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TL;DR Bitcoin Core announced the removal of the 80-byte OP_RETURN limit on May 5th, 2025, expanding Bitcoin's data capabilities. ZetaChain pioneered a solution using Taproot and inscriptions to pack cross-chain instructions directly into Bitcoin transactions without wrapping or bridging. The first use case is bitUSD, a native BTC-backed stablecoin on ZetaChain that works across all connected chains. ZetaChain brings native BTC into the broader DeFi app ecosystem.
At ZetaChain, our mission is to build a Universal Blockchain with native access to any blockchain, making crypto as accessible, diverse, and connected as the internet. In May, Bitcoin Core removed the long-standing 80-byte OP_RETURN limit, marking a pivotal step toward freer onchain functionality and cross-chain interoperability for Bitcoin.
While this change opens new possibilities for many, ZetaChain goes further by enabling native BTC transactions that trigger cross-chain logic directly, without wrapping or bridging. As Bitcoin expands its capabilities, ZetaChain provides the foundational infrastructure to bring it to the rest of crypto, natively and securely.
Bitcoin’s OP_RETURN was introduced in 2014 to include small pieces of arbitrary data like a hash, timestamp, or message in transactions. To keep Bitcoin lean and discourage misuse, Bitcoin Core (the official, open-source software implementation of Bitcoin to run a node) limited that data to just 40 bytes at launch, later increasing to 80 bytes. Although this limit wasn’t a consensus rule, it became the practical cap for most nodes and tools built on Core.
In April 2025, early Bitcoin contributor Peter Todd proposed removing this cap entirely. Supporters stated that arbitrary data storage on Bitcoin is inevitable and that OP_RETURN offers the safest, cleanest way to do it. Keeping the limit only pushes developers toward riskier alternatives.
Opponents, including Bitcoin Core developer Luke Dashjr, worried that removing the limit could encourage spam and undermine Bitcoin’s core purpose as money. These different views reflect an ongoing tension between preserving Bitcoin’s core value and expanding its functionality.
The discussion reached a turning point on May 5, 2025, when Bitcoin developer Greg Sanders announced that the change would take effect in the next Bitcoin Core release. Nodes will now, by default, relay and mine transactions with OP_RETURN outputs longer than 80 bytes and allow multiple such outputs in a single transaction.
Now that Bitcoin Core has officially removed the OP_RETURN byte limit, there are more possibilities for data-enabled Bitcoin transactions. However, even before this upgrade, ZetaChain already circumvented these constraints with Bitcoin’s latest script system.
For example, in 2024, ZetaChain and bitSmiley introduced a novel protocol layer that effectively expands Bitcoin’s data-carrying ability. Through Tapscript**,** a ****part of the Bitcoin Taproot upgrade in 2021, and inscriptions, more information can be packed into a Bitcoin transaction than OP_RETURN alone would normally allow. Instead of relying on the limited OP_RETURN field to carry cross-chain instructions, ZetaChain and bitSmiley use Taproot’s witness data to include more detailed information, such as the recipient’s EVM address and transaction metadata directly within a Bitcoin transaction.
This approach creates a seamless, Bitcoin-native interoperability layer. A single transaction on Bitcoin can carry all the data needed to trigger actions on ZetaChain or any connected EVM chain (and eventually other non-EVMs such as Solana) without the need for wrapped tokens or bridges. It’s an efficient solution that takes full advantage of Bitcoin’s newer scripting capabilities to deliver a simple, one-click user experience. It also demonstrates that Bitcoin can stay minimal and secure at its core while still supporting advanced use cases through thoughtful protocol design.
The first real-world use case powered by this new protocol is bitUSD — the first native BTC-backed stablecoin issued on ZetaChain by bitSmiley. Users deposit native BTC to mint bitUSD, which can be used across chains because of ZetaChain’s Universal architecture.
bitSmiley developed the bitRC-20 protocol, an extension of the BRC-20 standard to support stablecoin operations like minting and burning. Each bitUSD token is overcollateralized and backed by real BTC, with the underlying collateral secured and verifiable via native Bitcoin transactions.
This makes it the first project to use Bitcoin Layer 1 as the foundation for minting overcollateralized stablecoins that flow freely across ecosystems. With ZetaChain’s protocol handling cross-chain logic directly from Bitcoin transactions, bitSmiley delivers a seamless, secure way to turn native BTC into a Universal stablecoin that reaches people on every connected chain.
The broader impact of lifting the OP_RETURN goes well beyond the data storage and usage on Bitcoin. It represents a meaningful step toward a more active and interoperable Bitcoin, capable of participating in wider crypto ecosystems.
In just over a year, BTCFi TVL has surged from $307 million in 2024 to $6.6 billion, reflecting a strong demand for Bitcoin utility beyond simply holding or transferring value. But sustaining this growth depends on easier and more secure ways to connect Bitcoin with other chains.