New opportunities for Bitcoin L2? Detailed explanation of SatoshiVM and testnet interaction process

Even if spot ETFs passed, the market still maintains long-term enthusiasm for BTC-related concepts.

On January 14th, the data showed that the cumulative cost consumption of the Ordinals protocol’s inscription reached 5,600.22 BTC, which also indicates the continued activity of the Bitcoin ecosystem.

At the same time, there is still a market for Bitcoin-based L2 narratives.

Concerns about the Bitcoin block space, as well as the previous situation where Inscriptions raised Bitcoin transaction fees, are vividly remembered. How to reduce the cost of the Bitcoin mainnet has become a narrative necessity, and it has also driven related projects to attract attention in the secondary market.

For example, STX, the token price last week has reached a record high.

Under this circumstance, other Bitcoin L2 projects are eager to try it, including SatoshiVM, which has been frequently mentioned recently - a decentralized Bitcoin ZK Rollup Layer 2 solution, and the Ethereum Virtual Machine (EVM) ecosystem and uses BTC for gas fees.

Bitcoin, L2, ZK… These high-value concepts combined can easily make people FOMO; at the same time, the project is currently being discussed a lot on Twitter, but it is still unclear whether this is a “collective marketing” , or the “value discovery” that everyone unanimously agreed on.

However, there is enthusiasm, which at least indicates that there may be short-term opportunities.

So we dug into the project’s documents and integrated the currently public testnet interaction and token initial issuance information in order to provide everyone with a reference.

What is SatoshiVM?

SatoshiVM bridges the EVM ecosystem with Bitcoin, enabling the Bitcoin ecosystem to issue assets and develop applications.

It is not difficult to see from the name that the project pays tribute to Satoshi Nakamoto (Satoshi), and the VM in it means a virtual machine, and running smart contracts and issuing assets in a virtual machine provides the possibility for Bitcoin’s current weak scalability.

The crucial concept that makes SatoshiVM possible is ZK Rollup.

Leverage rollup technology to bundle multiple transactions into a batch and verify them as a single transaction on the Bitcoin main network. This ensures the same level of security as the main Bitcoin network, guaranteeing data validity and availability;

At the same time, Taproot, Bitcoin Script and other technologies are used to verify the contract on the chain without changing the consensus rules of the Bitcoin network, thereby completing the calculation of the fraud proof.

To put it bluntly, since ZK Rollup can be used as the L2 of Ethereum, it can also be used as the L2 of Bitcoin.

In fact, more generally, most of the work of L2 is not executed on the main network, but is submitted to the main network after execution. Therefore, in theory, it is of course possible to execute the transactions that occur off-chain, and then submit the packaged transaction results to the chain in batches.

L2 executes the transaction and L1 is responsible for settlement. In this case, the mainnet is replaced by Bitcoin.

But it is worth mentioning that SatoshiVM uses native BTC as the gas of EVM. Once the project develops, the more applications are created on this L2, the more active the ecology will be, and the more miners will naturally welcome it.

To be more specific, we can take a look at the design structure of SatoshiVM:

Sedimentation layer

This layer provides data availability, ordering, and validation of proofs for the SatoshiVM chain. It allows users and dApps to send messages and assets between Bitcoin and SatoshiVM. Bitcoin serves as the settlement layer, and bridges and rollup scripts are deployed on the Bitcoin network.

Sequencing Layer

This layer consists of an execution node responsible for executing transactions submitted to the SatoshiVM sequencer and transactions submitted to the L1 bridge script, generating L2 blocks. It also includes a Rollup node that handles batched transactions, publishes transaction data and block information to Bitcoin to ensure data availability, and submits validity proofs to Bitcoin for finality.

Proving Layer

This layer comprises a coordinator, which assigns proof tasks to provers and relays the generated proofs to the Rollup node to complete finality verification on Bitcoin. It also includes a prover pool, responsible for generating validity proofs that verify the correctness of L2 transactions.

How is it different from other Bitcoin L2?

Strictly speaking, SatoshiVM is not so much an L2 as it is a “bridge”.

What bridge here means is that the introduction of development formats and execution methods on Ethereum allows you to perform activities similar to those on Ethereum, such as issuing new digital assets or building applications, but using the Bitcoin network for payments and processing transactions.

Previously, due to the limitations of Bitcoin’s original design, generalized L2s such as lightning networks, side chains, and state channels were also very active around scalability and improving transaction performance, but most of them were trying to find solutions within the ecosystem. ,:

That is, to make Bitcoin faster and better in terms of performance, or to enable Bitcoin to handle transactions in certain scenarios.

Then Stacks tried to find ways to enable Bitcoin to support the operation of smart contracts and Dapps to support more function.

Please note that performance and functionality are two different concepts. With that said, in terms of purpose, SatoshiVM should be compared to Stacks.

We might as well compare the two in terms of technical implementation and integration with Bitcoin.

Technical implementation and compatibility:

• SatoshiVM: Able to run Ethereum-compatible smart contracts and use native BTC as fuel.
• Stacks: uses different technologies and has its own Proof of Transfer (PoX) consensus mechanism and Clarity smart contract language. It does not directly support the EVM, but provides a different approach to creating smart contracts and applications on Bitcoin.

How to integrate with Bitcoin:

• SatoshiVM: By leveraging ZK Rollups technology, it integrates the Bitcoin main chain at the Layer 2 level while maintaining compatibility with EVM, allowing developers to develop using familiar Ethereum tools and languages.
• Stacks: Through its unique PoX consensus mechanism, Stacks directly adds the functionality of smart contracts and DApps to the security of Bitcoin.

To make an inappropriate metaphor, SatoshiVM is more like a panacea. L2 is designed to serve both Bitcoin and Ethereum, and can even serve other L1s. Just for narrative reasons, serving Bitcoin seems to be more popular.

Stacks is a specific medicine. It depends on the structure of Bitcoin and then prescribes the right medicine. It may not be universally applicable to other L1s.

At the same time, we also conducted a comprehensive comparison of all Bitcoin expansion plans mentioned above, as follows:

Current status of the testnet and participation opportunities

At present, SatoshiVM’s test network has been launched. Users can use Unisat or Metamask wallets to participate in interactive activities on its test network, including transferring tokens, performing swap and other operations.

According to the latest data, there are currently 7,000+ accounts interacting with the test network, with a total of 46,000 interactive addresses and a total of about 200,000 transactions completed.

Meanwhile, although SatoshiVM’s official website does not explicitly or implicitly mention any airdrops for interaction, as the project is being widely discussed on Twitter, the daily increase in the number of accounts and active accounts also demonstrates the market’s FOMO sentiment towards it.

But the other side of the heat is competition. The result must be that those who interact will win over those without interaction, and those who interact more will win over those with interacting less.

Considering there is a “zero-play” feature of the testnet, there is no cost to participate in it. It is still a good strategy to earn potential tokens with zero cost.

The following are detailed interactive steps for players in need to refer to (picture from Twitter user@FareaNFts）：

1. Download the Unisat wallet, and in the final settings of the wallet (gear icon), switch the network to Testnet.
   

2. Go to the faucet to receive the test token tBTC, enter the amount and your Unisat address:
   The faucet URL is as follows:http://bitcoinfaucet.uo1.net/send.php
   

3. Follow the following rules to add SatoshiVM’s network information to Little Fox:
   Network Name: SatoshiVM Testnet RPC: https://test-rpc-node-http.svmscan.io Chain ID: 3110 Currency symbol: BTC
   

4. Complete the transfer of BTC across different networks
   Visit websiteBridge.satoshivm.io Connect Metamask and Unisat wallet
   Deposit the tBTC received from Unisat into the website and withdraw it using the Metamask wallet (same test network)
   

5. Transfer SAVM tokens (the official token for the future of the project)

Enter the “SAVM Bridge” page

Get the “tSAVM” faucet

Deposit some tSAVM and confirm the transaction in your MetaMask wallet

Withdraw some tSAVM and confirm the transaction in the MetaMask wallet

In addition, SAVM’s mainnet token will also be officially issued on the 19th.

In terms of rule design, SAVM will be supported by Bounce, another well-known Bitcoin ecological project, and its corresponding token is AUCTION. Bounce adopts the initial liquidity pool (ILO) issuance method, which means that SAVM will have an initial liquidity pool based on the AMM model for participants to swap at that time;

To participate in the ILO, one must hold Auction tokens and there is a certain probability of being randomly selected for trading eligibility. Participants can also continuously receive a share of trading fees and ETH rewards from this initial liquidity pool. This provides another relatively stable option for players who want to participate in token issuance but are concerned about the exchange risks of AMM.

However, it should be remembered that holding Auction also means a certain risk of price fluctuations of the token itself. Whether it is worth the price is a matter of opinion.

Issues worth paying attention to

Finally, although the concept, technology, and narrative of SatoshiVM are promising, I still have some concerns about the integration process of the information.

First, since it is L2, is the L2 sequencer centralized or decentralized? Who acts as the validation node for L2, and what are the rules for becoming a node? All of this is currently opaque, and it feels more like “token first, details later.”

This is common for meme projects, but for an infrastructure project, it seems a bit rushed.

Second, the project does not publicly disclose specific team and past information. L2 involves a large number of transactions, and security and stability are prerequisites. Without the endorsement of a team, it becomes a point of concern. Although the hotness of the Bitcoin ecosystem is driven more by retail investors, if critical infrastructure is not managed by a high-end team, it is easy to raise suspicions.

Third, there is no substantive information on the project’s Github, and the open-source status of L2 itself is unknown.

Finally, there is a rampant scam surrounding SatoshiVM, generating FOMO emotions. There have even been “verified” users with more followers than official Twitter accounts posting phishing links for airdrops. Many blue-checkmark accounts in the comments section are collaborating in the act, exploiting the psychology of greed and inducing users to transfer their assets through wallet links.

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