economics.
The project, which aimed to build a Bitcoin-based application layer without relying on native token incentives or inflation, is winding down operations after determining that organic transaction demand was insufficient to cover baseline infrastructure costs, it posted on X.
According to the post, the project’s Spiderchain infrastructure operated with 100% uptime and recorded zero security incidents during its year of mainnet operation. The project also built Dynafed, a dynamic federation that turned the Spiderchain from a static multisig set into a rotating decentralized system.
The team claimed its network processed 25 million transactions across 200,000 wallets during its mainnet operation, moving tens of millions of dollars in assets.
Despite these technical milestones and integrations with infrastructure providers, including Chainlink, Morpho, and OKX Wallet, the project said user activity skewed toward long-term asset storage rather than high-frequency transactions, impacting revenue generation from fees.
“The honest answer we have arrived at, after living inside it every day, is that it did not work, at least not in this market and not on this timeline,” the post read.
The Botanix team cited five takeaways from the shutdown, saying Bitcoin’s utility remains secondary for most users who continue to view it primarily as a reserve asset.
It added that token launches have broadly underperformed, while most demand for Bitcoin-denominated DeFi has gravitated toward wrapped Bitcoin on Ethereum-based networks.
The team also pointed to growing concentration of activity on centralized exchanges, Robinhood, Hyperliquid, and traditional finance firms, where it said convenience and institutional access have outweighed decentralization for many users.
The shutdown adds to ongoing questions over whether dedicated Bitcoin Layer 2s beyond the Lightning Network can attract enough user activity to sustain themselves without relying on token incentives.
Meanwhile, Botanix urged users to withdraw assets by July 9, with remaining funds slated to be swept by the network’s federation after the deadline.
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