A brief analysis of the core of BTC L2 technology

*Forwarded Original Title:浅析BTC L2技术的核心和命门是什么？投资比特币L2必看

Currently, if we talk about the hottest track, it’s undoubtedly BTC L2. Currently, all kinds of BTC L2 solutions are emerging one after another, and various gameplay methods are dazzling. Some are playing with staking points, some are launching coins right away, and some are claiming to be BTC L2 with just a multi-signature wallet + POS network. Everyone has different investment preferences, and I belong to the stubborn conservative type who says, “Give me a reason to invest at least.”

Why should I participate in BTC L2 investment? Why should I participate in this BTC L2 instead of that BTC L2? I need a reason, and this reason must be: give me a satisfactory answer to the most critical question.

What is the most critical problem with BTC L2? Is it the ability to earn points and stack TVL by staking?

Is it the ability to unite large holders and market makers to ensure that most of the points can be controlled by coordinated actors? All of these capabilities are crucial. Such gameplay requires these abilities to be essential.

However, as a stubborn conservative, I believe that these are not the most critical issues with BTC L2. I think the most critical issue with BTC L2 is how to address the problem of trustless bi-directional cross-chain circulation between the BTC mainnet and BTC L2.

If this issue remains unresolved, I firmly believe that the very foundation of BTC L2 projects is precarious, and the applications layered atop, such as DeFi, are equally vulnerable. A single flaw in the multisig system could result in the entire structure crumbling. In such scenarios, I opine that it’s more prudent to pursue a more direct approach rather than exerting extensive efforts in vain.

Personal research into various BTC cross-chain solutions, whether it’s multi-signature, HashLock, threshold signatures, MPC, and more, has led me to the conclusion that the most native and decentralized BTC L2 solutions don’t necessarily require looking beyond the Bitcoin system. The native technologies of Bitcoin, particularly those concentrated after the Bitcoin Taproot upgrade in 2021, are adequate for implementation. Moreover, teams have innovatively combined these native Bitcoin technologies to ultimately achieve a fully decentralized BTC L2 solution.

The implementation formula of this technology combination is:

The formula for achieving decentralized BTC L2 is: Schnorr signatures + Mast contracts + Bitcoin light node network. Because all of this is built on the foundation of BTC Taproot and enables BTC to achieve the equivalent functionality of a VM in a decentralized manner, I refer to it as TaprootVM. The most prominent example in this regard is BEVM, and another BTC L2 project, Bitfinity, incubated by ICP, also utilizes a similar approach. Yesterday, BEVM’s official Twitter account pinned an article that explains in layman’s terms the BTC L2 solution based on Schnorr signatures + Mast contracts + Bitcoin light node network, which serves as an excellent resource for understanding BTC L2. If you are also interested in the most critical issues of BTC L2, let’s share this information together:

Summary:

BEVM is a BTC L2 solution completely built on BTC’s native technology. After the Bitcoin Taproot upgrade in 2021, the BEVM team utilized BTC’s native technologies such as Schnorr signatures and MAST to construct a fully decentralized BTC L2 technical framework. The BEVM testnet has been operational for 8 months (launched in July 2023), with over 100,000 on-chain users and over 30 on-chain ecosystem projects spanning 15 different areas including BTC stablecoins, DEXs, and lending platforms, making it one of the few BTC L2 solutions with an operational testnet. Leveraging years of exploration and accumulation in the BTC L2 space, the BEVM team pinpointed the core proposition of BTC L2: how to achieve decentralized cross-chain functionality for BTC. Based on BTC’s native technology, the BEVM team has provided a fully decentralized BTC cross-chain solution, laying a solid technical foundation for BTC L2 implementation.

Main Context:

The BEVM team has over 6 years of experience in Bitcoin Layer 2 development and operation. In 2018, the core team of BEVM launched ChainX, which used Bitcoin’s 15-fold multi-signature + Bitcoin light node technology to achieve Bitcoin cross-chain, ultimately achieving cross-chain transactions of over 100,000 BTC and 500,000+ BTC Hash Lock.

However, the Bitcoin 15-fold multi-signature is still a relatively centralized solution and has not yet solved the problem of completely trustless BTC cross-chain transactions until the Bitcoin Taproot upgrade in 2021.

In 2021, the Taproot upgrade brought two core technologies to Bitcoin: Schnorr signatures and MAST contracts, which opened up a new fully decentralized BTC Layer 2 solution for the BEVM team.

Schnorr signatures are an aggregation signature technology that offers higher efficiency, smaller storage requirements, and better privacy compared to elliptic curve signatures. The main advantages are: based on elliptic curve signatures, Bitcoin’s maximum multi-signature address is 15; however, based on Schnorr signatures, Bitcoin’s maximum multi-signature address can be expanded to 1000. Moreover, when managing BTC with 1000 multi-signature addresses, only one Gas fee is required for on-chain signing, and the privacy of all multi-signature addresses can be guaranteed.

(Schnorr Aggregate Signature Scheme) When Satoshi Nakamoto created Bitcoin in 2008, Schnorr signatures were not yet open-sourced (they were open-sourced in 2009). Therefore, Satoshi Nakamoto had to choose to use elliptic curve signatures first. After 12 years of development and verification, Schnorr signatures have been proven to be a more suitable digital signature algorithm for Bitcoin. Therefore, with community consensus, Bitcoin Core formally introduced Schnorr signatures into Bitcoin, opening up a new chapter for Bitcoin’s scalability.

(The Operation Logic of MAST Contracts) Although Schnorr signatures can expand Bitcoin’s multisignature addresses from 15 to 1000, allowing for more decentralized management of Bitcoin, if these 1000 addresses still rely on humans for signatures, then it is not code-driven, let alone network consensus-driven, and the trust issue is still not solved. However, with MAST, this is achievable.

MAST (Merkle Abstract Syntax Tree) is the second core technology introduced by the Bitcoin Taproot upgrade. MAST can be understood as follows: MAST is a set of instructions equivalent to smart contracts. By introducing MAST, the 1000 multisignature addresses enabled by Schnorr signatures can be driven not by human signatures but by MAST contracts.

Therefore, the introduction of MAST contracts eliminates the need for multisignature signers. The 1000 multisignature addresses are not reliant on human signatures but are driven by MAST instructions. In other words, they are driven by code, which makes Schnorr signature signing smarter and code-driven, independent of humans. This brings BTC cross-chain interoperability and management closer to complete trustlessness, although it has not yet been fully achieved.

Although MAST combined with Schnorr signatures achieves decentralization in the number of BTC multisignature addresses and enables code-driven and intelligent multisignature execution, the question arises: who will drive the MAST contracts? Who will instruct the MAST contracts? Relying on humans is not an option. Only through network consensus can MAST contracts be truly driven, thereby relying on network consensus to drive Bitcoin’s decentralized cross-chain interoperability, management, and spending. Therefore, the BEVM team ingeniously introduces Bitcoin light nodes into the second layer network as validation nodes, while also merging Bitcoin layer-one Taproot addresses involved in multisignature management with the Bitcoin light nodes of the second layer network. In other words, these Bitcoin light nodes serve as both the block-producing validation nodes of the BEVM network and the Taproot multisignature addresses of the Bitcoin layer-one. Consequently, when the network nodes of the second layer reach consensus, they can drive the Taproot addresses of the Bitcoin layer-one to execute consensus through MAST contracts.

For instance, when the network reaches consensus to transfer 10 BTC from a certain address in the BEVM back to the Bitcoin mainnet, the Taproot multisignature address of the Bitcoin layer-one will automatically execute a transfer of 10 BTC through the MAST contract. It’s important to note that in this process of cross-chain transfer and management of BTC, there is no human involvement whatsoever; it is entirely driven by network consensus. This represents a genuine achievement of trustlessness.

Summary: The core of BEVM’s BTC L2 solution is based on Bitcoin’s Schnorr signatures, which achieve decentralization of multisignature addresses (expandable to 1000 addresses). Additionally, leveraging Bitcoin’s MAST contracts enables the codification and automation of multisignature signing (eliminating human involvement). By utilizing the Bitcoin light node network, communication between the Bitcoin layer-one and layer-two is facilitated, ultimately allowing network consensus to drive Bitcoin’s multisignature and management. This culminates in a genuinely decentralized BTC L2 solution.

It’s worth mentioning that since the block-producing nodes in the BEVM network are all Bitcoin light nodes, if Bitcoin ceases to exist, the BEVM network will also cease to exist. The BEVM network cannot exist independently of the Bitcoin network, so BEVM is a true Bitcoin L2 solution, not the sidechain misunderstanding prevalent in the market.

Why is achieving decentralized BTC cross-chain crucial for BTC L2?

As is well known, the extremely simple UTXO design and limited block space of the Bitcoin network make it impossible to implement smart contracts or support complex scenario expansions. For BTC to achieve genuine scalability, it must transition to a second-layer network to facilitate complex scenarios.

Hence, enabling decentralized BTC cross-chain functionality and transitioning it to the second layer is the crucial initial step for all BTC L2 solutions. Failure to achieve decentralized BTC cross-chain transactions would render such purported BTC L2 solutions built on an unreliable foundation, jeopardizing asset security and future development prospects accordingly.

However, most of the current BTC L2 solutions tend to sidestep the critical issue of achieving decentralized BTC cross-chain functionality. Instead, they often emphasize technical terms like ZK-rollup or OP-rollup without addressing the core challenge. It’s essential to recognize that Bitcoin nodes don’t validate such data, rendering these terms somewhat irrelevant. Even if these solutions enhance the trustworthiness of the layer 2 ledger to some extent, they fail to address fundamental questions about how Bitcoin can achieve decentralized cross-chain interoperability and secure asset management.

The BEVM BTC L2 solution, built on three key BTC-native technologies - Schnorr signatures, MAST contracts, and the Bitcoin light node network, perfectly addresses the challenge of decentralized and secure cross-chain interoperability for Bitcoin. This breakthrough effectively tackles the most crucial aspect of BTC L2.

To further develop the Bitcoin ecosystem and ensure the robust expansion of the BTC L2 track, BEVM will fully open-source its BTC L2 solution. Additionally, after the mainnet launch, BEVM will introduce BEVM-Stack, a modular functionality for BTC L2. This means anyone can easily build their own BTC L2 using the BEVM-Stack. Currently, BEVM has developed a fully compatible EVM BTC L2 modular technology stack.

In the future, as the ecosystem evolves, BEVM will also build a modular technology stack for BTC L2 compatible with the StarkNet network’s Cairo language, Solana’s Rust language, and the MOVE language. The goal is to integrate BTC through BEVM into any chain, allowing innovative technologies from any blockchain to be utilized for BTC, maximizing both BTC value and blockchain technology benefits. This will ultimately establish a BTC-native superchain network based on the BEVM technology stack.

Disclaimer：

1. This article is reprinted from [web3中文]. Forward the Original Title‘浅析BTC L2技术的核心和命门是什么？投资比特币L2必看’. All copyrights belong to the original author [*PeterG]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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