It is an interesting idea and certainly one that taps into a real gap in the current Bitcoin ecosystem. While there have been attempts at privacy solutions for Bitcoin most focus on transaction-level obfuscation such as CoinJoin or privacy-focused overlay networks. What you are proposing with a fully private L2 or sidechain using MPC and Shamir secret sharing is more ambitious because it would create an environment where every layer of asset management and smart contract execution is encrypted and inaccessible to outside observation. That is fundamentally different from what exists now.

If implemented correctly the technical challenge here is not just in getting MPC to work for decentralized signing but ensuring that consensus and state verification can occur without leaking any critical information. That means designing a system where validators can confirm a transaction or a contract outcome without learning the underlying inputs. Achieving this requires strong cryptographic rigor and a careful consideration of how private state interacts with public consensus.

One potential point of friction is that Bitcoin’s base layer was not designed for this level of abstraction and privacy. You would likely need a specialized sidechain architecture that has its own consensus rules while anchoring to Bitcoin for final settlement. That way BTC is the ultimate source of truth but the sidechain handles the private computation and contract logic.

This is technically feasible and there are enough cryptographic tools available today to make it happen. The real question is whether there will be enough developer and community interest to sustain the project. The market tends to reward privacy innovations in spurts and only when they are user-friendly and integrated into existing workflows. If you can make this work in a way that feels seamless to users it could be a powerful addition to Bitcoin’s utility and resilience.