Convincing the most extreme Bitcoin advocates, known as “maximilists,” to use an Ethereum-based solution may be difficult. Target users of the platform include traders, mining pools and foundations.

“We know Bitcoin maximalists may initially be hesitant to use an Ethereum-based solution, but our primary focus is to create the most robust and efficient marketplace for Bitcoin transaction fees,” said Alkimiya founder and CEO Leo Zhang.

The usefulness of a solution like Alkimiya may not be in doubt: In April, when Casey Rodarmor’s Runes protocol, designed to mint logic tokens on Bitcoin, went live, the Bitcoin network fee jumped from $4.80 per transaction to $125.

According to Alkimiya’s press release, “faced with high operating costs, Bitcoin mining companies are increasingly looking for hedging tools to protect against fee volatility.”

The company was founded in 2021 and has received backing from investors such as Dragonfly, Castle Island Ventures, 1KX, GMR, Coinbase Ventures, Circle Ventures, Tribe Capital and Robot Ventures. The project raised $7.2 million in funding in January 2023 and went live on the testnet in April.

Designed as a personalized payment network, Bitcoin has been around since 2009, and most of its users are fiercely loyal and skeptical of solutions that do not use a secure device “natively” or directly on the oldest and original blockchain.

But noticeably, Bitcoin does not have the programmability of Ethereum, which was founded in 2015 mostly by developers including Vitalik Buterin, who previously worked on Bitcoin.

And like most decentralized applications and protocols on Ethereum, Alkimiya’s design requires some programming. According to Alkimiya’s documentation, Alkimiya works like this: “Alkimiya users can enter Buy and Sell positions for any pool. These Buy and Sell positions are represented by NFTs (ERC-1155) called Long and Short shares. Long shares from the same pool While they have the same tokenId and are logical, Long shares from different pools have different tokenIds and are not logical. The same rule applies for Short shares.”

According to the definition on the Ethereum Foundation’s website, ERC-1155 is a standard for “smart contract interface that can represent and control any number of logical and non-logical token types.”

Founder Zhang told CoinDesk that the project is “actively pursuing” the development of “UTXO-based approaches” as well as Ethereum-compatible layer-2 solutions on the Bitcoin blockchain.

UTXO – short for “unspent transaction output” – is a fundamental element of Bitcoin’s architecture and is radically different from Ethereum’s approach to accounting.

The truth is that many Bitcoin layer-2 solutions are still in development, especially those with Ethereum compatibility.

According to Zhang, “Since we cannot currently develop on Bitcoin, developing on Ethereum is the most decentralized approach and is in line with our commitment to decentralization and our goal of avoiding a centralized approach.”

The goal is to eventually “create seamless integration paths that make it easier for Bitcoin users to access and use our platform without having to manage multiple wallets or interfaces,” says Zhang.