Hybrid L2 BOB: Merged Mining, Integrating Bitcoin Security with EVM Liquidity

Forwarded original title: A quick look at hybrid L2 BOB: merged mining, integrating Bitcoin security and EVM liquidity

Written by: Karen, Foresight News

Bitcoin boasts robust security features, yet its liquidity constraints have long shackled its development. Especially when Bitcoin undergoes halving, miners face a significant reduction in profits, posing substantial challenges to the entire Bitcoin ecosystem. Against this backdrop, Bitcoin’s Layer 2 (L2) solutions hold promise for enhancing miner profitability. What happens when Bitcoin’s security is combined with Ethereum Virtual Machine (EVM) liquidity? The hybrid L2 solution BOB offers its approach, allowing Bitcoin miners to perform validations only, without the need for additional Proof of Work (PoW) or incurring extra electricity costs, potentially injecting new vitality into the Bitcoin ecosystem.

What is BOB?

BOB stands for “Build on Bitcoin,” an L2 technology stack designed to support Bitcoin DeFi innovation and ecosystem development. It not only inherits Bitcoin’s PoW security but also supports elements of the Bitcoin ecosystem such as Ordinals, Lightning, and Nostr, while being fully compatible with the EVM. Currently, BOB is live on the Ethereum testnet Sepolia and plans to launch on the mainnet around the time of Bitcoin’s next halving.

In terms of access, BOB can be interacted with through MetaMask via the “BOB Bitcoin Snap.” This means users will be able to conduct transactions like transferring Bitcoin, signing Bitcoin transactions, and transferring Ordinals on MetaMask. According to BOB’s documentation, the BOB MetaMask Snap is currently under formal review for official integration into MetaMask. BOB also allows users to pay for gas fees in cross-chain BTC and other ERC-20 tokens through meta-transactions and account abstraction.

BOB’s co-founder, Alexei Zamyatin, is a Bitcoin enthusiast, researcher, and software developer, also known as the co-founder of the Bitcoin DeFi project Interlay. The other mentioned co-founder, @domiki0_, remains elusive as of now.

Recently, BOB announced a successful $10 million seed funding round, with investors including a mix of international firms focused on Bitcoin, Bitcoin OGs, and leading by Castle Island Ventures. Other investors include Mechanism Ventures, CMS Ventures, Bankless Ventures, Alliance, Antalpha Ventures, Asymmetric, Bitcoin Frontier Fund, UTXO Management, Web3.com Ventures, Zee Prime Capital, ViaBTC Capital, Lucky Friday, Modular Capital, Daedalus, IOSG Ventures, Hypersphere, DFG, Nexo, and angel investors like Dan Held and BRC-20 token standard creator Domo.

How does BOB work?

Initially, BOB starts on the OP stack and can inherit the security of Bitcoin through a merged mining protocol (Bitcoin heavy pledge). Its ultimate goal is to settle directly on Bitcoin L1, and it may later perform full-state verification through ZK Rollups.

In terms of technical implementation, BOB’s merged mining protocol, OptiMine, follows a hybrid consensus model, allowing any sidechain or Rollup connected to the L1 chain to obtain PoW security from Bitcoin miners. OptiMine separates block production from proof of work (PoW), inheriting the security from Bitcoin miners while eliminating reliance on a centralized orderer, and maintaining quick block times (retaining a block time of 2 seconds).

Specifically, in the BOB merged mining protocol, the orderer is responsible for creating and signing blocks, while the participating Bitcoin miners in BOB L2 only perform verification. Since blocks are generated by the orderer and miners only perform verification, the orderer can, in the worst case, stop producing blocks, but it will not create forks or invalid blocks, thus preventing attacks from Bitcoin miners.

Regarding EVM compatibility, BOB utilizes the EVM to create and execute smart contracts, primarily developed using the Solidity smart contract programming language. Most of the Bitcoin stack and applications built around it, such as core SDKs, Lightning, and Ordinals, are implemented in Rust. BOB also supports Bitcoin’s Rust libraries, allowing off-chain execution of Rust programs through RISC Zero zkVM, while using ZK proofs to verify the correct execution within EVM smart contracts. BOB indicates that in the future, it will consider this as a pathway for direct ZK Rollups on Bitcoin, where BOB itself can be proven within zkVM and verified through Bitcoin consensus.

Furthermore, BOB provides trustless access to Bitcoin block and transaction data through a BTC light client, allowing EVM contracts to handle BTC transactions (e.g., P2P BTC exchanges, Ordinal auctions, hash power tokenization), and supports a range of Bitcoin cross-chain bridges. BOB also plans to launch a bi-directional light client BTC bridge supported by BitVM.

BOB Stack

BOB Launches First Season of Points Activity

On the day of the official announcement of fundraising success, BOB also launched the first season of the BOB Fusion Points Program to encourage active participation and contributions to the BOB ecosystem. The first season allows users to lock assets in the non-custodial BOB Fusion Time-Locked Contracts on the Ethereum mainnet and invite others to earn BOB Spice points. These points represent contributions to the BOB ecosystem.

Regarding asset locking, for every $1 worth of assets deposited, users can earn 1 Spice per day. Deposits in tBTC and WBTC earn 1.5 times the points. Specifically, the supported assets for deposit include:

1. Bitcoin-anchored assets: tBTC, WBTC (1.5 times points);
2. Stablecoins and Ethereum liquidity staking tokens: DAI, eDLLR, rETH, STONE, USDC, USDT, wstETH (1.3 times points);
3. ALEX, ETH, eSOV (1 times points).

Reminder: Do not directly transfer funds from exchanges to the BOB FUSION smart contract address.

Besides asset locking, users can earn more points through a referral system. After making an initial deposit, users can generate a personal referral code to invite others to participate in the activity. Referrers can earn 15% of the Spice earned by their first-level invitees and 7% of the Spice earned by their second-level invitees.

The first season of the BOB Fusion event will end after the mainnet launch in April. At that time, the deposited assets will be unlocked for withdrawal around the time of the Bitcoin halving, and can be migrated to the BOB mainnet to continue participating in the second season. According to the BOB official website, there are 25 days left until the end of the first season of the points activity. If the mainnet launch is delayed, assets will automatically unlock by May 15, 2024, at the latest (due to the use of a time-locked contract).

BOB Roadmap

BOB has also announced a detailed roadmap, showcasing several release stages from the public testnet to the Multi-ZK-Rollup. BOB Layer 2 (L2) will be released in multiple phases, from Phase 0 to Phase 5, which include the public testnet, Bootstrapping BOB: Optimistic ETH Rollup, inheriting Bitcoin security through a new merged mining protocol (PoW Re-Staking), upgrading from Optimistic Rollup to ZK Verification, implementing BTC staking orderers through BitVM, one-time signatures, and ZK proofs, and Multi-ZK-Rollup (connecting both ETH and BTC).

As mentioned earlier, initially, BOB will use the OP stack to launch as an Optimistic ETH Rollup, where the BOB orderer processes transactions and blockchain, then submits data covering PoW commitments to Ethereum Layer 1 (L1), where Data Availability (DA) and PoW commitments are verified, with settlements also occurring on Ethereum L1. Due to native L1/L2 cross-chain bridges, it enables access to stablecoins (USDT, USDC), ETH/stETH, and ERC-20 assets. BOB also tracks Bitcoin’s status through a BTC light client, verifying block headers and accepting transactions with proofs. This enables trustless cross-chain swaps/auctions/contract executions.

It is important to emphasize that compared to the standard OP stack, BOB has made several changes and optimizations, such as having its own governance to make community decisions and implement changes, exploring alternative data availability options besides Ethereum (such as Bitcoin and Celestia), adding merged mining in a single centralized orderer setup, and adding the function of Bitcoin miners verifying the orderer’s work.

In Phase 2, BOB will introduce Bitcoin PoW security to ETH Rollup. After the BOB orderer processes transactions and blocks, Bitcoin miners will verify the state of the BOB Rollup, and only if the state transition is correct will the commitments be included as part of PoW, thus minimizing trust in the orderer. Then, the orderer submits data covering the PoW commitments, and finally, Ethereum smart contracts verify the DA and PoW commitments.

BOB aims to introduce Bitcoin as the settlement layer for BOB, currently under research, and may need to introduce ZK compression, likely as part of the fraud proof mechanism, and may collaborate with ZK infrastructure providers (such as RISC Zero). BOB’s vision is to ensure that assets on the Rollup are protected by Bitcoin, while ETH assets are protected by Ethereum.

Recently, BOB has also established a strategic partnership with Marathon Digital’s Bitcoin sidechain development platform Anduro. LayerBank, IceCreamSwap, bitSmiley, and iZUMi Finance will also deploy applications on BOB.

In summary, as an innovative L2 technology stack, BOB not only inherits Bitcoin’s security but is also compatible with EVM. As it launches on the mainnet and further functionalities are perfected, whether it can drive a Bitcoin L2 boom and become a significant force in the Bitcoin DeFi sector, pushing the development and prosperity of the entire ecosystem, remains to be observed.

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