Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Citrea: Modular Rollup Framework on Bitcoin - Orkun Mahir Kilic

Episode Date: November 12, 2024

Bitcoin’s lack of native programmability, coupled with advancements in zero knowledge cryptography, has led to rollups being explored as a substitute for an execution layer. Citrea’s approach involves using Bitcoin as a data availability & settlement layer for their zero knowledge rollup. These rollups not only lower transaction costs, but they also enable smart contracts to use Bitcoin’s L1 security and further incentivise miners to secure the chain despite halving rewards. In order to inherit Bitcoin’s security, zk proofs are inscribed in Bitcoin blocks.Topics covered in this episode:Orkun’s backgroundInscriptions, BitVM and zk rollups on BitcoinOptimistic bridgingSequencerProgrammability solutions on BitcoinBitVM developmentCitrea ecosystem developmentcBTC vs. custodial wrapped BTCThere is no second best!PoW, halving block rewards and how rollups incentivise minersCitrea’s efficiency & fee reductionBitcoin as an inflation hedgeEpisode links:Orkun Mahir Kilic on TwitterCitrea on TwitterBitVMSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Felix Lutsch.

So Bitcoin issues, like you said, is every four years. It's just goes half. And eventually it will converge to zero. Roll-ups are using the L-1 as a DA layer. So we post our data to Bitcoin in the form of ZK proofs and state diffs, which is a bit more optimized form of just sending pure transaction data. And we compress them, send them to Bitcoin. So we do two things at the same time. We achieve the Bitcoin level security because the data is there. And we also pay miners to be incentivized to keep the hash rate high and get more fees and just continue the chain without reducing its security. And right now, the data size of doing a Bitcoin transfer on Citra is 15 times smaller than doing its own Bitcoin mainland. If you're looking to stake your crypto with confidence, look no further than Course 1. More than 150,000 delegators, including institutions like BitGo, Pintera Capital and Ledger trust Corse 1 with their assets. They support over 50 blockchains and are leaders in governance or networks like

Cosmos ensuring your stake is responsibly managed. Thanks to their advanced MEV research, you can also enjoy the highest staking rewards. You can stake directly from your preferred wallet, set up a white label note, restake your assets on eigenayer or symbiotic or use the SDK for multi-chain staking in your app. Learn more at chorus.1 and start staking today. This episode is proudly brought to by NOSIS, a collective dedicated to advancing a decentralized future. NOSIS leads innovation with circles, NOSIS pay, and Metri, reshaping, open banking, and money. With Hashi and NOSIS VPN, they're building a more resilient privacy-focused internet. If you're looking for an L1 to launch your project, NOSIS chain offers the same development environment as Ethereum with lower transaction fees.

It's supported by over 200,000 validators making NOSIS chain a reliable and credibly neutral foundation for your applications. NOSISDAO drives NOSIS governance where every voice matters. Join the NOSIS community in the NOSISDAO forum today. Deploy on the EVM-compatible NOSIS chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at NOSIS. Hello and welcome to Epicenter. I'm your host Felix Lutch and today I'm here with the co-creator of

Citria Orkun Kilich. Hi Orkun and welcome to Effacenter. Hi, hi, folks. Thank you for having me. Yeah, great to have you. As usual on every center we kind of want to start with how you, how you got into crypto. Citria is a L2 like a ZK roll up on on Bitcoin. So today's topic will be probably a lot about like sort of like Bitcoin, programmability, things around that. And, you know, I guess want to probably know how you, how you ended up in that space and how you started to work in crypto. So like please. Yes, sure. So I'm Orkon. I'm one of two four co-founders of Chainmail Labs to initial contributors of Citra and the CEO. Actually, I got into crypto and Bitcoin, maybe like five or six.

six years from now. And when I was in college, I was getting some scholarship to some crypto-based application, basically. And then I started to learn how to open a wallet, how to receive funds, then how to do off-rap to spend in local markets. I'm from Turkey, Istanbul, so I was studying there. And then I started wondering, okay, these are working fine, but it doesn't hit to the bank or like it doesn't use any conventional infrastructure.

So how do I receive this funds? How can I be sure that I'm actually receiving the funds? And I started looking into it. I obviously heard about Bitcoin a lot. But then I encountered this is actually something technological and like based on computer science and distributed systems and cryptography. And I started digging deep. Back in those days, I was doing web development for regular Web2 stuff.

But as time comes, I thought more and more interesting. And then I started basically building smart contracts. I first tried to build something on Bitcoin, but I realized I don't know anything about script and it is very hard to do something on Bitcoin. Then I discovered solidarity and started building programs on EVM compatible chains. But after a couple of years doing that, I realized I want to build products. I don't want to work on like different stuff, building smart contracts and move on to another thing.

I wanted to build some real products that people can actually use. And that's how we actually started our company maybe two and a half years ago. In Istanbul, with my friends from college. We initially worked a bit on privacy on Ethereum. And then Ordinol's thing came up to Bitcoin. This was early last year, around two years ago, actually. We saw that some Bitcoin developer built something called Ordinals that enables people to embed some arbitrary data.

to Bitcoin. And we thought, okay, this is cool, what's how this can be even useful. Then we start, people are actually printing the images on Bitcoin. Then they try to build exchange to buy and sell this image with Bitcoin. And then things got more and more interested and we realized, okay, people can actually do decentralized exchange of Bitcoin. And I previously thought this was not possible when I first entered the space. So we wanted to play around it, play around with it. and in two months we decided to build

basically ordnals supporting Bitcoin wallet. In a month we built it, released to the public and I think in three months we had more than tech users. So it was a bit success for us. And meanwhile, we also learned a lot about Bitcoin script and ordinals. And building a wallet is basically you built the foundation for a super app. I realized, okay, let's just build an exchange in the wallet and just built an inscription service in the wallet,

maybe some account-obstruction features that we can build. And around that time, we were doing designs, like some paper scales on whiteboard, but eventually our design converged more and more into building actually a roll-up on Bitcoin, because we were trying to add-com programmability to Bitcoin by doing client-side validation as ZK-proofs. Because we previously said ZK-proofs for privacy,

we knew that how to do it. And eventually we realized, okay, we are actually reinvented roll-ups. And we focused on this direction and realized, okay, we can actually build roll-ups on Bitcoin today. With maybe some broken bridge mechanism, but we could fix it in the long run, we believed. And then we simply started building it. This was, I think May last year just before ETC. And in ECC, I also talked with some roll-up builders, get some validation, and then fully focused on this idea, basically.

This was our whole history. And then a lot of stuff happened in Bitcoin. New mining pools came. Ornals infrastructure changed a lot. And then Bifian paper came out, I think, one of the biggest breakthroughs into like last maybe four or five years in Bitcoin history, maybe even longer. And then, yeah, we simply become Citrae,

cleared our roadmap, and make everything open source in our GitHub repository, and since that we have been building, stop and today CITJ is live on Bitcoin test at it. Awesome. Yeah. Thanks for the call out there. So basically you'd say like I guess order nodes kind of pave the way to show something is possible after all to bring programmability to to Bitcoin and then like BitVM is a is another big breakthrough there. It sounds like that enables enables also Citra from from my understanding. Can you explain a little bit

what BitVM does and how you leverage that for the rollout? Yeah, basically for like to enable the current form of Citra, you need two things. One, you need to be able to put your ZK proofs on Bitcoin, which is being a must to be a ZK rollout. And this is enabled with not ordinances, but inscriptions as the term that enables putting arbitrary data on Bitcoin. They are not images that we put.

It is just pure byte data, which is the serialized form of the ZK proof. And this is the one thing that enables Citraia. And I think even most importantly is we need to be able to verify those proofs on Bitcoin so that we can have a trust-minimized bridge to move our Bitcoin from Main Chain to Citraa. And this is enabled with BitVM basically. So Bitvian is introduced, I think October last year, just exactly maybe a year ago by Robin Linus, a Bitcoin researcher. And then it changed a lot since now, maybe like two, three version came and it's still

work in progress. But the most basic idea is we can divide the huge ZK verification algorithm into chunks. And then we can optimistically verify the ZK proof using these chunks. But we will still get the same level of security because if there's something wrong, someone can challenge the ZK proof and verify a single part of it so that Bitcoin can know ZK proof is correct or not so that we can even move the state forward and continue the roll up or just select. the adversary operator. Right, okay. And so basically these operators, like, are part of the Citria network,

or what are like sort of the roles in that Citra network? Yeah, I think in like regular Ethereum SQL ops, it's very clear. You have like sequencers and then you have the Prover. The Sequencer just orders the transaction and Prover generates the proof and verifies on Ethereum by just sending to a smart code. But in BitVM things are a bit different, that we don't do verification for every single proof. Instead, we just wait and aggregate them together to save some costs to do a transaction of Bitcoin. So the idea is we still have a sequence run Prover, which is run by us, and they do the same thing with Atterio.

But they send the proof into Bitcoin, but not immediately verify. They just inscribe and full nodes get confirmation. This is still like an interim Zikaa lab. But then after, we have a set of operators and verifiers. This is a terminology coming from BitVM. And these operators are responsible to pay that people are withdrawing from Citra. If you want to withdraw, let's say, Bitcoin from Citraia, you just burn your BTC and request your Bitcoin to a cell, Bitcoin address.

And one of these operators pay you the Bitcoin. And then after a couple of weeks, this is currently 14 days. They go to the main chain and say that, look, this is the latest. finalized Sitya proof and you can see that this user requested this Bitcoin to be sent and I actually sent that Bitcoin. Now I want my Bitcoin back and this is simply a proposal that's put into Bitcoin and in a week let's say everyone agrees that this guy's honest he actually paid the user and the proof is correct then they simply sign a transaction and operator get reimbursed but if there's something wrong let's say operator is trying to steal money by showing some ability

ZK proof, that any of these verifiers can go on chain and challenge the operator, and eventually the operator will get slashed, and it won't be able to get any money from the breach. So this is one of an trust assumption, similar to Arbitrum today, let's say. But on the other side, this is not an optimistic roll-up. It's a ZK roll-up, but the bridging mechanism is optimistic and similar to Arbitrum's breach. Right. Okay. Very interesting.

And so these time frames, like 14, seven days, you mentioned, they're just like the optimistic window or are they related to the finality or the chunking of these proofs? Yeah. So the finality is actually still the same with all the relaps because once we sent the proof into Bitcoin, that all the full nodes see that proof because they rely on Bitcoin security. Once that proof is mined in Bitcoin blockchain, then you can be sure that this is actually final. so there cannot be double spent.

The only finality that you need to wait is while you are withdrawing from the chain. And this is also the operator taking their risk because they simply prepare you and they're year-burst later. So this is all becoming the operator's risk. And they are economically incentivized to be honest because if they do something malicious, they will get slashed eventually. And their incentive to actually pay you before, I guess it's like sort of almost like intent or something where you then get it like that. Yeah, it's actually like an intent. And even our

software is intent. As the user simply starts reducing the desired amount, the one by one, and releasing some signature to the operators, just like an intent saying that I burned 10 Bitcoin and I can get, can I get like 9.9BTC? And if there's no answer, reduced to 9.8 and then 9.7, and eventually one of the operators become profitable because they, let's say, already have Bitcoin Treasury, then they will pay me 9.7 Bitcoin, and in two weeks they will get 10 Bitcoin back. So they will have 0.3BTC in profit. So it is just like an intent.

I'm doing fast withdrawal from the bridge. But the difference from the Ethereum intent is this is the only way of doing withdraw. On Ethereum, let's say on Arbitrub, if you don't do intent, then you can go to the native bridge, wait seven day and get your money back. But on Bitcoin, we don't have the call announce, which is a special form of transaction type, let's say. then that's why we need those operators to actually pay us, but they're incentivized to pay us because we are paying some fee to them

in exchange for fast withdrawal from the chain. Right, so we meaning the user of the Cittria roll-up, or is Cittria itself also sort of incentivizing these roll-ups potentially, sorry, these operators? Yeah, the operators are getting some fees, and eventually the roll-up can decide at some point maybe share some transaction fees with them as, well. But right now in our architecture, their main revenue mechanism is the fees from

withdrawals. And also, if there's no withdrawals, they don't have any cost. They're just running a hardware, maybe it costs $100 per month. So it's basically virtually nothing for an operator. And unless there is a withdrawal, they're happy. If there's a withdrawal, they're getting fees, so they're still happy. So nothing to worry about the economics of operators, actually. Right, right, right. Okay, cool. Yeah, very interesting. And so the rest of the construction like you said it's kind of like normal ZK roll up you have some sequencer it's initially centralized maybe yes it's some point yeah yeah it's initially a single ground by us together with the prower uh in our role now if we have this first to peer network for sequencer so

as we can enable maybe like fast six for the notes and then eventually decentralized the sequencer and maybe also decouple the sequencer with prouber or maybe keep the same uh so that every let's say, sequence that proposed block should also prove their block. But it still expects. But initially our mainnet field be single program, single operator, single signals. Cool. Yeah, very interesting. And so this construction relies on BitVM.

I think there's also like other brolaps in Bitcoin or other ways to bring programmability. I guess there's also like OPCAT or. you know what are what's the differences there like on a high level i guess and and what are like kind of the trade-offs yeah yeah so in the in the high level we know bitcoin also like we know lightning like all of us like lightning and it's eventually proposed payment solution for bitcoin where you can open channel between parties and send down receive btc through that channels but lightning has been around maybe for the last six years, but still it's way behind the scalability solutions on other chains, I would say.

The channel itself is very interactive and it requires you to manage the liquidity, which is very hard to do self-custodially. That's why I think today majority of lightning will start past audio, because no user can run a lightning note very easily if they're not highly technical. So that's the one thing that's obviously the biggest, the well-known, Bitcoin-scalped solution. Other than that, there were side chains, has been around since 2014.

Similar to Polygon to Ether. There are many side chains to Bitcoin. Let's say, liquid, root stock, stags. But the side chains, I think, now everyone knows this, but back in those days, it was very popular, and it was thinking about it to scale the Bitcoin. But eventually, there are different chains. With their own economics, with their own validators sets,

they need to incentivize their model later with fees. So they're simply stealing the fees from Bitcoin main chain and pay to their own operators. So I wouldn't say like side chains are scalable solutions. And I think this is also a well-known fact in Ethereum land too. That's why most people try to build roll-ups because they're more aligned with their one than side chains. And other than it, there are still a lot of experimental stuff like you mentioned, OP CAT, which is a proposed op code to be implemented in Bitcoin. And if it get implemented, potentially, theoretically we can build a stark verifier natively without doing this optimistic challenge response thing with BitVM so that we can just have a regular

Ethereum-like smart contracts. We can move a state forward. We can verify the ZK proofs. But Bitcoin social consensus is hard. We get last software three years ago, it was step-roots. And now it's still a bit mess. like no one knows which software should get activated in the future. There's OP CAT, there's OPCTV, there's GRACE, Crypt restoration.

There are all different op codes like software proposals. But no one, like the Bitcoin community hasn't still agreed on CAT. I think personally I'm in favor of it because it makes everything much easier. But like I said, there are also potential risks of adding another code because they're open any way to do things, which should be well analyzed. But yeah, it's complicated and very experimental. But today, BITVM and combined with Rolaps is the best you can get in terms of the security and the decentralization. Right.

So BidVM doesn't introduce any new, any changes. Yeah, it's already. It just works today. That's the beauty of CITRAA, yeah. Yeah. But it's also like still developing separately. like sort of the BitVM proposer or is that a team working on that? Are you contributing to that also?

Yeah. So good question. Yeah, the BitVM started with Robin's paper and Robin has a not-profit called Zero Sync, funded by a stock where a couple more open source Bitcoin development companies to actually build ZK proofs for Bitcoin chain. But now their focus is BitVM. And it was an open-source code base and it's still open source. Everyone can contribute.

but also five teams, including our team and ZeroSync, form something called BitVM Alliance. This was actually two weeks ago, I think. That alliance is trying to complete the BitVM implementation in the next 100 days to actually put a proof on Mainet and verify it. Because open source development is great, but without coordination, we are all working on the same issues without knowing what we are doing.

So this alliance is mainly coordinated, mechanism between the major contributors of the BitVM. But other than that, there are still many teams opening VRs to BitVM contributing to it. The Alliance is just a coordination mechanism. Like I said, they're not owning the BitVM repository or the idea. It is still fully open source. Awesome. Yeah, that's really cool.

Sounds great. And so that will, like, the next hundred days, like two weeks ago. So I guess like... Yeah, around two, three months. point next quarter. Yeah, actually, like, end of this year is their target because they become, like, started a bit early. We have an internal between a ZK team that's fully contributing, and they're actually much more

optimistic than end of the year to do a proof of concept. But obviously, something needs to be run on main net, and it should require, like, a lot of audits, maybe even some like hideports to put on main net. But eventually, the proof of concept hopefully will become much more. shot. Right. Cool. Awesome. Yeah. I think that was great overview of how you're building and why, how what's possible in Bitcoin. I guess the other element that I definitely wanted to talk about today is sort of the Citra application and developer ecosystem. You mentioned, right, you started from building a wallet and actually trying to build applications. Now,

it seems like you're building the infra first, but there's also the developer and application side. Can you explain a bit, you know, what was there? How does it work? You mentioned DVM competitivity in the beginning too. So in the initial phase, we like we said, we were exploring our own ideas to build, to direct this bullet. And once we discovered we are actually building a roll-up, our initial idea was this, I don't know, maybe app-specific roll-up to do some decks for an old sort to do lending borrowing old Bitcoin. But eventually we said this infrastructure is extremely hard to build. Like the Bitfian taking a year,

even a proof of concept implementation. So if you do multiple-step-specific roll-ups, then we need different breeds for all of them. And we need more developments. So we say, we already have, like, a lot of modular piece that's been developed on Ethereum. And we also, like, good builders for Bitcoin and Ethereum for years. Let's just combine them, improve them,

and make them work on Bitcoin. So that we can enable all, the developers to just come and deploy their applications here without going through all the infrastructure challenges. And that's why we choose to be fully EVM compatible. Right now our test net is type 2 ZKEVM, which means it's fully compatible. You don't have to change anything or any test. You just deploy the same contracts from a material main chain to here and they just work. The only changing thing is the block structure like the gas limit, which doesn't affect the applications. So that's why we choose to be the same.

type 2 ZKVM because we want the finance world to be run on Bitcoin. Bitcoin is the most decentralized blockchain and it's most secure blockchain that's been running more than 15 years. And it's the most censorship president chain today. So what we want is actually, and also it has a very precious asset called BTC, which is a sound money and probably the best performing assets so far that I encountered. then. But the main problem with Bitcoin was, if you want to use that precious assets in finance, you have to trust someone, right? On main chain, you can only do payments, and it's also a bit

conscious sometimes, so you cannot even do payments. So most people did was just deposit their Biscisi to some custodian and then land USTT there and use some decks to do, not but use some exchange to do some swaps. But this is against the whole point of Bitcoin. The Satoshi in the white paper said that the payments without going through a financial institution. But the Bitcoin eventually evolves to something that people are using BTC the assets, but not the Bitcoin blockchain or not any blockchain that will have macro storage properties.

So it's, I think, a bit diverged from the main vision of Bitcoin. And what we try to do is enable developers to build actually non-custodial and trust-minimize applications so that none of these people has to go financial and custodial infrastructure providers to use their Bitcoin. They should be able to just move their BTC here, hold their own keys, and do anything they want. And even we can make the UX better. We have now account infrastructure support. We have now, let's say, we can just use the secret enclave on the mobile phone to sign transactions. We don't have to carry any more hardware volus. We don't have to worry about,

let's say, inheritance because we can just design a wall smart contract. But it is not possible to do on Bitcoin I want today. So that's why we just want to build the infrastructure to make UX better, make non-cassadial apps work on Bitcoin, and then we leave rest to the developers to actually build the final applications to the end users so that we can actually achieve the final on Bitcoin mission. Right, right. And I guess it also relies a lot on what is already there. Like you said, the EVM space and what was built there, just sort of settling on

Bitcoin. How do you see Citria then interacting kind of with other EVM or like this ecosystem sort of outside of Bitcoin, both from the side of like, you know, like as a roll up, but also in terms of like the developer ecosystem and attract. thing these developers. From a technical perspective, one can also get the Citra proofs in crypto and then verify them on Ethereum or some other chain to actually build a trust minimized bridge between Citra and Ethereum. So it's also very easy to do and our infrastructure allows that. But there are more practical interoperability solutions that can be used today,

hyperlayers and deployed on our test nets, where you can configure your security model and run just a message passing so that you can build token breeds, we can build other things. But eventually we believe people would want to move CBTC from Citra to other chains too. But in the long run, we expect all of them to come here. For us we solve everything about infrastructure, like making it fully scalable, making it cheap and reliable. But until then, we also expect some other ecosystems would want to have that Bitcoin to build their ecosystem. So they can build any interoperable solution they want for the developers. We recently launched Citrae Origins, which is our like one-of-a-kind incubator program

that we support developers from the product ideation, the roadmap, the actual engineering, and then branding, growth, go-to-market, fundraising, everything at crypto startup and Bitcoin startup would need. We just provide everything to them. This is a part of our latest funding grounds. one of the main purposes that we do that's founding ground is to actually have enough human power inside to support multiple Bitcoin applications to go to market. And those applications will just be EVM-based. And this means you can also build applications on Citraia, but you can also deploy your

own roll-ups on Citraia, just like L2's on ETA. We can actually deploy L3s on Citraia. And then you can customize your infrastructure. You can choose different VM. You can choose different DA layers. if your application requires, let's say, millisecond confirmations, you can also build that on Citrea by deploying another chain on top of Citraia. So it's just like the end of this possibilities, but using BTC as a native token

and getting the full Bitcoin security to those applications. And the CitraerGIS is just a tool for us to get those developers and help them to build their vision, just supporting them from zero to 100, and then just give them. a Bitcoin app to the Bitcoinersplacing. Right, right, right. So, like, one of the main things is also that BTC is the, like, gas token on the L2 of Citria, right? And yeah, okay. And you mentioned CBTC, I guess that's on your chain, just BTC.

Just the naming of BTC. Yeah, we just wanted to make it easier for people to understand because especially like in exchange, it's just a mess. Like you want to withdraw BTC to some other chain and you get some random revoked BTC that you don't know the name of. That's why we just keep CBTBTC, CETRAPETC, but it is one-to-one peg to BTC, so there is no volume change.

And there's all rep and given. Yeah, yeah, yeah, okay, okay, I guess I get it. Okay, I guess it's interesting because also on Ethereum or like the BTCs that go around right now, like yeah, a lot of them are custodial, like you mentioned earlier. Fuller custodial. Yeah, so if people want to use, use that in let's say, I don't know, restaking or lending, borrowing, borrowing, right, or

defy in general, right now, there is not like super great, not a custodial solution. So I guess CBTC could be one of those. Exactly. Like, Ava is trustless for like lenders and borrowers, right? It's not like excluding the direct risk. And if you use WBTC on Awe, it is the same as using binased lending application or whatever. Because we still have trusting, like fully trusting Bitcoin to not. drug or collateral.

So it's fundamental different than what we're building. We want to achieve both. We want to have my custodial BTC as the asset, and we want to have Bitcoin secure applications, which can be fully trust and decentralized. Right. Yeah, awesome. Cool. I guess, yeah, that's basically like maybe two days, like sort of final, let's say,

part of the interview or like podcast, where we like sort of maybe can talk about gets Bitcoin Defi in general or also like you know what I'm sort of interested in is is there anything you see that's like

kind of unique to Bitcoin coming in that world or is it more just that Bitcoin is just a better form of collateral given like its history and and all these elements of it

so Bitcoin is definitely a better form of cultural and the better form of money as a policy I would say and let's start with the Bitcoin blockchain It's a very special blockchain, still running proof of work with the biggest hash rates,

and has a really big market. And like I said, it's the most censorship presence of blockchain today. It's not great. We still have minor centralization, but it's still better than a lot of other chains who produce blocks with, like, OFAC compliant blocks, let's say. So fully compliant blocks are very popular to some other blockchains, but not on Bitcoin. So in here, patrol-ups actually, what speed of all is? is the role ups endgame is to also enable forced inclusion of transactions from the base there, right? So the roll-ups are, let's say, simply makes the safety fully inherited,

but they sometimes lack the lightness so that there's single sequencer, even though there's multiple sequencer, it's not the same as the Bitcoin network. But we can enable forced inclusions so that people can't send their transaction to Bitcoin, and those transactions will be Rano, Citra. it has to be run on Citraea, basically. So this is the whole point of forced transactions on roll-ups. And as the Bitcoin is the most censorship-resistant layer, now for the important financial activities on Citraia,

Bitcoin is the best base there, because you can just send your transaction and it will get mined, maybe 90% sure. And then those transactions has to be executed on Citraia. That's why I think it's important to build a proof-of-work-cansorship-resistant layer, like Bitcoin. Now, the second aspect is obviously the BTC as the asset. Compared to the other currencies, Bitcoin has the best product market fit for payments, right?

It's still, like, it's still not great. I think most people prefer to get like USDC or USDT because it gets more stable. But compared to, let's say, EITC is widely used in payments, but it is not. There are still a lot of good improvements done on the Ethereum scalability side, which enables very cheap payments, but no one is using them because they don't want to use it as the payment tool. But what we can do is simply just get all this infrastructure run on Citraa

and use Bitcoin as the payment token inside that payments, scalability solutions, basically. So the payments are one of the main thing that I want to see. It should be better than Lightning. And with EVM, like, just Citra, you can build everything without channels like the ZK proof verification if you want to do client side verification

you can do that so it should be better than lightning and the second thing is obviously privacy but there's no today privacy on the term Bitcoin L1 and it's because you don't have enough up costs to build let's say pools or whatever but you can build

a very good privacy tools on Citraa we know like real gun from Ethereum we've worked with them maybe in the past also but it's a great tool to be help on Bitcoin and the third thing is the landing borrowing because Bitcoin is actually like should be widely used as a cultural and we just need to enable it to do NICASTodial land trustlessly by basically having a landing app run or so this will be maybe my maybe prioritize

for Bitcoin applications right right yeah makes sense Very interesting. And so, yeah, I guess the core of it comes down to like sort of the proof of work and the history of Bitcoin, which I guess that's what's the core argument. Is there or like how do you see it then evolving? I guess, you know, we all know like block reward is going down. But basically like the rollups would counteract because they create like these proof transactions, how much is that? Or like, could you see that becoming like sort of the main

source of fees for Bitcoin itself at some point? Yeah. So Bitcoin issues, like you said, is every four years, it's just goes half. And eventually it will converge to zero. And at that point, Bitcoin miners incentive is transaction fees. And if no one is actually using Bitcoin blockchain, but if everyone uses BTC asset in, let's say, custodial applications, then Bitcoin miners won't get any fees and Bitcoin blockchain will become much less secure than today. So with roll-ups, roll-ups are using the L-1 as a DA layer. So we post our data to Bitcoin in the form of ZK proofs and state diffs, which is a bit more optimized form of just sending pure transaction data.

And we compress them, send them to Bitcoin. So we do two things at the same time. We achieve the Bitcoin level security because the data is there. And we also pay miners to be incentivized to keep the hash rate high and get more fees and just continue the chain without reducing its security. So we do these two things, which is extremely helpful to Bitcoin. And at the same time, we do transaction cooperation with ZK proofs. So it is not as expensive as do you get transaction on the L1. It is much more cheaper, but collectively it helps Bitcoin to be sustainable and also to be scalable.

So yeah, that's the main problem with all the proof of work chains. And I don't think other than like something other than Bitcoin will survive in the long ground. And if Bitcoin needs to survive, people need to use Bitcoin and maybe just in a form of single transactions or roll-ups, basically send all the data to Bitcoin. Right. Have you done like some sort of simulation for how much Sidrea would pay on like Bitcoin main net for like some operation?

Does it depend on the load on Citra also? Exactly, because it's state diffs. It depends on like how much, like if we are all using the same uniswap pool, the state div will be extremely small. But if we are using all different uniswap pools, the size will be huge. But we did some statistical analysis using like some past Eighty blocks on user behavior and creates an analytic. And today I think in our test nets, this is the like real numbers on test nets.

But the fear rate is exactly. to our wallup. And right now, the data size of doing a Bitcoin transfer on Citra is 15 times smaller than doing it on Bitcoin Main Net. So even though fee rates change, you can expect that we reduce just the cent transaction 15 times than the main net. This is maybe like somewhat same for other things, but we cannot understand because there is no decks on Bitcoin.

We don't know the cost of decks on Bitcoin. But it should be maybe like somewhere around. between a terrym and itary brolaps, not as cheap as a terry brolaps for sure, but not as expensive as a terryo also. So maybe somewhere in between we can estimate the transaction costs, but there's no strict numbers for it. Interesting. So right now it would be, I guess, like an order of magnitude lower maybe. And like what does that mean? Like what would like a normal cent on Citra cost in this 15x lower? I guess as we record here 31st October Yeah I think like today's

Only like the main net fees are somewhere along like 10 sets Or something like that So a Bitcoin transfer should definitely below $1 to do Citraa Maybe even around like below 10 cents But no matter the fee rate it will be 15 times cheaper If you do that transaction today Because we just reflect the same fee rate of Bitcoin to Citra Because we just send all the transactions that

you need to keep the rates the same, but we just compress the transaction. And I guess that's with the current architecture could like further compress more if there's like more improvements to BVM, ZK. Exactly. The ZK improvements are the main thing. And the second thing is you are now also changing the architecture to embeds stateful which means that let's say if you do a transaction, your compressed address is written into Bitcoin.

And if you do a second transaction, we no longer use your address. We just use your index to put. So we reduce the data size a lot. And there's still working progress, not live on Tesla, but yeah, in the long run, the idea is Zika proof systems will be much more faster so that we can do more, let's say, proofs per time. And we can compress more. And with state, we'll state this, we will achieve optimal compression as well. Awesome. Okay.

Very cool. Yeah. But maybe one final, like, sort of question before we slowly, like, wrap up is I guess you're, you're all the team. You mentioned you were from Istanbul in Turkey. You want to share a bit like how I guess that's, that's a big community that's emerging there. How, how and also has like interest in Bitcoin from sort of like inflationary perspective. So yeah, maybe you can share a bit how that's going, how you're how you're growing that or like your thoughts. So like I said, all my co-founders and are based in Istanbul. Actually, like, I say majority of our team is also in Istanbul. We have an office there. But, yeah, that's how we grew up, like my, maybe like, since high school, all I saw was inflation, Turkish you are going to zero against dollar and other currencies,

especially against Bitcoin too. Just Bitcoin does all-time high maybe every day in Turkey, no matter the ESD price, because either ESD goes up or Bitcoin goes up for Turkish zero. But yeah, that's also like how I got into crypto that I was getting scholarship through crypto because it's a much more freer form of doing money transfers and it's also a resistant against the inflation.

This was 2018 or 19, I think. Yeah, that's how we got into. But in the Turkey, there are like just some developer groups that's still like getting bigger and bigger. we definitely like help them with their products if they have ideas we want to support them we do for a couple I think we will announce more of the coming days but less like I said we are just supporting all the local builders and at the same time there is this retail user base which mainly holds I would say USDT and not Bitcoin because it's still more volatile

compared to the UST for Turkish persons but the main thing is also they don't know how to use the self-custodial tools. So they use the most basic thing, which is Binance. And they just use the USCT on Binaz or USTC, whatever, so that they can just cheaply send it around or just convert to the cash. But I think market on Turkey is really big, especially if we can onboard them to Bitcoin, because it's better than UST for monetary policy.

And if we can make also like sending, receiving Bitcoin and holding Bitcoin easier, then I don't see any reason to like just dumps up of UST. Right, right, yeah, that's just super interesting. How big the adoption in that sense is. And maybe the step towards going full non-custodial is actually much shorter than what it is in like the Western world. Yep, for sure. Cool. I think, yeah, it covered a lot of ground.

And yeah, congrats on the Fadrace. I guess this might go out shortly after. is there any final things you want to share with our audience or where to learn more about how to build exactly thank for having me i think we covered a lot of technical and non-technical stuff for technical stuff they can always for us our GitHub which is open source our repository and our web pages citrea.xy z and the twitter is citrea underscore xyz so that you can see all the resources there but the other than that if you're a builder and developer i want to be a part of Citra Origins Incubation Program.

It just hit us up. There's a form on the web page as well. We just do one or long meetings with all the builders that's applying. Yeah, in general, what we want to achieve is the end goal of Bitcoin, what I imagine is the hyper-bitconization, where all the other currency is getting hyper-inflated and the Bitcoin at the same time getting adopted. The hyperinflation is happening on other countries,

like Argentina, like Turkey, like Zimbabwe. But the hyper-bitconization is also slugally. all the coming. We just need the enough infrastructure to actually achieve scalable and trust-minimize and non-costodial applications. And then once we see the creative applications, the adoption will be much more higher, potentially bigger than probably bigger than all the crypto and potentially bigger than the web tool as well in the long run. So if you are a builder, just like I said, just hit me up or apply from the form. I think that's all. Awesome. Sounds great. Thanks, thanks everyone. Thanks for coming on.

And yeah, great see you. Thank you, Felix. Thank you for having me.