Financial stalwart Franklin Templeton, which launched a Bitcoin exchange-traded fund in January, is investing in the broader ecosystem of the original cryptocurrency token. On Tuesday, a Bitcoin layer 2 project known as Bitlayer Labs has announced that it has raised $11 million in a Series A funding round, led by Franklin Templeton along with ABCDE and Framework Ventures.

A layer 2 refers to a network that sits on top of a base layer like Bitcoin or Ethereum and offers a faster and cheaper way to process transactions by compiling them into batches and periodically recording them on the primary blockchain.

The latest round brings Bitlayer’s total funding to $16 million. Other investors include Stake Capital Group, WAGMI Ventures, Flow Traders, GSR Ventures, and FalconX, among others.

Bitlayer is the first Bitcoin infrastructure project to receive investment from an ETF-licensed institution. The partnership with Franklin Templeton highlights the “growing interest and momentum” from institutions to address the technical challenges Bitcoin faces when it comes to scalability, the company said in a statement.

As for Franklin Templeton’s decision to invest in Bitcoin, Bitlayer Labs co-founder Charlie Hu told Fortune that it’s because the financial giant wants to fund solutions that can lead to yield-generating opportunities for holders of the currency — including themselves. “Without a layer-2 infrastructure, there’s no yield opportunity for Bitcoin in your cold wallet,” he said. For example, Noodlea decentralized exchange built on Bitlayer touts the promise of “comprehensive income generation schemes.”

‘History in the world of Bitcoin’?

Bitcoin, the original blockchain, was built to be a decentralized digital currency and a long-term hedge against inflation. In contrast, Ethereum was designed to be a platform that enables smart contracts and decentralized applications. Evidence of this can be seen in comparative network activity. Bitlayer is the top-ranked Bitcoin layer 2 by total value locked, with $404 million stored on-chain, according to data from DeFiLlama. But in contrast, Ethereum’s equivalent, Arbitrum One, boasts almost 18 billion dollars.

The short answer to why is that Ethereum’s higher throughput and Turing completeness — a term in computability theory that describes a system that can solve any computational problem — mean that complex applications can be created more easily.

But Bitlayer wants to change that. Its main goal is to address Bitcoin’s trade-off between security and completeness through cryptographic innovations and blockchain protocol engineering.

Bitlayer is the first layer 2 solution on the Bitcoin Virtual Machine, or BitVM. BitVM extends Bitcoin’s functionality without changing the underlying network. Think of it as a computing paradigm that expresses Bitcoin’s smart contracts while requiring “no changes to the network’s consensus rules.” It enables a layer-2 “free market” to be built on top of Bitcoin.

Bitlayer wants to scale Bitcoin while “inheriting its security, providing users with a high-throughput, low-cost transaction experience,” the company said in a statement. Hu wants to make “history in the Bitcoin world,” he said in a statement.

The funds announced today will be deployed to support the number of protocols built within the ecosystem. The company’s development team continues to work on building its Mainnet-V2, a native Bitcoin rollup.

“We believe that Bitlayer’s unique approach and technology has the potential to unlock new use cases and opportunities for Bitcoin, and we look forward to exploring opportunities to collaborate with our Bitcoin-focused financial products,” Kevin Farrelly, managing director of Franklin Templeton Digital Assets, said in a statement.

The Bitcoin ETF launched by Franklin Templeton — a historic company dating back to 1947 — currently oversees US$312 million in assets under management.

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