Unchained - Bitcoin Layer 2s Aim to Attract Ethereum-Like Dapps. Will They Succeed? - Ep.638

Episode Date: April 30, 2024

In this episode of Unchained, host Laura interviews Alexei Zamyatin, co-founder of Build on Bitcoin, Willem Schroé, founder of Botanix Labs, and Orkun Kılıç, co-founder of Chainway Labs. They discuss their respective projects, all of which are focused on developing Layer 2 solutions for Bitcoin.  Zamyatin's Build on Bitcoin is a hybrid Layer 2 that connects to both Bitcoin and Ethereum, aiming to bring innovation back to the Bitcoin ecosystem. Schroé's Botanix Labs is developing a decentralized Layer 2 solution using the ‘Spiderchain,’ which uses a series of multi-signature wallets to secure the chain. Kılıç's Chainway Labs is building Citrea, a zk-rollup on Bitcoin that aims to create a Bitcoin-backed economy.  All three projects are in various stages of development and testing, with BOB’s mainnet launch expected shortly. Show highlights: Introduction to Build on Bitcoin (BOB), Botanix, and Citrea: How they aim to innovate and expand Bitcoin's capabilities, including their architectural designs that integrate Ethereum users and work toward decentralization and trustlessness Security Aspects and Integration Strategies: What the security risks associated with BOB, Botanix, and Citrea are, and strategies to enhance decentralization over time How these Layer 2s influence Bitcoin fees, and how Botanix's integration can leverage the Bitcoin ecosystem, with insights on the potential of Layer 3s and zk-rollups to transform Bitcoin's utility and fee dynamics How these projects aim to attract Ethereum users and developers, and the reasons why this may be an attractive opportunity for them How Runes, Ordinals, and BRC-20s operate on Citrea, Botanix, and BOB How Bitcoin is always a derivative when it’s not in its Layer 1 and the pros and cons of different bridging solutions The concept of forward secrecy and how it can help improve security in blockchains Why Willem believes that Layer 3s are possible and bullish for Bitcoin How "merged mining” resembles Ethereum’s restaking and why it’s positive for Bitcoin Thank you to our sponsors! Polkadot Guests: Willem Schroé, founder of Botanix Labs  Orkun Kılıç, cofounder of Chainway Labs  Alexei Zamyatin, cofounder of Build on Bitcoin Links Recent coverage on Unchained of Bitcoin L2s: Stacks’ Muneeb Ali On Why Bitcoin Is Exciting Once Again Build on Bitcoin BOB learning documents Announcement of mainnet on May 1st. Unchained: Bitcoin DeFi App Sovryn to Deploy on Hybrid Layer 2 Network Build on Bitcoin Alexei’s tweet on BitVM/rollups  Alexei went on a retreat with the inventor of BitVM Citrea Unchained: Here's What You Should Know About Citrea, Bitcoin's First ZK Rollup Whitepaper Orkun Mahir Kılıç’s interview on Unchained Premium Citrea learning documents Clementine -Citrea's BitVM Based Trust-Minimized Two-Way Peg Program Botanix CoinDesk: Willem Schroé: Building Botanix, a Bitcoin Layer 2 That Brings the EVM to Bitcoin Botanix and the Future of Bitcoin Bitcoin Magazine: Spiderchains: A Proof Of Stake Second Layer For Bitcoin Willem Schroé’s interview on Unchained Premium Learn More:  Unchained:  What Is the OP_CAT Bitcoin Improvement Proposal?  What Are Opcodes in Bitcoin? A Beginner's Guide  Learn more about your ad choices. Visit megaphone.fm/adchoices

I think most people today thinks like Bitcoin is like a store of value or like medium of exchange in the future. But what we see is Bitcoin is the full global money. We want Bitcoin to like see as full global money. But without having a real economy around it, you can actually have like, you can't have a currency or money. It is just a payment protocol. If you just do a medium of exchange or if you just store of the value, it's like just digital gold. But we want more than that. We want to do every single financial activity we do with Bitcoin.

we want to get Bitcoin-backed loans, we want to compete with UST, with let's say, Bitcoin-back-stable coins and Bitcoin-backed stable coins, for example. Hi, everyone. Welcome to Unchained. You're no-hype resource for all things crypto. I'm your host, Laura Shin,

author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor at Forbes was the first Main Tree Meteorporter to cover cryptocurrency full-time. This is the April 30th, 2024 episode, of unchained. Pocodot is the original and leading layer zero blockchain with over 2,000 plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem, making it faster, more secure, and adaptable. Perfect for GameFi and DFI to build, grow, and

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reporting on the ground from where you live, telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News. Today, we're going to do something a little bit different. I wanted to do a deep dive into Bitcoin Layer 2s, since there's quite a renaissance going on in that space. Instead of doing one long interview with a couple of projects, I decided to do many interviews with three different ones. You'll now listen to three separate discussions I had with first, Alexei, Zon,

Zamyatin, co-founder of Build on Bitcoin, then Willem Shro, founder of Botanics Labs, and finally, Orkin, Killich, co-founder of Chainway Labs, which is Building Citrae. That said, let's begin. I'm here with Alexei, Zemyatin, co-founder of Build on Bitcoin. Welcome, Alexei. Hi, thanks for having me. What is Build on Bitcoin and what problem are you trying to solve with it? So, Building Bitcoin is a hybrid layer two.

and I can talk about what hybrid means a bit later, but our goal is to bring innovation back to Bitcoin. For the last 10 years, we've had lots of people, join Bitcoin, start using wallets, learn about the blockchain, and then when they want to go Web3 Native, they've had to leave to Ethereum and other ecosystems because they could not do anything apart from hold and transfer. And the vision of Bob and I think also many other projects in the ecosystem

is to bring back innovation and power users and all these new use cases that we've seen flourish across different Web3 ecosystems back into the Bitcoin ecosystem and give Bitcoin users a place to experiment, to build without having to leave Bitcoin. Okay. And when you said earlier that it was hybrid, what are the elements of it? Initially, we started with the goal to build a Bitcoin layer two. Today, you know, Bitcoin layer two is you can just debate about what the definition means.

We can call them side chains. We can call them layer two. We definitely don't yet have roll-ups. We are on the way to get there. There's a lot of innovation happening in the space. But then we realized one thing. To build a successful layer two, you actually have to solve three problems.

You have to solve the Bitcoin problem, namely Bitcoin security and a secure Bitcoin bridge, but also to others. Liquidity and ecosystem. You need to provide good tooling and an easy way for projects to deploy and go to market fast and support them along the way. and at the same time, I need to give them access to stable coins to on and off-ramps to liquidity and other assets.

And to do this, we decided to not launch in isolation connected only to Bitcoin, but actually to connect to both Bitcoin and Ethereum from the start. And that's why Bob's position is a hybrid. Bob will be connected to both Ethereum network allowing us to import eth users, eth assets, stable coins, eth, E.C20 tokens, but also easily connect to exchanges, because everything connects to Ethereum first. And at the same time, we're working with different ways to bridge in Bitcoin securely and ultimately also be able to settle directly to Bitcoin using new things like Bitfia.

Oh, this is interesting. The other two interviews for this episode are Satrea and Botanics. And the on-ramping is more through Bitcoin. So walk us through what it's like for a user if they're going to use Build on Bitcoin. It sounds like they actually start on Ethereum? It depends. So we cater to both user groups. I think if you look at the Ethereum user journey, you start on ETH

and you can use the native ETH bridge from ETH to Bob, and you can bridge any EARC20 acids. USDT, USDC, all different stable coins or any EARC 20 acid like ETH, STE, die, but also essentially you are only two clicks away from any exchange. So if you're on Binance, you can always, draw to ETH and then go to Bob. Same with coinbase, or you can go from coinbase to base and then easily bridge over to Bob. And of course, in the future, we anticipate to be integrated directly into these major

exchanges and directly with the major stablecoin issuers. But as we all know, the path to get there is quite long. And we don't want this to be a bottleneck and a blocker initially, having learned from building another ecosystem previously. From the Bitcoin side, we actually made onramping to Bob also quite easy. we work with currently two major Bitcoin bridges, namely WBTC, which is a more institutional Bitcoin solution, and TBTC, which is a very robust threshold signature-based design that has 30 to 60 siders. And what we've built is an easy way for users to go from Bitcoin into any

of these two and in the future other rapid-pickon representations on Bob. It's designed just like a liquidity bridge that you see when you go from base to optimism to arbitram and so on. So we have liquidity providers that provide liquidity up front. They do the minting as a service. And the user does not have to think about different bridge interfaces. They just go to the Bob wallet page, say, I want to move Bitcoin into Bob, select which Bitcoin asset they want. And they just send Bitcoin to one of these market makers. And they actually are just swapping in to the Bob ecosystem. So it's really simplified. We can speed up the onramping as well from 10 minutes to a couple of minutes and even in the future, hopefully to seconds.

And so through this model, it sounds like the onramping goes through a centralized entity. Is that it? Or are there any more decentralized options? It's actually fully trustless for the users. So right now we work with a few like widelisted liquidity promoters, but they're fully not like trustless to the user because it's a pure-to-peer swap. So what the, what the liquidity provider does is they go through TBTC, for example, they do the minting, they deposit the TBTC into a pool on Bob, and that pool of liquidity now can be used by users to just swap in a trustless way. And the swap works using a Bitcoin-like line. So Bob has built into its system by the smart contract, a Bitcoin

like-line that is able to verify transactions that happen on Bitcoin. So this thing actually checks the Bitcoin blockheaders, keeps track of what's going on in the Bitcoin network. And then if I am in the process of moving on Bitcoin in, I make the Bitcoin transaction. And then this system will actually pay attention to what's going on on Bitcoin and then verify that a transaction actually occurred cryptographically. And only then I will actually get my TBTC or WBTC on ball. So I really don't trust the liquidity provider at any point in time. It's purely me swapping in.

And the benefit here is that instead of me having to request somebody to provide me with a TBTC or WBTC or go to the TBTC bridge myself and then understand how it works or, you know, right now there's two. But in the future, we expect there to be different Bitcoin bridges that have different tradeoffs. We provide a unified interface that is much easier. And you still have to, of course, familiarize yourself with the different trust models and trust assumptions of these different Bitcoin bridges. But this on ramp is fully trustless to use. so it's just a peer-to-peer swap. Okay. And so then once you're on Bob, it sounds like you always have some derivative of Bitcoin

then, like TBTC or WBTC? That is correct. And that is the case for any layer two. It's very important to note that Bitcoin exists only the Bitcoin blockchain. And the moment you want to move it into another system, be it finance, Kraken, be it Ethereum, be it a layer two like Bob or Citraer Botanics, you're always depositing into something. Like somebody else is receiving custody of your Bitcoin. Non-custodial bridges don't exist. I've spent a good deal of my research times working on different bridge designs and ultimately

you always have to give away custody in some form. And the question, obviously, the biggest question of bridging is who actually has custody of your assets. And today there's ultimately just two different designs. There is statistical security, meaning ideally, I hope that the chances of this breaking are low and we can improve, reduce the risk by distributing trust across a big multi-sig or you can scale the multisig by using threshold cryptography like TBTC is doing. And the other side, you have economic security, which would require the bridge operators to put up some additional collateral in different assets. And that's, for example, that's the design that we invented in 2018 and TBTC version 1, for example, implemented this on Ethereum back in the day.

So you would have, for example, Ethereum as a collateral asset that the operator of the bridge provides. And if they lose the Bitcoin, the users will be reimbursed. But that model doesn't scale well. So today we mostly see the statistical security implemented in like different multi-signature designs. And ultimately, you always end up with this IOU or rapt representation of Bitcoin where you essentially have to go back to whoever is custody the Bitcoin and request a redemption to actually get back the physical or underlying BDC asset. And that holds same for all bridge designs, which ultimately are some derivative form of a multi-sick today.

Okay. And so then build on Bitcoin because it is this hybrid, how is that chain secured? So we are rolling out Bob in three phases. phase one, and then that's of course very important to be transparent about it. In phase one, Bob, security depends on Ethereum security. So we launch as an OP stack roll-up, and the goal is obviously we're waiting for OPE to activate fraud proofs. The goal here is really, okay, be connected to Ethereum, import eth assets, and have this pragmatic approach of being fast to market, but also providing Bitcoin projects with what they want. We spoke to many Ornals teams, with many

defy teams, and we have quite a few of the large pre-existing Bitcoin defyteams like Sovereign, deploying to Bob. And what they really wanted is liquidity and access to more users. And same for Ornales projects. If you compare the user base of Ordeal's users, which is around 500,000, to even just Metamask itself, which is 30 million, the dimensions are so different. And right now, we just try to be the easiest place for Bitcoiners and Bitcoin projects to get access to more users. and at the same time, the easiest way for Ethereum users to start experimenting and learning

about the Bitcoin ecosystem. And then in phase two is where we bring in Bitcoin security. And we do this using something called merged mining. So merge mining, for those not familiar, is we could call it the grandfather of restaking. It's a concept that was invented

by Satoshi himself back in the day. And merge mining allows a Bitcoin to mine on Bitcoin, but at the same time, use this mining power to secure multiple networks in parallel. So essentially reusing the proof of work. From the technical perspective, what happens is as a miner, you would run additional full nodes in different networks.

These networks would be designed to accept Bitcoin's proof of work as consensus. And then you would, when mining Bitcoin, you would collect the transactions for other networks. You would bundle them into a block. And then you would just reference these additional blocks from other networks in the Bitcoin block that you're actually mining on. And that's exactly what we're going to do on Bob. We have a prototype running on TestNet,

and we're actually working with some of the largest Bitcoin mining companies to design this new type of merge mining because we've significantly proved merge mining to what it was designed by Satoshi to actually, I would call it, I would see we modernized it. So previously the challenge with proof of work on merge mining was that it's very hard to reduce the block type, to a competitive kind of time span, like two seconds,

which you have to do today if you want to compete in the defy arena, because Bitcoin's prefer work is unpredictable and non-deterministic. So there's a high chance that if you go below a minute or 30 seconds, that you, below a minute, basically, you start seeing shallow forks. Because a miner, because they're so optimized to just, you know, optimize as much as possible for mining Bitcoin, if they find a block, they post the solution to the Ebbler, but they continue automatically mining,

on their own block, even if somebody else found a solution at the same time, and maybe they should actually be mining somewhere else. And usually, if you have 10 minutes on Bitcoin, the chances of me actually finding two blocks in a row is very, very low. And the chances of me actually forking the network and also very low, and we very seldomly see forks. But if you reduce the block times to a minute or lower, you start seeing a lot of these small forks. And what we did on Bob is we separated block production from actual finalization. just like Ethereum roll-ups do today. So we introduce sequencers

just like an eth-roll-up. And of course, in our case, the bob sequences will be the ones that are pre-producing the blocks. And then every minute, the miners just take the last, let's say, 100 or 200 bob blocks and reference them in their mining process.

So you can think of it this way. You have this trailing finality throughput for work, following up every minute. And of course, every 10 minutes, ideally if the majority of the Bitcoin and miners are participating, you would actually also see it in the Bitcoin block, but we don't really depend on the Bitcoin full block itself. We just care about the actual proof of work being performed.

And the cool thing about this is, it allows us to have fast block times, just like optimism, but also have Bitcoin security. And in phase two, Bob will then have security from Ethereum and from Bitcoin, which will make it the most secure later 2 in practice. because to attack Bob in this model, you have to attack the sequencer, you have to censor Ethereum to prevent fraud-proofs from happening, but you also need to attack the majority of the miners that are participating in this merge mining protocol, which in practice is very, very difficult to execute.

And if you look at the percentage of the mining rate, mining power that is actively already employing merge mining to optimize a revenue stream, for example, in the case of Rootstock, they are currently at 60%. But from our conversations, and we've spoken to all of the large mining companies in the space so far, almost all. And definitely all of the large mining pools,

you will see more and more of them turning on merge mining and we can expect the hash rate that participates in this to go up to 80% and higher towards the end of this year and next year. And the reason is, miners are obviously very aware of the Bitcoin block having and the next one that's coming in for years. And merge mining is a way for them to increase the revenue streams that they have at the same time exporting Bitcoin security and improving security of designs and roll-ups like Bob 3.

So interesting. So it sounds like there's this sort of phased rollout. But could you describe what the security risks might be at these different points in time? Of course. So in phase one, the security risk is that the sequences get corrupted and that there are no fraud-proofs executed on Ethereum. So whether they're not activated or because the Ethereum fraud-proof system doesn't work, then just like any optimistic roll-up on Ethereum, you are at risk. So it's the same security model as optimism or Coinbus as base chain. And of course, in between, we're of course, just like any OP stack roll-up, we work with the OP stack in this case, actually.

So we're also working towards decentralizing the sequencers so you can reduce the single points of field. on the sequencer side, but that ultimately, you know, it expands it from a single sequencer to a federation, most likely, initially. And then in phase two, you now have this additional security from the Bitcoin miners, which means that, you know, for this to go wrong, you would have to have a collusion between the sequencer, the Bitcoin miners, and a way for them to actually prevent froppers happening on Ethereum. So also collude with the majority of the Ethereum stakers to delay the fraud proofs for sufficiently long for seven days to actually execute an attack. And then in phase three, and that's obviously something that I believe also Citri and many

others are working towards in this space, we would have an optimistic roll-up-like settlement on Bitcoin using BitVM. This is, of course, still in the early stages. The paper came out in December. BitVMVMV2 was released recently. We've seen more and more designs pop up like BitVMX. so it's really great to see so much contribution towards the same goal. We're collaborating with Robin on the research side, and hopefully once the technical specification is complete, we can start implementing prototypes of this new design. And the goal here is really to get an optimistic settlement on Bitcoin.

So similar to what arbitramor optimism will be doing on Ethereum. And in that case, you can actually have this fraud-proof mechanic, not enforced by Ethereum full-notes, but by Bitcoin full nodes. And that is ultimately where we want to get to. So that we inherit security primarily from Bitcoin because we feel Bitcoin is the more distributed and essentialized network.

But we would always still keep the Ethereum native bridge from Ethereum to Bob. And the way we do this, and it's always easier to visualize. We have a nice visualization of this. But what we would do is we would then ideally take the fraud proofs that would happen on Bitcoin and pass them onto the Ethereum networks.

Instead of having fraud-proofs on both chains at the same time, which could also work, we would just take the fraud-prups on Bitcoin and then give them to the Ethereum contract, which because Ethereum has more expressive smart contracts, can vary five Bitcoin transactions and be aware of what's happening on Bitcoin. And the goal in phase three is that

if something was wrong and I have bridged in my Bitcoin through this BitVM bridge, I can always get them out. But as an eth user, If I've bridged in Ethereum, I can also get my eth out and go back to Ethereum. And the goal here is really to provide the best possible security for these two user groups. And this can, of course, in theory, be expanded to other layer ones, although our primarily primary focus is, of course, on Bitcoin and Ethereum being the two

largest ecosystems in this space. And so for eth users, when they bridge their eth over, then is it again a derivative that they're dealing with in Bob? So, yes. And that's where it becomes quite interesting. By technical design, you always have a derivative because, again, ETH only exists on Ethereum. So even ETH on optimism or arbitram is actually derivative. But because the security of the bridge in the ETH roll-up case is enforced by Ethereum through fraud proofs

or if it's a ZK roll-up actually through validity proofs, you actually have the same security model. So while on the technical side, if you look at the contracts, yes, you're kind of minting and like burning, like or locking and minting eth, you're actually using the same assets. So it's very different to, for example, using wormhole or layer zero where you actually have this third party trust assumption on top of the wrapped asset. And in the case of Bob's phase three, in the final design, you would have this exact kind of native, you could call it bridge. So you would have Bitcoin that's bridged in. to Bob, then it will be wrapped, of course, from technical perspective. But the security of the bridge is enforced by the Bitcoin full nodes through fraud proofs. So instead of, you know, because we can't execute the full contracts on Bitcoin, we only execute the small part, which allows us to prove that something is going wrong and preventing a malicious operator from actually stealing the Bitcoin. And in that case, so yes, from technical perspective, you still always have wrapping,

but from security standpoint, you have. actually have the same or almost as close as we can get the same security model as Bitcoin itself. There's always risks, right? There's always a chance that nobody does a fraud proof and that there's censorship and so on. But we can really minimize, and that's why we can call them trust minimized or native bridges at that point in time. So the goal is really to get to the same security model that we see with ETH on Arbitrumb today, to have the same security model for Bitcoin on Bob and, of course, also other

Bitcoin layer twos. and then we could actually call them Bitcoin Roll-ups. Okay. And so I understand the value proposition if you're a Bitcoin user to use something like Bob, because then you can access this whole world where you can find additional uses for your Bitcoin. So what would be the appeal for somebody who has ETH and already accesses a lot of these apps on Ethereum to go over to Bob. So I think there's different angles here.

The first one, if I'm an eth user and I don't have anything to do with Bitcoin, well, Bob is the easiest way for me to actually get a room, get an order know, and start experimenting with the Bitcoin ecosystem, get exposure to the community to other builders without having to really go through a steep learning curve of learning what the UTXO model is, learning what Bitcoin's script is. So I can start building and familiar, like, experimenting with data. in the same environment that I'm used to, but these things are now Bitcoin-focused, or you have some form of ordinals, or you can do Q-to-peer swaps,

and we're building tooling so that you can actually receive ordinals, Bitcoin and Rune, in the largest web-based or browser extension wallets that people use on Ethereum, so kind of unifying the user experience into a single wallet, so you don't have to have a Bitcoin and an Ethereum wallet. I don't want to say too much, but we've built some really cool things that we're going to be releasing in two weeks. And then the other angle is for a builder, well, I can deploy my contracts and suddenly I have easier ways for people to deposit Bitcoin into them. And as an eth-dap, Bob is essentially a way to get Bitcoin exposure. And you can see many of the Ethereum applications

developing a multi-l-2 multi-chain strategy. And right now they have to pick between 40 plus different eth-l-2s, is it kind of more like. let's do the same and target the same community. Whereas Bob targets the Bitcoin community really all of our engineering resources go towards not reinventing the wheel with the EVM because that's all there. We start on par with arbitrament optimism. And all the engineering resources go towards unifying the experience between Bitcoin

and EVM networks, really better wallets, better on-ramps, with the goal to make Bob the easiest way for Bitcoin users to deploy Bitcoin to to defy. And the same time, this, of course, creates a network. effect and brings the liquidity to Ethereum def applications, which now have an incentive to deploy to Bob. And we've actually seen this with some of the larger Ethereum players actually announcing that they will be deploying to Bob, most notably, for example, Beelodrome and a few others.

And that's essentially the, it's not only technical play, it's also an ecosystem play here. Well, honestly, when you were saying that the Lempicoin will also work with the Ordinals and runes. My thought was, oh, the Dijans are going to love this. Hopefully, yeah. So you said, well, actually, you're going to be going live with your main at the day after this podcast goes out. So will that kind of functionality be available on the first day? We will have this on-ramp from Bitcoin to Bob.

We'll be live from day one in terms of ruins. We have Sovereign, for example, that is one of the largest Bitcoin D-Fi projects in the space previously a Roonstock. Now they're also deploying to Bob. And they've actually built a ruin's bridge. It is multi-signature based. But that allows you to wrap ruins and then basically trade them or buy, acquire them as an UC20 token, making it just more accessible to an ETH user. And that, I believe, is going live on day one or within one or two days of the main at launch. And that will actually be the easiest place for ETH DGians to get their first rule without having to really, you know, install new wallets and get Bitcoin from a centralized exchange war,

get Bitcoin from their, you know, dusty ledger that they've, you know, hit away for a long time. Because now they can buy these things with USDC or USDT or ETH. Okay. Okay. And last question here, how does this affect fees on Bitcoin? You know, I'm sure you're aware that people have been concerned about the security budget problem on Bitcoin. You know, would this keep transaction fees off? And, you know, make that worse? Or is there some way that this could actually, you know, contribute and make Bitcoin more secure? So I think that there's two things. So depending on the design in phase, so in phase two, we don't post a lot of data to Bitcoin. We work with the miners and

we actually contribute back fees to Bitcoin and contribute to sustaining Bitcoin security budget. And that was very important to us. And that's why we also work closer with the Bitcoin mining companies and the mining pools and the miners. Because ultimately, as a Bitcoin, layer two, we rely on Bitcoin existing. And I think the entire Web 3 space relies on Bitcoin being secure. And we saw the Bitcoin having happened just now. And then the one in four years might actually be quite impactful. And we see lots of interest from mining companies to move into the Bitcoin layer two space as a way to bring back more users to Bitcoin because everybody has realized that, okay, it's hard to build on the layer one. The fees are way too high.

you run into the tragedy of the commons because ultimately normal users can't just make transactions anymore. But on the layer two, you could have cheap fees and amortize this cost of actually doing things on the layer one, whether you know, your merge mining or as a rollup trying to post data to Bitcoin, which would be very expensive, no matter how, you know, the Bitcoin fees develop, it's going to be expensive. And we might see kind of some hybrid solutions there as well. But you're amortizing these costs potentially among millions of users. So for the end user is just a couple of cents more, and it doesn't really matter. And that's really important.

So the goal for Bob is to inherit Bitcoin security, but also contribute back to sustainability. Well, last quick question, just with the merge mining, does that compromise the security of Bitcoin in any way? It does not. So the reason why Satoshi invented merge mining was to actually prevent fragmentation of mining power. So back in the day, you started seeing altcoins. Bitcoin Forks that would use the same proof of work algorithm, and then miners had to choose do I mine Bitcoin or do I mine this other thing? And the idea was, well, we could actually have everybody mine on Bitcoin.

So we keep Bitcoin security instead of fragmenting and making everything weaker because now you need only a fraction of the mining power to attack each of these individual chains one after the other. By merged mining, you have Bitcoin and then everything else is connected to Bitcoin. And everything has a lot of miners. miners could still choose which chains they merge mine, and if a merge mine chain gets a lot of Bitcoin's hash rate, then it also becomes very secure and very difficult to attack.

And the second idea and second vision of Satoshi was actually, well, this would enable innovation outside of Bitcoin itself. So we wouldn't have to fork Bitcoin, or you could actually go experiment on a side chain that would still have Bitcoin security. So the nice thing about merge mining is it does not impact Bitcoin security at all. There is a disadvantage to this. like eigenlayer restaking has obviously risk for Ethereum

because you can get slashed in one of these applications that you're actually securing using your stake and then it actually would affect your Ethereum stake. This is good for apps because it creates a disincentive for a staker to try to misbehave in an application because they have so much to lose, but it actually has a risk to Ethereum. Merge mining doesn't do that.

So the risk for the mire is an opportunity cost of setting up a node, running it, and not earning rewards in each respective network if they try to misbehave. And the assumption here is really, okay, as long as the majority of the hasher that is participating, the side share will be secure, but we never, ever affect Bitcoin. Bitcoin doesn't even know that merge mining is happening. Bitcoin nodes have no idea that this is even going on. They don't care.

All right. Well, you're launching your main net the day after this podcast goes out, as we mentioned. And Unchained will have more details on that in a video and in an article. so listeners should be sure to check those out on May 1st. Thank you so much. Thanks for having me. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers, and the anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem,

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No sugar added? Neutral. Refreshingly Simple. Hi, everyone. I'm here with W. Willem Shro, founder of Botanics Labs. Welcome, Willem. Nice to meet you all. Thanks, Laura. So Botanics is one of the new L2s springing up on Bitcoin. Can you explain what Botanics is and what problem it is that you're trying to solve with it? No, absolutely. Yeah, I think we started a year and a half

ago in terms of just looking at the broader crypto ecosystem. And what I saw happening is you had Bitcoin, pure, decentralized, secure money and almost no applications on top of it. And then outside of Bitcoin, I saw a huge amount of applications, all reaching product market fit, realizing that they're actually built on what you call the EVM. EVM is just a software layer and realized that Bitcoin might be the winning money, but the EVM, the winning virtual machine. And so year and a half ago, we really wanted to bring the two biggest Lindy effects in the whole of crypto infrastructure, meaning Bitcoin as the money and the EVM as the virtual machine and wanted to bring them together. So that's why a year and a half ago came up with the idea for Botanics, the second layer EVM on Bitcoin. It's fully EVM equivalent and it fully runs on Bitcoin.

So it feels like you're transacting on Ethereum, but you're using Bitcoin for everything. And so we're directly connected as a second layer on Bitcoin. And I think what differentiates us, we're building the second layer in a very novel way, what we call the spider chain. And so the spider chain is basically this decentralized layer two. So we actually found a way to fully decentralize that layer two.

And yeah, we've been actually we started a year and a half ago. First six months we spent on the cryptography. Then we started building and went on test net in November and now looking forward to main it. And so when you call it a spider chain, what is that exactly? And how is that different from, say, a roll up? Yeah, very good question. We're definitely another roll-up. And actually, the name, the spider chain comes from how the design actually works.

We want to build an absolutely, actually decentralized layer two where anyone can join in, can join in the multisic key set. One of the things we saw is that a lot of different layer twos are still a multi-sick, where their central parties have in control. And so we want to decentralize that. And we actually create this series of different multistics. which is what we call the spider chain, because if you depict it, I was actually drawing it on a whiteboard and I was drawing all these series of multistics, which actually looked like all different spiders in a chain. And so how it actually works is when you think about the Lightning Network,

that is actually a decentralized network of two out of two multistics, because if you and I open a channel, that's a two out of two multisic. When you open another channel, that's another two out of two multisic. So basically the Lightning Network is this decentralized network of multisics, And so if you park that idea, but think bigger, and you have, for example, 10,000 different notes or 100,000 different full notes running the Botanics EVM and the spider chain, what you will do is generate a series of multisks. So, for example, if you have 10,000 full notes, you will randomly choose 100 participants out of the 10,000, and they will secure one multicake. And then you do that again for multisic two. again, you randomly choose 100 out of the 10,000 different notes,

and there will be multisic 2. And then you do that again for multi-six, three, four, five, six, seven. And after a while, you have this decentralized network of multisix. And that is a spider chain. And maybe good to know, like, why would you want to build a decentralized layer two? I think there's a lot of different aspects that come into mind. I think you want to be fully permissionless. I think you will fully want to be censorship-resistant.

And so this is a network where anyone will be able to join, where anyone can actually run a full node. And that's a little bit what we aim to do. We are decentralization maxis. And I think especially these days with the US government coming after a lot of defy projects, we believe this is extremely important. Besides that, it actually gives a lot of different benefits. If you are decentralized, basically by essence, your data availability is decentralized. So we don't have to post the data back to Bitcoin the base layer. which is extremely hard.

We know that Bitcoin is not made to actually build roll-ups. It doesn't have a lot of different tools. And so despite the chain is possible on Bitcoin today, because we're decentralized, we don't have to post the data back to Bitcoin and we can keep the transaction fees on the second layer in Bitcoin, extremely cheap. So it's a different design than your classical roll-ups

that are more centralized but trustless, can go really fast, high throughput, centralized but trustless. and then you have the spider chain decentralized, a little bit slower. It's going to be a little bit like Ethereum, in essence. We can be as decentralized as Ethereum. But once you want to become decentralized, of course, you have the blockchain Trilemma and you cannot go super fast. And that's a little bit how we see the future of Bitcoin scaling.

You have Bitcoin on the base layer, absolutely secure, very decentralized 10-minute blocks. And then you go to, for example, like a botanics, which is more like an Ethereum itself, actually. Very decentralized, but not as decentralized as Bitcoin itself. Nine second blocks. But anyone can join and anyone can run a full known. And then you can go even further than that. You can do the ZKWLOPs or the roll-ups on Botanics itself.

And then you basically are able to scale Bitcoin to 8 billion users in the world. And that's how we think 100 years from now, the whole world will run on Bitcoin. Where you have Bitcoin the money, you can have a Botanic switch, is the EVM and can power that financial system. And you went over this quickly, but you said, so the data is, will not be posted to Bitcoin. So that is, is that even on chain at all or is that off chain? And then another question is you talked about the transaction fees. So do the transaction fees to all stand botanics or how much of that goes to the base layer

or, yeah, how frequently are even any proofs or anything like that batched there? Yeah, very good question. So we don't need to approve because the security comes from the decentralization itself. And so when you think, for example, like an Ethereum, all the data sits on Ethereum itself. For Botanics, all the data will sit on botanics itself. We will post back the root of the Merkel tree back to Bitcoin every Bitcoin block. So we basically have that anchorage. And that protects us against what's called a long range attack.

So in terms of a proof of stake, so we'll run a proof of stake on top of Bitcoin. So you'll stake Bitcoin in order to actually participate in this decentralized network. And to protect yourself against that long range attack, we'll post the root of the Merkel tree back to Bitcoin. But it's not for any other reason. That basically what prevents something like a reorg in Botanics? Yeah, you have a proof of stake on the second layer. So basically the proof of stake runs and anyone can build a full block.

there, which immediately gives censorship resistance. So we'll start out with 15 members. And so all these 15 members are joining in building the blocks. So from the get-go, we have what you call, like, decentralized sequencers, so to speak. Okay. So basically, so for the spider chain, I think that serves two purposes. One is these multisigs are used for bridging the Bitcoin over. But then they're also used.

for proof of stake? Correct. Actually, when you think about any layer two, there's always two aspects you need to secure. One, the actual assets on the base chain. So for Ethereum roll-ups, the actual Ethereum sits on the Ethereum smart contract. And then there's a second part you need to secure,

which is like the separate roll-up or the chain. And so the proof-of-stake actually fulfills both security aspects. So all the Bitcoin sitting in these decentralized multisics are secured because, everyone needs to stake Bitcoin. So you have the proof of stake there. But then the proof of stake also secures basically the blockchain on the second layer. Okay, got it.

So when a user bridges to Botanics, what are they receiving on the other side? Are they receiving Bitcoin to transaction on Botanics? Or is it a token that represents their locked Bitcoin? We don't have a token. The whole thing actually runs on Bitcoin. fully connected to Bitcoin. And so the user receives Bitcoin. So when you'll go to your Metamask, you'll have the Bitcoin in your Metamask.

Or fully EVM equivalent. So anything will work. And so you'll have the Bitcoin on the EVM as a native currency there. All right. So what are the security risks with Botanics? Very good question. So all the different designs of Lair2s have different tradeoffs. And so for Botanics, a tradeoff is basically the decentralization.

So the security of botanics all depends on how decentralized it actually is. If you have 20 notes, in the beginning will be permissioned. We're more like a side chain then. But if you go to like 100 notes, if you can go to 1,000 notes or 10,000 notes, then you become like really, really secure. So it is this like slow approach to from like starting very centralized, so like getting more and more decentralized. And that's basically that transition.

And so if you compare that more to like the roll ups, With the roll-ups, you have more the censorship risk. You need to post the data back to the base layer. You have more the buck risk. What if there's a buck found in that centralized smart contract? But you can have very high throughput. And so on the one hand, you have more the trade-offs that you can have high throughput. You have the buck risk and you have a centralized party compared to us where it all depends

on like how decentralized are, so to speak. And when you go to Mainnet, do you have any? plan for how to roll it out so as to mitigate the risks when there's not that much Bitcoin securing botanics? Absolutely. So we basically have a faced plan. We'll start with 15 federation members. That's what we call a federated side chain. And then basically there will be permissioned. And then after that, we will basically grow the staking set and we will allow certain people in, people we know, certain companies like staking companies or liquid staking companies, until there's enough Bitcoin staked and then basically you can become fully permissionless

and anyone can join. That is always the risk when you run a proof of stake using a different asset. So we're using Bitcoin as a base assets to stake. And we believe that's the right thing to do because Bitcoin is the most decentralized asset out there. So if you think in the long term, this should flow into like the most decentralized proof of stake there is. If you start with your own asset as a proof of stake, then of you start with your own asset as a proof of stake, then of course that starts being very, very centralized, so to speak.

And what is that threshold where you'll, you know, after that, you'll stop the phased rollout and it will just be open? Yeah, that's a very good question. Yeah, that should be around somewhere between 10 to 50,000 Bitcoin. So we'll have to see how actually this evolves. Because when you think about a proof of stake or Bitcoin staking, this is actually very risky. There's a lot of people, well, there's not a lot of people, but there's some people. in the world that, for example, 100,000 Bitcoin. If you have 100,000 Bitcoin, you can perform

special attacks. You can take over the majority of the stake, so to speak, right? And so you need to be sufficient in size in order to avoid those attacks. Now, you don't need like a million Bitcoin steak because, of course, if any attacker wants to actually steal the Bitcoin, then, yeah, they also risk actually losing, getting slashed and actually losing all that Bitcoin. And the Spider-Chainer is actually something very unique, what's called forward security. Actually, when I researched in cryptography, I researched an authenticated encryption where I learned a lot about what's called forward secrecy. So this is a very cryptographic thing that doesn't exist yet in the world of crypto, in the

world of cryptocurrencies. And so we basically brought the concept of forward secrecy from the cryptography world into the cryptocurrency world, and we call it the forward security of the spider chain. which means even in the case where an attacker takes two-thirds majority of the stake, they will be able to steal exactly zero Bitcoin. So basically the design is very special made with forward security that even in case of an attack, yeah, the attacker can actually not do anything. So basically the number should be somewhere between 10 and 50,000 Bitcoin.

And wait, if they do an attack, they can't steal any Bitcoin. Is that through slashing or what's the mechanism? Yeah, you have this decentralized network of multisix. But these are like a series of it. And so if you have this sequential series, if at some point an attacker comes in and says, oh, I'm going to take two-thirds of the stake, I'm going to use 100,000 Bitcoin to stake and become two-thirds majority, all these previous multisics that were generated previously are still safe.

You won't have access to them. you only have access to the future multisysix. And so he'll somehow have to wait for, I don't know, a year, two years, five years, in hope he doesn't get slashed. And then he'll be able to steal the Bitcoin in the newly generated multisix. So that's the concept of forward security debt. Basically, at some point, if the network is decentralized and safe, that will not be able to be stolen, even if an attacker in the future comes in.

Huh. Okay. Okay. It's sort of like reaching some sort of escape velocity, but it's really just through TBL. Okay. Yeah. Well, I saw that you also have a vision for L3s on Botanics. So, you know, what do you envision Botanics itself being used for and then these L3s? So Botanics itself, I think, is what we want to build is the infrastructure for a financial system running on Bitcoin. Like I said, I see this world 100 years from now where we have Bitcoin, which is the base layer extremely high transaction fees, you can barely build anything on it. But then what we've seen on Ethereum is this whole infrastructure for a financial system. And so botanics on its own can actually be the basis or infrastructure for a financial system running on Bitcoin.

Now, of course, if you want to have Dexas and if you want to have Perp Dexas or Bitcoin-backed stable coins, they can all live on botanics. But that will, of course, result in higher transaction fees. and the same thing will happen as you saw on Ethereum itself. And then you want to even scale that further. We are slower. Our throughput is more or less like an Ethereum. So we're not higher throughput, but we want to be decentralized.

And so you can go to like layer threes. And actually we know that EVM is very well made to build those roll-ups. While Bitcoin isn't, once you have a botanics, you can copy-based the OP stack or the Arbitrum stack or any ZK roll-up. immediately deployed that on the botanics. So I think layer three can go really, really fast. And then you have layer three is running fully on Bitcoin. Like we're not connected to Ethereum at all. The whole tech stack runs on Bitcoin. So that's how I see the vision of that world really playing out. That's how you scale Bitcoin to 8 billion people. That's how you run a financial system actually fully on Bitcoin. I mean, obviously, you know, that's a selling

point, I can see how having a fully functioning EVM on Bitcoin and just enabling people to kind of port over that would make things appealing or at least make it easy to foster an ecosystem there. But is it literally just that the idle Bitcoins on Bitcoin then could access an ecosystem like that, or do you feel in some fashion that Ethereum itself doesn't have a long future? Is there some reason why you don't feel that that ecosystem on Ethereum will last into the future? Yeah, I think generally from a cryptographic perspective, I think bridges are very risky. And so you could see a vision, okay, let's have Bitcoin and let's have Ethereum and have that ecosystem has wrapped Bitcoin on Ethereum, but wrapped Bitcoin is very centralized and it's very

risky. And I think it makes the most sense. Bitcoin is the biggest asset. It is the most pure, secure, decentralized money. And it makes the most sense that all activity eventually will flock where the biggest liquidity is and that is Bitcoin. And so for me, for example, as a bitcoiner, I would want to leverage my Bitcoin on a perp tax on Bitcoin. It makes the most sense. from a mental perspective and from an ideological perspective. I would want to have a Bitcoin-backed stablecoin. I want to lend against my Bitcoin. I want to do so much things, but I cannot do it right now.

And so I actually see this is actually growing bigger than what's been happening on Ethereum, just because there's way more capital in Bitcoin. And so let's say that you have, you know, like 10% of your portfolio and EF itself, once Botanics is up and running, then would you transact, like, let's say you wanted to do the same, you know, perp-dex activity or whatever on, well, just, but both with your ether and with your Bitcoin, then would you do that on, for your ether, would you just do that on Ethereum, or would you somehow port it over to Botanics? I would port it over to botanics 100%. I like Bitcoin. I want to do it on Bitcoin. And so, okay, and then port it over, what would that look like?

Yeah, that's where the bridges come into place. So that's a cool thing about the EVM is the whole interoperability. There's a lot of EVM-EM bridges that people have built and that problem is more or less figured out. So, for example, with a layer zero or warm hole or an XLR, you can bridge from Ethereum using an EVM-EVM bridge to Botanics. And now you have the Bitcoin on botanics. So suddenly, bridges between Bitcoin and Ethereum come fairly easy

because it becomes EVM-E-M bridges. Huh. Okay. This is super interesting. But wait, so just so I understand, that bridge, you use the bridge and you still end up, you just have Ethereum still, or Ether, still on the other side in botanics. Is that right? Yeah, so you would have Ethereum on Ethereum. I would use like a layer zero to bridge my Ethereum from Ethereum to Botanics.

And so on Botanics, I'll have a wrapped if then on Bitcoin or on Botanics. Got it. Got it. Okay. So there is some risk there then. There's a bit of centralization risk. Yeah, but then on botanics, I can go to a uniswap type. Dex and I can just very easily swap Rep.Eaf to Bitcoin. And then I have actual Bitcoin on Botanics. Okay. Suddenly it becomes very easy. That's the power of the EVM. Right, right. Do you just imagine that all the dapps that exist on Ethereum will immediately just deploy their smart contracts on Botanics just to access that equal? Like, do you think it will

take any convincing or if so, like, how are you going to get them to build over there or deploy over there? So a year and a half ago, I always had this theory, but now I can see it playing out actually already. And so the theory is, if you are an Ethereum dab and you have a certain smart contract code, you've done the work to build this incredible debt. Now you have a choice. Do I use this app? Do I deploy an Ethereum, which is a very crowded market? There's a lot of different players in there, or do I deploy on a botanics, where you can be the first one on Bitcoin, where you have a massive first mover advantage. There's no one there yet, and there's a trillion dollar worth of customers. And that's a quite obvious choice for me. And I see that play out

quite quickly because the cost is zero. Like, it's exactly the same smart contract code. And so it's copy-based. So I think that will blow up very quickly. And wait, just when you say that you're already seeing that, is it that the people who made a series of smart contracts on Ethereum, that they're simply deploying them and copying pasting them over in Botanics? Or are you saying because it's open source, other people are doing that? No, the first thing. So basically, we are on test net since November. Like we're taking a very security-minded long-term approach. Like we really feel we're building an infrastructure that can actually run a financial system 100 years from now. And so on that test net since November, we have seen, I think, is now 12,000 different smart contracts deployed or something? So already on that test net, I can see that happen. So we already have a Bitcoin-Bacted stable coin, palladium.

We already have a Dex called Bidzee. Yeah, and a bunch of different applications. There's 10,000 different tokens launched. It's been quite incredible to see. seed play out. We have an Oracle. We have all the building blocks for that Defy ecosystem. So I thought you were going to name equivalence on Ethereum, but these are actually just new names. So are they copying, pasting the same contracts, but under a new name? There's two different things happening. There's new founding teams that have built Defi products

before, and they are building those same products, but then under a new name on Botanic. So those are new founding teams building on botanics. They will also launch their tokens on botanics. And then you have the same thing, the existing big teams on Ethereum and arbitram and optimism of those lands. And we are in talks with them as well. I cannot spill any beans yet, but there's a lot of interest. Okay. So obviously in the last year and change, we've seen that ordinals and now Rooms are a big trend on Bitcoin. So how does Botanics work with those, if at all? Yeah.

So we're working with a few partners to basically, yeah, to allow the ability to basically bridge your ruins and BRC20s to Botanics. And once on Botanics, you can, of course, very easily trade them. They'll be like tokens on an EVM. And so you can trade them in Dexes, in Perp, Dexas, et cetera. Actually, a very big fan of the Rooms Protocol myself, because it's a very clean, clean protocol. And I like the vision of Casey where he basically wants the UTXO, the UTXO set to basically become bigger. Because it solves a big problem in Bitcoin.

So I really like that vision of doing the right thing. And I think Roons is achieving that. So we'll be compatible. And so how does all this affect the fees on Bitcoin? You know, we've had a number of people flag an issue potentially with a security budget for Bitcoin. So could this exacerbate it by keeping transactions off the base layer? No, I actually don't think so. Like one of the biggest drivers for layer two adoption, and it's exactly the same thing we've seen on Ethereum, is high base layer fees.

Why would you transact on a botanics if the base layer fees are extremely low? Like, there's nothing more secure than having your Bitcoin on the base layer in a cold wallet, right? You can have it in a cold wallet on the EVM, of course. But there's nothing more secure than being on the base layer. And so every time you want to like what we call bag in or peg out to Botanics and back to Bitcoin base layer, those are transactions. And so the more activity on the second layer, the more base layer transactions you will have as well. So I've never really been worried about the security budget.

The more activity goes to Bitcoin, the more, yeah, the more transaction. fees will go up. So, yeah, even for Botanics, if it takes away a lot of block space from Bitcoin itself, I think actually a botanics will result in a net higher transaction fees just because there's more bridging and more transactions going on. For example, with the Botanics, we made it that way that you can withdraw directly from a Coinbase. You put your withdrawal address that we generate with Botanics for you in your Coinbase, and

you withdraw directly from a Coinbase. and you get the Bitcoin back on Botanics. So you never even see Bitcoin the base layer, but it is a transaction on the Bitcoin base layer. And so all these movements to the second layer and back from the second layer will basically generate transaction fees. All right. So as you have mentioned right now, your intestinate,

when do you expect to be on Mainnet? We're very close. So almost code complete. we're actually planning an audit or the audit is actually planned. That will start very soon. And then basically after the audit is fully completed, we will go to Maynett. So I think that's another two months or something. All right.

Well, we'll have to see how that goes. Good luck. Absolutely. Thank you. Hi, everyone. I'm here with Orkin Killich co-creator of Citria, a ZK roll-up on Bitcoin. Welcome, Orkin. Hey, Laura.

So tell us about Citria. What is it? And why did you decide to build it? What problem were you trying to solve? Citra is Bitcoin's firstly carry a lot that we have been building for around a year. And we will come with a public test very, very soon. While we are leading Citra is like, depending on very basic answer. We want the finance, on-chain finance, but we wanted to be Bitcoin secure and we want to use Bitcoin as the native asset of this finance.

with that goal, we started ideating some new products and eventually we come up with this ZKELOP on Bitcoin idea. It is one of a kind. It is the first. And since all the year through, we've been researching different ideas, different problems, but apparently Zika relaps are like on the way to actually secure the scale the block space and enable a Bitcoin-backed economy. And when you say Bitcoin-backed economy, I think you're alluding also a little bit more to that problem you're trying to solve. Can you talk a little bit more about that? Yeah.

So I think most people today thinks like Bitcoin is like a store of value or like medium of exchange in the future. But what we see is Bitcoin is the full global money. You want Bitcoin to like see as full global money. But without having a real economy around it, you can actually have like, you can't have a currency or money. It is just a payment protocol if you just do a medium of exchange or if you just store the value, it's like just a digital goal.

But we want more than that. We want to do every single financial activity we do with Bitcoin. We want to get Bitcoin-backed loans. We want to compete with USDT with, let's say, Bitcoin-backed stable coins and Bitcoin back-backed stable coins, for example. And just out of curiosity, you are based in Turkey. And I know when we spoke earlier, I don't remember exactly. It was either you or your...

Yeah, it was my co-founder. Yeah, well, so just the fact of being based there, does that inform your view or desire to have this Bitcoin back to economy? Yeah, like we are living in Turkey. We have an office in Istanbul and we are experiencing the downfall of Turkish lira, right? For the last 10 years, Turkish trade is going to zero, I guess, Bitcoin. I think that's very important indicator for us and all the team because we are seeing how a local currency can fail is. it's managed by decentralized authorities and corrupt authorities most of the time. So Bitcoin is decentralized, Bitcoin has like the salt money. We are seeing that and we value Bitcoin because we see Turkishira and other things,

like other monies in the region, not just Turkish. That definitely affects why we are building it and how patience we are. All right. So as you said, Satria is a ZK roll up on Bitcoin. So can you describe for us how it works? Yeah, for sure. ZK roll-up's basic idea is to roll every transaction up into a batch and then create a ZK proof for it. ZK proofs are a complex mathematical structures that allows you to verify a computation without going through every single step.

So with this way, Italian researchers a couple of years ago find a way to compress transaction data into a single proof. By doing that you allow main chain to get not congested, build all the transactional data on the L2, but it can still verify the other transactions. So we want to scale Bitcoin block space and scale Bitcoin's abilities, but we can do with Bitcoin. That was the main idea and we think that, okay, but if we can build a ZK role up, because it keeps the same security level with the main chain for Bitcoin.

And it also allows you to do more than that because you have now unbounded computation and any VM that you want to implement. So we choose to implement ZK EVM, which is fully EVM compatible. you can bring every application from Ethereum and other chains and deploy on Bitcoin. And every single transaction happening here, you get patched. And then this batch is proved with ZK proof. So main chain only stores this proof and some additional data. And at any point in time, we can optimistic to verify the ZK proof.

So Bitcoin can actually know what is happening on that too. Is it correctly happening or it is falsely happening? So we can facilitate this two-way peg mechanism. And so then how frequently would, Would transactions be, I guess, verified on the L1? Would it just happen with every block? Yeah, in Bitcoin, it doesn't verify in every single block. Or not verify, but batched two.

Yes. So in our architecture, there are two decoupled things. What is the store of the proofs and the data, and the other is the verification of proofs. So this is decoupled in our architecture, because Bitcoin verification is not that easy. We are using B2M and it has some limitations, so you cannot actually settle every single block. What we do is we simply get all this batches on the L2.

It is also like changing. The intervals can be changed. It can be two blocks, three blocks or one block. And then these proofs are recorded on misgrain in different intervals. And after some time, we aggregate these proofs in a single proof, then verify on Bitcoin. So Bitcoin verification doesn't get overwhelmed with all this single batch. instead of we batch the transactions, we code on the main chain, then we batch the actual batches and also verify on the main chain. So verification and the store of the proof, publishing of the proof happens decoupled.

Oh, I see. Okay. And Satria uses Bitcoin natively via pegged Bitcoin and BitVM. Can you describe how that works? Yeah. So BitVM is a kind of off-chain computer that allows you to optimistically verify some computation. What we do is we already have a ZK proof for all the L2 right. We just aggregate it together and have a single proof. So Bitcoin can actually optimistically verify the proof, thus it can verify the L2,

Citrae. Using that mechanism, now Bitcoin can know the state about L2, and L2 can already read Bitcoin L1 very, very easily compared to the other side. And using that, we have this bridge called Clementine, which is also open-sort people can view on GitHub, and we have a very in-depth explanation in our blog. So what it does is you simply, just like Ethereum roll-ups, you simply deposit your VTC,

and that you get your Bitcoin on the roll-up, which is also the native token, the guest-off. So people actually spend Bitcoin during their transaction, and they do everything natively with Bitcoin. They don't need any other token to actually transact on Citra. That's the one advantage. I thought that I read that on Citria, it would be CBTC. Yeah, we call it CBTC, but it's actually

just regular BTC. The UX doesn't change because you can get your CBTC with your main chain BTC. We just call a CBT to not confuse people. We are also thinking very depth about this. We may rename it to BTC actually because it is not that difference.

It's not a different token. It's literally the Bitcoin. Yes, it's a little bit of Bitcoin. Oh, okay. Okay, so the CBTC is only to indicate it's now on Citria. Yes, exactly. Oh, got it. Okay, I'm sorry, I interrupted you.

Did you finish your... I was almost finishing, yeah. So this is just simple deposit on withdrawal mechanism that people will experience. There will be multiple alternatives to using that bridge. There will be atomic slops. There will be or apps and off-ramps through exchanges and other solutions. The beauty is we are using Bitcoin as a native token. So actually, we are opening a whole new market.

Like self-custody Bitcoin L1 is very hard, to be honest. You need these like ugly desktop applications, all the seed, But on the L2, we can do every experiment we want. And using that, actually, we can actually create an onboarding experience for new people to actually get their first Bitcoin. They can hold their first Bitcoin, now they're also dealing, using Citra. I think that's the whole another market that we're opening to Bitcoin L1. And I think it's the most valuable parcel, but we are building. Okay.

Well, you know, I mean, this, it does sound really interesting. but they're probably security risks. So can you outline those for us? So on Bitcoin L1, let's assume like Bitcoin Alban is trustless because you have Bitcoin full node, now we are trusting your full node and everything is okay. So once you go to the L2, actually your assets are as safe as Bitcoin

because the proofs are inscribed in Bitcoin. So your full node can actually detect these proofs and off-chainly without communication to any validators or any other people. you can't just verify the K-approves. So you can actually understand that the R2 is valid. So in terms of that we call this trust-minimize. For the bridge, there is this assumption of one-of-an-assumption,

which is also trust-minimized. So in there, that will be, let's say, 10 people who actually verifies the bridge transactions. And as long as one of them is honest, that everything is okay. So this is also a trust-minized. It is not just like a simple multi-sig that requires honest majority assumption.

It is on this-minority assumption. We call it trust minimized, but hopefully in the future it will be permissionless. So you can also verify your bridge transactions, which makes it fully trustless. And other than that, there is no major trust assumption, unlike side chains, that requires full trust to the consensus mechanism. Because this is a roll-up. We inherit most of the security from Bitcoin. And wait, so I'm sorry.

You're saying currently it's one of N that's needed for security. And you said in the future, potentially anybody could, could, serve that function. So right now, is there a centralized one of N that's doing that? Yeah, there is a federated one of N that is predetermined and actually validates the breach. But it is just for the breach. So actual proofs are still in Bitcoin, so you can weave it. It is just facilitate the two-way peg program. The Clementine itself is right now limited with the end parties, which are predetermined. But the rest of the roll-up is permissionless that you can verify just in your Bitcoin node.

Okay, when you say it's federated, like who is part of that group? It is not yet published, but there will be predetermined trusted companies that holds the keys of the one-of-hand assumption. Oh, okay. So basically, that will roll out with Mainnet? Yeah, they will go Mainnet just like that. So in the future, our goal to have the CK verification base. Hopefully, Bitcoin can natively verify the CK proofs in the future, either via ZK op-code or maybe like OpCat enables this functionality, this stark verification functionality. So once we have one of these soft forks, we will transition to be a fully trustless ZK Rolops, just like the future roadmap of Atari ZKRLops.

Oh, okay. But I guess OpCat, I mean, that's a pretty new proposal, right? Yeah, it's very interesting. It is actually like very old code. It is from Satoshi's like not codes and like lines. But in a panic of time, Satasio removed that code because it was creating a denial of service attacks for old nodes. So he panicked and removed the code from the Bitcoin nodes of air. And since then it is disabled.

But right now, this BIP is very, very named, like you said. But the actual code was there for years, like tens of years. The main functionality has this concordination of these two strings. So once you get that, you can actually have more clearly. inclusion proofs, which are the key of the most of the things on Ethereum and all other old chains. I think that's why CAT is very, very important, but I fully support it and hopefully in the near future it will get adopted. Okay. Do you have kind of a timeline that you think it might get adopted on? Between is like very hard to predict, especially on this software. I hope it will

be like late this year or early next year, but it obviously depends on the social consensus of the network and community. Okay. And so you said that you have this goal of someday making Satrea fully trustless. And so is it really just about, you know, the proof, I guess the one of end proving or what are the other aspects that still need to be made trustless? Yeah. So if we can get actual ZK proving base here, we can enable unilateral exits.

So we don't need actually this one of an assumption anymore. This makes it fully trustless because everyone can propose their. Perclepet and they can need the system. So it makes it fully stresses from a perspective of any user. All right. So let's say that I'm a developer and I currently have some smart contracts that I've deployed on Ethereum. What changes do I need to make to my smart contracts in order to deploy them on Citria? Is it like a lot of work or is it literally the same code or how does that part work? We very prioritized that and it is literally the same code. You are just changing the RPC URL you are pointing to.

You want to deploy an Ethereum, we are just like typing the Italian public node URL or your node URL. And if you want to deploy a Citra, you just change it to the CitraN node URL. So you don't actually need to change the code. That's the like target whole year. We are building type 2 ZK

EVM, which means it is fully EVM compatible. So all the applications should work as is. Initially, there will be one or two like small differences which don't affect the functionality, but it can affect something. but if the tests are well written, then there will be no issues. And hopefully in the main net, it will be fully compatible.

So people can just change their RPC endpoint and deploy the smart contract without changing any calls. Wow. Okay. That's, I'm sure that's a selling point for developers. But just because it's there doesn't mean necessarily that they will automatically move their operations. So do you have a specific plan for how you're going to get developers? to put their dafts on Citria.

So I think the relations with developers is very, very important from human science, like education, even like creating new developers. Right now there are, I think, thousands of EVM developers out there, but we need more to develop more applications. And that will be one of the strategies

and the other is, I think, the liquidity and the ecosystem. We are like most trust minimized out of today, among all this like altus popping up every single day. We are as a secure, up, we have this trust minimized two-way pack called Clementine, and hopefully this will allow us to get all the liquidity from the ecosystem. And this liquidity, I think, will be the main

initiative for people to deploy their applications. Because Bitcoin today has $1.3 trillion in dollar, sitting in the main chain, doing nothing. And if we can enable this trust, minimize Clementine, which we will, then people will simply just deposit their BTC and get the same BTC on the R2. So it will be fully defy-enabled. And they can do everything they want. They can do private swaps, private transfers. They can do swaps, Bitcoin back loans, Bitcoin back stable coins. These all will be possible with Citra.

And so it's one thing to get the developers to bring their DAPs to Citria, which obviously I could see what the incentives would be. And, you know, as you explained, it does seem that there are certain technical benefits also to being on Citria. but I wondered like for the $1.3 trillion worth of Bitcoin that you mentioned that are idle in Bitcoin, you know, do you think it would be hard to convince users to participate in Defi or do you think that there's pent up demand for that? Yeah, I think it is not that easy, to be honest, because most of the Bitcoin main chain users doesn't even like have enough experience on Defi, right? most of them didn't even use any DFI application or decentralized exchange,

but they have something in common. They are buying Bitcoin. And today they are doing it with centralized and custodial solutions like exchange, like ECA solutions, some like United States-based applications that allow them to like buy Bitcoin, but they have to custody their U.S.T or their native asset to that platform to actually buy the Bitcoin. And also after that point, going to main chain from exchange is also paying. point. But with Citrae, they can simply get their USDT, USTC, and if they don't like these

solutions, they can buy Bitcoin back stable coins. And they can hold that as their main store of and they can now buy Bitcoin, now cross-loidia in a trust-minimized way. I think that's the one thing that will encourage people to use Citra to, like, easy onboarding to Bitcoin. If you are just buying, if you are coming first time, that will be the main point. And other than that we will do are best to like make this ux as smooth as possible hopefully even smoother than the other chains all one and out two experiences and what are some examples of the bitcoin-backed stable coins that you're thinking of we are like there are multiple teams who also deploy this solution of citra and i think one of the alternatives is like the first version of dais which is like it was only backed

by it back then right now it is kind of mixed but if we can deploy just purely btc back stable coin that's the one thing and And the other thing is, for example, there is reflexor on Italian, which is stable coin, but not pegged by actually, not pegged to any fiat coin. So it performs against UST and euro and other monies around the world. So, for example, this is backed by Bitcoin is very interesting markets because actually it can compete with UST and euro in the long term. That's what we want actually on this trial up and there are already multiple teams who want to work on this solution. All right. Well, when are you expecting to be on main net? We have some time to main net. I think that most of the L2 space is going to main net very, very close.

But our solution is the actual Bitcoin now, too, that uses the most Bitcoin aligned on to, to be honest. All the data availability is on Bitcoin. The bridge is trust minimized. We are pure Zika-op, not a side chain, not a multi-seek bridge. So it takes some time to get everything very secure and trust-minamized. but until then, we are working very hard to ship the test and it will happen very, very soon. Okay, so maybe like within a year-ish or something, is that? Hopefully closer than that. Okay.

So how would the implementation of this affect the fees on Bitcoin? I'm sure you're aware of what some people perceive as a potential security budget problem that could come relatively soon to Bitcoin. would this kind of exacerbate that by keeping transactions off or what's your take on that? Yes, so today's side chains just like take these transactions to off chain and they keep there. So the fees are gone from main chain. And with this halvening, like the real SPRC-Tven is they're like great, I think, fee source for miners. But they're not sustainable.

They're very, very like going up, going down. But roll-ups, especially the ones that who holds the data on Bitcoin, so like Citraia, creates a consistent revenue for all the miners. So we are paying this data availability fee for every two block or three blocks. So it actually creates a sustainable fee in the long term, which boosts the hash rate, that boosts the security of the main chain. So it actually contributes to the problem that's called security budgets, unlike side chains and other solutions that use off-chain DA.

And last question, I'm sure you're aware of that. last little over a year. We've had this whole new revolution on Bitcoin with ordinals and then more recently runes. And I wondered how those work on Citria, if at all. Yeah. It works very, very effectively the main chain, because on main chain, the user experience is not that right. Good, right? You just get 10 minutes block time, very expensive fees. But on the L2, once you get these BRCittainis and runes here through some bridges, there are a couple of deployed on like other alternatives and there are a couple of who are like building on the trail right now. Once they will enable you can simply get your BRC 20m

June to the roll-up and you can enjoy two second block times and a cheaper I guess fees than the main chain. That will be a game changer for like all the AMM logic, all the other book logic on the auto will be much more easier than doing this old album. Okay, so the DGens I guess will be happy with that. And I'm sorry, did you say it was 12 second a block time? Just like... Two seconds. Oh, two seconds. Oh, okay.

So you have even faster block times than Ethereum. Yeah. It's just complete with Ethereum well-ups. Okay, great. Thank you for having me. Thank you for all the great questions. Thanks so much for joining us today. To learn more about Willem, Orkin, Alexei, and Bitcoin Layer 2s, check out the show notes for this episode.

Unchained is produced by me, Laura Shin, with help from Matt Peltcher, Juan Aranovich, Megan Gavis, Pamma Jimdar, and Margaret Curia. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week with host Noel Atchison. Follow the CoinDesk podcast network for some of the best shows in crypto.