Technical Analysis of Particle Chain

Forward the Original Title： 技术解析Particle Chain：如何帮Merlin达成40亿美元TVL？

TL;DR

Previously, I mentioned that “chain abstraction” is the next focus track after modularization, which many people did not believe. However, if I told you that without the behind-the-scenes support of @ParticleNtwrk’s “chain abstraction” technology, we would not have witnessed the brilliant TVL of nearly $4 billion in MerlinChain’s BTC layer2 track within a month. Why? Next, I’ll share my technical understanding:

“Chain abstraction” is another concept derived from account abstraction, aiming to enhance users’ seamless interaction experience between different blockchains. When EVM-Compatible dominated the field, AA account abstraction basically met users’ usage needs. However, with the rise of BTC layer2 ecology and the emergence of many new UTXO model chains, a “chain abstraction” technology that can cross EVM chains and non-EVM chains becomes crucial.

Taking MerlinChain as an example, it is an emerging EVM-Compatible BTC layer2 chain. Its purpose is to extend the application ecology of BTC and BTC derivative assets such as BRC20, ARC20, and BTC420 on layer1 by layer2’s high scalability, allowing these BTC derivative assets to break free from the limitations of the mainnet chain performance and unleash greater liquidity and market potential.

Therefore, the main technical barrier for MerlinChain lies in how to “cross-chain” BTC native assets and derivative assets originating from inscriptions to Layer2 chain and quickly build an “application protocol” ecosystem, providing a huge liquidity market for inscription assets, thereby revitalizing the long-silent inscription ecology.

To achieve this, a seamless connection between BTC UTXO chain and EVM-Compatible chain is required, involving technical issues such as secure cross-chain of BTC assets, seamless ledger migration of derivative assets like BRC20, and rapid construction of DeFi application environment for BTC series assets on layer2.

In the normal development process, even if the layer2 chain can be quickly developed based on existing mature EVM solutions, how to handle the interoperability between the BTC native chain environment and the EVM environment is a major problem. When it comes to interoperability between other chains, they can also “go back and forth” to adapt to each other. However, the BTC chain is very unique; it can only be compatible with and adapted by other chains, even those with significantly higher scalability like EVM chains. However, EVM chains themselves are not the same species as the BTC chain and cannot actively cater to the design of the BTC chain.

What to do? It can only be provided by an independent third-party “chain abstraction” platform to offer interactive “connectors”. Perhaps, let’s take the example of Particle’s technical support for Merlin to do some exploration and explanation. Let’s see how Particle Network’s BTC-Connect, specially customized development, works?

Most EVM-Compatible chains can only be compatible with Metamask, while the majority of BTC chain user assets are in wallets such as Unisat, Xverse, etc. To connect Unisat to the EVM chain, a layer of “wallet adaptation” abstraction processing is required.

In simple terms, Unisat and Metamask have different public-private key encryption algorithms and special signature parsing characteristics. Particle needs to coordinate the communication between the two sides:

1. When a user initiates a transaction on Unisat, Unist needs to first send a transaction request to Particle Chain through Particle’s SDK. Particle Chain will generate an EVM Smart Contract address corresponding to the Unisat address, and then this AA address will initiate a transaction in the EVM environment and request a response from MerlinChain.
2. When a user first connects, they need to bridge some assets from the BTC chain to the AA address on the Particle chain. This address has the function of Paymaster agent payment and can execute a series of subsequent interactive operations, such as delegated transactions, gas payment, multi-signature management, etc.
3. After Particle completes a series of SDK interactive operation basic connections, user transactions are sent to Particle Chain. Particle Chain verifies and executes the transaction, coordinates with MerlinChain, and when Merlin receives a new transaction request, it directly parses and verifies the Bitcoin wallet signature through the AA contract to complete the transaction.

After completing the wallet abstraction adaptation processing, Particle also plays a certain role in the process of asset migration and processing on MerlinChain. For example: when users transfer assets from Unisat to MerlinChain, they will be stored in a custody address provided by the Cobo platform. Particle should immediately trigger a response to generate corresponding Wrap assets and create an AA address for multi-signature and delegated transactions. Particle acts as a necessary channel for BTC native assets to enter MerlinChain. This means:

ParticleChain will retain most of the native assets migrated from the BTC chain in the form of Wrap, and it can be considered that most of the nearly $4 billion TVL assets of MerlinChain will be within the jurisdiction of Particle Chain. Particle needs to connect the entire process of minting, burning, and transferring Wrap assets to help MerlinChain have clear asset circulation management capabilities.

For other assets flowing into the EVM-Compatible environment such as ETH, USDT, USDC, etc., Particle will also do corresponding asset circulation accounting management based on its AA account abstraction characteristics to support various Swap, Staking, Restaking, and other DeFi protocol applications generated on MerlinChain.

The indexer system corresponding to the inscription assets is also crucial. As the core tool for managing transaction data on the chain, when inscription assets flow into the layer2 EVM environment, the indexer needs to accurately record, track, and manage the circulation of such assets, especially when coordinating the ledger differences between different indexes.

In summary, MerlinChain’s ability to quickly and methodically absorb nearly $4 billion in TVL assets is directly related to the mature “chain abstraction” services provided by Particle Network behind the scenes, including BTC Connect, AA account abstraction, Paymaster, etc.

“Chain abstraction” as the next potential breakout track holds undeniable value and significance. Some may say, isn’t this just a solution for interoperability between chains? Indeed, but communication between chains of different species through “chain abstraction” is not as straightforward as imagined.

A set of ERC4337 AA account abstraction standards can essentially connect the entire EVM chain ecosystem. Asset delivery between emerging chains like Sui and Aptos can also be achieved through mapping relationships using contracts and proxy contracts. However, the most troublesome and challenging aspect lies in how to deal with the abstraction relationship with the BTC chain. The development of BTC layer2 requires continuous support from “chain abstraction” capabilities, including abstraction of wallet incompatibility for interaction, abstraction of indexer collaboration differences, abstraction of off-chain custody environment and on-chain asset transparency, abstraction of management between various specialized inscription assets on-chain, and so on.

The silence behind the inscription track is mostly due to many technical issues that have yet to be resolved. When various micro-innovative assets flourish, it is now necessary to use the abstraction method to unify them onto a single layer2 chain, indicating the magnitude of the challenge.

Note: At its core, BTC layer2 aims to solve the liquidity problem of BTC derivative assets. We look forward to builders such as @MerlinLayer2, @BSquaredNetwork, @ParticleNtwrk, and others working in this field to bring continuous breakthroughs.

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