Merlin Chain

Merlin Chain is a Bitcoin Layer 2 solution that combines ZK-Rollup, a decentralized oracle network, on-chain BTC fraud proofs, and Data Availability modules to scale Bitcoin while preserving its native asset ecosystem. It supports Bitcoin-native protocols (BRC-20, BRC-420, Atomicals, Pipe, Stamp, Runes, Bitmap) natively on L2, and provides an EVM-compatible environment for deploying DeFi, staking, and dApp applications. The protocol is designed for Bitcoin holders and ecosystem participants who want to bridge native L1 assets—including BTC, inscriptions, and runes—onto a high-throughput L2 to earn yields and use DeFi primitives while staying within the Bitcoin ecosystem.

Merlin Chain offers three main ways for users to earn yield, all within the Bitcoin ecosystem.

1. Staking BTC (Bitcoin) for rewards

Users can deposit BTC into timed staking phases (the current one is Phase 4). This staked BTC helps secure the network — similar to how Proof-of-Stake works, but adapted for Bitcoin. In return, stakers earn yield paid in BTC. The source of these rewards is protocol emissions: tokens from the MERL supply are set aside for the community (16.57% of the total 2.1 billion MERL) and the ecosystem (40% of that same total). These tokens are released steadily over 48 months and fund the rewards.

2. Staking or delegating MERL tokens

Holders of MERL (the native token of Merlin Chain) can stake their tokens directly, or delegate them to "consensus nodes" — the validators that run the network. This also helps secure the chain. Stakers earn yield from protocol inflation (newly minted tokens), but they also face a risk: if a node misbehaves, staked tokens can be slashed (penalized). A limited-time boosted APR period kicked off in February 2025, with a stated long-term target for regular rewards afterward.

3. Fees, grants, and DeFi activity

MERL tokens are used as gas (transaction fees) for future Layer 3 networks built on top of Merlin Chain. The protocol also runs a 210 million MERL grant program called "Merlin's Adventure" that gives tokens to builders. Those builders create apps — lending markets, liquidity pools, and other DeFi tools — which in turn create more yield opportunities for users.

Past event note: A program called Merlin's Seal (now finished) airdropped 420 million MERL (20% of the total supply) to early stakers. No similar airdrop has been announced since.

Beyond all the above, MERL tokens can be used as collateral or liquidity inside the ecosystem, enabling lending and borrowing — and the yield flows that come with them.

Merlin Chain completed at least two disclosed financing rounds. On February 5, 2024, the project announced its first financing round with participation from OKX Ventures, ABCDE, and other venture capital firms. On April 17, 2024, a second financing round was announced, led by Spartan Group and Hailstone Labs, with participation from over ten institutions including Amber Group and Presto Labs. Per the tokenomics documentation, private investors received 15.23% of the total MERL supply (319,830,000 MERL) across two tranches: an A round (1.33% of supply) and a B round (13.90% of supply). The A round had a 6-month cliff followed by 18 months of linear vesting; the B round had a 12-month cliff followed by 36 months of linear vesting. Additionally, a Public Sale via the People's Launchpad allocated 1.00% (21,000,000 MERL), with 50% unlocked at TGE and the remainder released over 5 months. No specific USD amounts for any round were disclosed on the official site or documentation.