Fiatjaf, the developer of the decentralized social protocol Nostr, published a post suggesting the use of Spacechains and the Bitcoin custody open source protocol Fedimint to solve the Bitcoin expansion problem.
Fiatjaf proposes that, without attempting to create a complex “layer 2” setup involving new cryptography, the following could be done:

1. Adopt Fedimint source code and remove the “mint” feature, and only use their security tokens with multisig and federation features;

2. Then create a Spacechain;

3. Let the alliance issue multisig-btc tokens on Spacechain;

4. Set up a Uniswap-like facility on it so that these tokens can be traded freely.

As for why he came up with this idea, fiatjaf explained, “The recent fee surge caused by Ordinals and BRC-20 tokens shows that the Lightning Network is not a panacea. The channel is too fragile, and it is expensive to open channels and run routing nodes in a high-fee environment. People who want to continue using the Lightning Network have turned to large Lightning Network hosting providers: WalletofSatoshi, ZEBEDEE, OpenNode, etc. We can use people’s trust in these companies (and individuals) operating Lightning Network providers and turn each of them into a Bitcoin token issuer. Each company issues its own token, and transactions flow freely. Everyone can only hold assets from the issuer they trust more.”