These proposed "bitcoin banks" would handle most payments and vary in design from federated sidechains like Liquid to Chaumian ecash banks such as fedimint or cashu. Coinpools, which utilize time-sensitive smart contracts and do not depend on a trusted third party, represent an innovative solution at the forefront of Bitcoin scaling research.

The high costs of transactions on the main chain suggest a system where users engage with multiple semi-trusted off-chain services akin to community banks. These entities would be interconnected, facilitating liquidity similar to wire transfers, while still posing a threat of depositor interaction with the blockchain, thus balancing affordability with security.

Increasing block size is not viable due to potential centralization; hence, concepts like Utreexo may help optimize UTXO storage and validation but are not complete solutions. A network of distributed "banks" could allow for effective ownership, auditing, and fraud detection. The shift towards interacting more with sidechain tokens than the main Bitcoin chain raises concerns about the original vision, yet Bitcoin's core value as an inflation-resistant base-layer currency remains.

For development, addressing correlated failures in second-layer solutions is crucial. Tools like CheckTemplateVerify (CTV) are suggested for efficient exits during congestion. A hybrid system that preserves Bitcoin's integrity while offering scalability seems likely. OP_VAULT is noted for its importance in enhancing the security and efficiency of large-scale custody solutions, being chainspace-efficient compared to alternatives like MATT. However, proactive security measures must be complemented by protection against supply chain attacks on hardware and software.

Layer 2 protocols' effectiveness, such as the Lightning Network, depends on sound mempool and fee management policies, and initiatives like BIP324 ensure Bitcoin's censorship resistance. Research into a "minimum viable coinpool" is encouraged to determine if primitives beyond Taproot and CTV are needed.

In conclusion, networking these off-chain entities and applying market pressures can enforce regulatory compliance. Infrastructure builders must focus on equipping these entities with tools for safe operation, enabling quick Layer 1 exits, and simplifying custodial tasks, aligning with Hal's 2010 perspective on layer-building that allows for auditability and movement freedom.