Bitcoin and Beyond EP9: Rollux's Merged Mining, Data Availability, and Bridging

Transcript

[Music] [Music] [Music] welcome back to bitcoin and Beyond today we have Jag deep sidu from Rolex and syscoin to talk about the Bitcoin super chain welcome in sir thanks for having me again glad to be

here awesome look forward to having this presentation and um yeah learning more about Rox for sure so can jump right in as soon as you're ready sure yeah I think we're talking about scaling Bitcoin and U doing it in the most responsible way we think possible um so Rox is a layer two that we've been working on it's sort of a full stack U integration on top of Bitcoin uh we start with uh we've been doing this for about 10 years and we slowly have evolved our design and so we think it takes that long for teams to uh realize you know where where the pain uh

pain points are and what the problems uh of scaling are in general in blockchain uh you know not even talking about Bitcoin you know just scaling in general how to scale and then applying those Concepts um as well as the vision of where potentially we could be going in the future uh so you know for example not scaling on the layer one and scaling through layer twos I know a lot of people are hitting back at that and seeing look salana is doing good but you know we think in the long term there are really good reasons to separate uh the scaling uh and break it up into pieces and doing that through Bitcoin is also a critical uh thing because Bitcoin itself is not touring complete but we do want

to add the utility to the Bitcoin layer you know given that it's sort of the super Vault uh store value and uh F has a definitely has a first move advantage and Regulatory Clarity across the industry so you know figure figing out how to add more utility to that is definitely um low hanging fruit and almost uh seems to be you know the the the biggest thing that's on the table right now uh for the industry so Rox uh with with classifying it as sort of a Bitcoin super chain it's it's a home for Bitcoin in a way that does not interfere with Bitcoin tokenomics or consensus you know um we try to remove me uh cost

attack vectors from Bitcoin itself but still give the option for bitcoiners to have the best possible experience scaling without um actually embedding things right into Bitcoin which would actually create M attack vectors uh so rux is right now an optimistic will convert into ZK fairly soon uh system that's settling on a side chain that starts with merged mining uh and then applies uh data availability and know full modular stack to scale up we we start to see these main blockchains looking sort of like digital smart cities where um you know you will have EVMS toing complete EVMS but you

also have Bitcoin as the super Vault and the EVMS actually uh allow you to build anything and so the the way we think about them is um the base will be sort of like your core City and then the suburbs start to look like the fractal layers on top like suburbs can be rollups or suburbs can be very big daps uh in the case of Salena uh and the sort of looking like smart cities or how cities sort of formed organically and the the challenge is how can we bridge that liquidity especially from Bitcoin how can we bring that BTC over in the safest way possible without creating new trust assumptions and this has sort of been the challenge for many years uh

what we've been trying to solve and we have a white paper coming out uh on on creating a framework for the industry and how we solve these problems in the safest way uh we started in 2009 with the BTC and then we uh created our first core release which is compatible with Bitcoin 95% of Bitcoin pretty much without much changes we were one of the first five merg mine coins merge mining is this interesting concept that lets you borrow the security of Bitcoin and apply it to side chains however doing so uh just vanilla merge mining um it just lets you borrow the security but not transfer the security and that's critical because uh there is no

attribution of fault and also Bitcoin miners don't lose any of their blocker wordss if they are faking or attacking the side chain so for example if uh CIS coin is being merg minded with Bitcoin and there was uh is just vanilla merg mining then Bitcoin miners can effectively create Forks or uh do whatever they want on CIS in terms of uh faking the history or creating faked history as long as it follows the difficulty of CIS coin they don't lose any of their Bitcoin blocker words uh doing so uh so this is a big challenge that need needed to be solved and we worked on that in the context of scaling

Bitcoin this is particularly important because when you talk about scaling Bitcoin through side chains or any um Bitcoin system that requires sort of an evm or account based model or even creating a ZK system where the Bitcoin is going to be living in in the ZK system you start to talk about bridges and you start talk about uh security of that system uh especially when you want to move that Bitcoin back so when you you know Peg out the Bitcoin then it becomes critical that your security of the side system is as secure as possible as close as uh or exceeding the Bitcoin security if possible so that's the challenge and um if you can't provide

that then again the Bitcoin minor or whatever consensus system is running on the side can fake your chain history and therefore steal the Bitcoin uh so you know figuring out merge Mining and side chain security is critical to be able to create a safety net for that Bitcoin not to be able to be stolen once it does bridge over bridging into the side chain is not an issue it's it's always coming back as the the issue in 2015 we looked at smart contracts and created the first version of onchain smart contracts or identities Marketplace uh certificates which are sort of like nfts um and we focused on sort of the 99% of the use cases uh to hardcode them

they weren't really it's not a virtual machine that we created but it was more just like coding up the initial use cases and we found even doing that that uh we hit roadblocks you know even though we created a scalable solution there we still thought it would not uh scale enough for what we needed to do to hit Mass adoption and so um around 2016 we saw the big block debate on bitcoin talk and we realized that lir ws at least are court systems they're not transaction processors so we saw the first sort of Sparks of modularity there modular blockchain back in 2016 and so we've been building towards that since then uh you know with ZK and all that we didn't really know how to do it properly

until around 2021 which we'll cover here in 2018 we um we realize that you know we do need some sort of a system where uh and even eth eth Foundation has been saying this for forever since they looked at this around the same time was paid full nodes you need to have you need to increase your Nakamoto coefficient by having nodes run all the time you can't uh really make it altruistic you assume that someone's going to be running a full node uh if you pay people to run them through your blog subsidy you're subsidized and cost over all the users but you'd get that increased utility because uh the resilience of your network benefits so we created uh these Sentry nodes and

there's about 3,000 of them so about 40% of the supplies locked up in them and uh we researched ways we can scale up the blockchain using these like ethereum is using validators and then having the validators um do da and ordering of of the virtual machine um in our mind we looked at uh you know we we view Bitcoin as sort of this very secure system that does not need um special nodes and so Sentry nodes for us were was not to try to create new consensus but really just to increase the the resilience of the existing Network stack that we had um we we did look at trusted executions like Intel sgx or doing smart contracts with

Hardware uh in a in a secure way but uh yeah that didn't really um we felt that the manufacturers were you know a bottleneck there um so Sentry nodes essentially allowed us to look at very specific problems um and solve them in a unique way without sacrificing the the Bitcoin sort of methodology where every node verifies everything uh because if you don't have every node verify everything you do have uh a subjectivity problem like you have in proof of stake where uh you have to trust someone else to give you the state and has to be correct for you to be trust the the the state of the system so you have to reach

out to some block Explorer reach out to some other node and say okay what is the state of the system okay I trust it it's correct and that is the trust we're trying to remove uh especially during blacks one events you you can't trust anyone else but yourself when you're sinking up to these systems um and so we try to know stay stay within that Paradigm even when running Sentry nodes or creating Sentry nodes uh but we did realize that um there was a very big problem that we explained with merch mining uh particularly the Bitcoin miners can screw around with the side chain as much as they want and that's actually uh self called Selfish Mining and we needed to resolve selfish mining to be able to create security within uh the side chain and again we didn't know

the story of how it affects Bitcoin security and all that um or like client security or Bitcoin bridging until way later we did know that we wanted to solve for selfish Mining and um the chain locks that we created essentially lock the blockchain every fifth block back and allow um Bitcoin miners to be asynchronous and still you know Fork each other within that period but after five blocks the centry nodes essentially lock the chain and they force the Bitcoin miners to be honest so if the Bitcoin miner is creating a fake chain on the side chain then they have to restart every five blocks there there's only a race to

create five five five block Forks there did you say a a fake chain within the side chain like uh not not really a fake chain as in like you can do double spins and stuff but more as in like you are meing or you're reorg um or you are creating a a long uh uh long u really long attack long range attack on on the side chain for example creating a history that's rolling back the chain 200 blocks and it's going to be really important when I explain the Bitcoin problem um for now it doesn't really matter too much you know because yeah

you roll back cisin chain it doesn't affect Bitcoin chain but what are you actually gaining from that you're not gaining much until the size chain has a lot of volume a lot of defi or something that's going to give them money and it but when applied to bitcoin there is a very specific problem that you have to solve with u with finality and if you don't solve for selfish mining your side chain system is is sort of hopelessly insecure so we we'll cover that um but it's not you're not faking you're not creating a totally fake chain that doesn't follow the rules hasp to follow the rules it's just you're creating a fake history and it's a big challenge we didn't know that that challenge was so

important when we solved for this but we realized later that it does solve for that and and we just wanted to avoid the Bitcoin miners from screwing around with our side chain here even though you know we work with the biggest pools it's just uh we don't know the incentives and and and um Wanted to technically technically resolve issues so that users if our side chain does take off the the users uh are secure knowing that systems don't roll back like for example binance they wouldn't people wouldn't do double spends with binance and deposit and then uh sell and withdraw and then roll back the whole chain you know that's something we wanted to avoid uh we did a dual chain

infrastructure in 2021 so we did the evm we do believe that evm is sort of the um I know you guys are looking at parallel virtual machines and stuff but at the base you know the decentralized very slow safe um virtual machine that needs to be provable and safe as safe as possible we thought the the evm is is is that all of the custom virtual machines um that that may offer parallelization or speed I think we we can build those on top on the secondary layers and so you know now it's looking like proof of work Bitcoin utxo side chain and then evm on top and those utxo side chain evm are sort of coupled together every

block and and then this is sort of what chain locks are looking like you basically lock the fifth block back and you know it's a super secure system that creates finality and incidentally um once you create finality you can solve for da right because you you can't have da unless you have finality in your system um because if you're removing data from your system the blockchain can't roll back from that point otherwise you can't replay the chain um you know if if data is missing and you're trying to reproduce the blocks it the system just halts right so once you have finality you could agree on when the data should be removed from the finality point and that's where Bitcoin da was born we um effectively added da

to our base uh and we called it Bitcoin da because it's the Bitcoin miners are securing the system through the merge mining protocol and uh that da is used to scale up everything Beyond um know just like sort of like Celestia but also like EIP 4844 where there's rollups and Roo is is the first example of something that consumes that da uh the finality creates very secure incentivized resilient Network and then the da creates scale um it lets us scale up uh the roll up and it's very a very specific implementation of dat not like the ones you're hearing about out there like ail Celestia even

4844 all based on kzg commitments those are all sampling based uh we actually went to a more secure you know stable um non-trusted setup thing that we called hash based da which basically just has every node um verify the data and hash it and check that the hash matches the commitment and then um it's available in the system uh that sort of solution uh will offer less bandwidth with but it'll be super duper secure like there is no chance that some nodes have the data and some nodes don't all nodes have to all of the nodes have to be in consensus that they see all of the data so when

applying to bitcoin again very it's it's it's obvious that a Bitcoin person would prefer that sort of solution yeah and like how does that I don't know if you have another slide that's going to show but I'm curious to see how that works um or like maybe you could just like briefly explain like a bit more like okay like is is it dependent on the hash power that like the hash rate or or just kind of like what is the mechanism that um yeah that allows the data availability layer to be extremely secure yeah it's so it's just using a Ketch cash and the security is again taken from the merg minding concept where the side chain where the da you can't put the da on bitcoin right

because Bitcoin doesn't have this special concept even even if you have some people are saying you could do segwit blobs in Bitcoin especially with opcat or something you can have um PR prun ability of data in Bitcoin but um you need finality if you don't have finality you're going to have to throw the data into Bitcoin and it'll be in Bitcoin forever uh yeah it's going to be prune from your node but you're going to have to download all that data every time you sync up so it's not really solving the challenge um and we put the D da a special da solution into our side chain and the Bitcoin miners are merg mining it the finality of the side chain

ensures that the Bitcoin miners have to be honest or their proof of work is slashed if they try to create a long range attack uh beyond the finality and the that creates the transferability of the security of Bitcoin into the side chain and so anything you do on the side chain is now you know securing yourselves to that Bitcoin system which is basically shared by all the miners so the hash rate the hash rate is driven by the miners right and that's the security we are transferring into our system and so the the security is based on the mining network of Bitcoin but the solution is dependent on just a hash which is uh there's no trust

is setup and it's Quantum secure and um it scales a little bit less but it scales just enough for for most of the majority of the secure use cases to set up like a a base layer uh so for example like optimistic rollups you'd be able to do 6 to 7,000 transactions a second before the fee Market starts to drive up the cost of the gas market um we think that's you know adequate for a base and then you'd have your your other supplementary sampling based Das that scale up with the number of nodes like igen da for example could come in with Bitcoin as the backing collateral and you have uh a scalable solution that trades off a little bit security it's

not as secure as the one at the base that's enshrined not as as secure but it's a little bit more scalable 10 megabytes a second so users can have the option to decide you know I want you know if I'm doing gamey or I'm doing some sort of um trading on a DEX off order book decks or something like that then I could you know do my trade and settle on the a very fast da very low cost because um you know if anything happens I just lose my trades uh for that hour or for that day and then at the end of the day I settle my balances back into the very secure system um the enshrine da so even within modularity we would be

breaking up da layers across the system to create a more holistic approach rather than one da to solve them all which doesn't make sense to us in this example um um the need for multiple is because of the different constructions of basically uh like CIS coin and Bitcoin um in terms of how of like the different chain structures and you could also uh like could could Rox also settle to like ethereum and other chains and l1s be implemented or is this is it

pretty much just settling to bitcoin and syscoin uh yeah no if like I was saying you have that Celestia story so once you get like a we call a ZK da which is the light client that will allow us to essentially offer settlement um to other chains as well so uh and I'll talk about that that that Roo is sort of this transfer Hub that it lets you borrow that security and transfer it to other chains as well like how we're transferring it from Bitcoin we could transfer that security from from our side chain into even ethereum or Avalanche or some of the other layer ones so definitely we could package the whole system up and show that um you can

use the da and have settlement across other chain so they can take advantage of you know this hardcore secure version of The enshrined Da or if they like the Bitcoin um back sampling system that has the Bitcoin collateral securing it then they can opt in for the IG da as well so that's sort of what uh you know we're we're basically saying look our system is secured through Bitcoin so if you like that if you like our cryptoeconomic systems or the security of system backed by Bitcoin then the very same story you're using it for other da layers like Celestia you know that same sort of thing can apply to us but with Bitcoin as security blanket behind it so that's

what we call ZK da so we're working on a uh a ZK based light client that respects our um finality as well as the proof of work longest chain um system that it would it would guarantee and a recursive proof uh okay so yeah we get a little bit into proof of work versus proof of stake um uh so I I think proof of stake offers more security um because of the um uh shortterm security at least because of the attribution like you can slash somebody if they're found wrong and a Igan AVS services are examples that take the shared accounting shared security of ethereum or the base uh gas

token and then apply that to specific concepts with slashing uh it's really interesting um that slashing you you do have you end up having weak subjectivity so you do have some subjectivity in the system it's uh it's weaker than just having POS itself I think POS itself is not very good but with slashing it's it's good um but proof of work offers something different it's uh it's more about the Black Swan prevention or the anti fragility as well as not having any subjectivity so that means there's no human governance in that solution so you know if you philosophically think that

um the system breaks and Bitcoin gets sold off because there's a a huge reor because someone's trying to attack it and Bitcoin sells off to $1,000 right if you think that it cannot recover from that then philosophically you know you might be more in the proof estate camp but technically um there's nothing stopping it from recovering because there's no human intervention needed from that solution and Black Swan has occurred it will always occur yes it takes down maybe the market price and the confidence but technically the system can recover and that's the difference between proof work and proof of stake and proof of stake that same situation happens it requires human governance or subjectivity to kick in

and resolve it doesn't resolve itself that Black Swan will happen and it will require hard fork and probably slashing of the collateral of the Bad actors so if you think that humans can get together and resolve these situations um proof of stake you might be more in that camp so the philosophy is Black Swan prevention technical um uh resolution is better in proof of work but you don't have the slashing considerations so you have to rely on the fact that it has to slowly build itself up back up and um and then but in our solution we thought okay why can't you sort of apply the best of both Concepts without giving up

the black one capabilities or you know if we could slash Bitcoin miners somehow and that's what we did with uh with finality right we effectively are able to attribute dishonest Bitcoin miners to create honest short-term behavior um because they cannot um they cannot create a fake history in in by mining CIS coin when you merge mining because they have to they have to start over every time there's a finality event if they're creating a fake chain they effectively have to take over your whole uh validator set to try to fake that uh try to fake that system so the costs start to go up uh and this this matters in in

the context of scaling Bitcoin which uh you know I'll start to cover now um but you know the concept we created is sort of both right it's there's there's Bitcoin proof of work behind it but then there is finality that starts to sort of proof of work slash Bitcoin miners so we do see the benefits of both and we try to combine both in a in in a way that doesn't lose ourself from the Bitcoin um security system and it doesn't resolve itself down to just proof of stake and then Rox is sort of that and then you add in the fractal super chain concept on top with all of the additional things like igen

cryptoeconomic Solutions U probably there's app chains with Bitcoin and there's zda for selling the the settlement to other chains like you were asking about ethereum or other chains that want to borrow that security uh okay and so this is why it starts to matter um because when you're talking about scaling Bitcoin you end up having uh something called side chains and when you do side chains you have light clients now not all solutions of Bitcoin are need side chains right like um Babylon for example doesn't really need a side chain you take Bitcoin you wrap it into tap route and then you have an U equivocation of a of a um a schnor

signature that if you try to sign two blocks in your proof of stake system and you are trying to double trying to Fork that chain then you lose your Bitcoin collateral and there's no notion of me moving Bitcoin from bit coin into the into the Babylon system that would be a side chain if you try to do that that would be a bridge uh but Babylon itself isn't technically a side chain however you know you you start to lose things like da and again moving that Bitcoin over into that system if a sister proof a stake system and you just have a bunch of other assets it doesn't include Bitcoin then you don't have the ability

for you to create cryptoeconomic Solutions like IGA or Bridge serice services that are secured with Bitcoin or defi that's secured with Bitcoin so for us um it's a non-starter you you would start with a side chain right you start with a side chain try to secure it as as best as possible when you're talking about side chains then like clients start to matter and light clients are specifically when you try to move the Bitcoin back over from your side system into back to bitcoin then it relies on the light client of your side system for example um you know if you even look at some uh proof systems like citria that try to

build into Bitcoin they are settling in Bitcoin using Bitcoin as da and everything is supposed to be native but even in those Solutions um they rely on bitcoin as the light client because this the Bitcoin is actually an IOU Bitcoin you're creating inside the ZK system so you can use an evm and you're scaling up using um an evm and you're doing defi or whatnot but when you're moving that Bitcoin back over to BTC you do have to take a proof of your side system and show that okay this there's 500 blocks of this side system and the the BTC has been burnt and you are now minting it back on you you're moving it back out of

the tap rout address of Bitcoin main chain and if you can fake that 500 blocks then you can you can steal that BTC like if you take a look at bit BM and then the challenge system within bit BM typically an operator can can just try to take the Bitcoin right and then he has to wait a few uh maybe say seven days for someone to try to challenge it so if there's 10,000 Bitcoin in there I can say okay let me just move the 10,000 Bitcoin to my own address and he can try to do that uh however if he tries someone can challenge him and and they will likely win a bounty you know the operator will lose money if you um in order to challenge you just have to show look that there's nothing been that's

been burnt on the side system like uh why is he trying to take the Bitcoin where there's no proof so if you're able to prove that the nothing has happened then you were able to stop the attack but if the attacker the operator shows no there is a system there is a chain that's 500 blocks it has more work or it has you know a longer history then he wins and if able to attack the light client by showing this proof then you can effectively steal that Bitcoin and so light client security is this big thing that is really the critical underpinning of all of the Bitcoin solutions that take the Bitcoin and move it into another solution um if you do babyon you don't need it but again then you don't have any of the solutioning

around using Bitcoin in that system anytime you have Bitcoin in another system you end up having like client security um so you have Bitcoin like like client security which is something like citria and you have side chain like clients like all of the existing Bitcoin l2s that create proof of stake side chains they are not tied to bitcoin Security in any way they're effectively just validator set and if you can take over the validator set um whatever the cost is there you can effectively fake the light clients our paper is focusing a lot on the light clients um and in ours you effectively have the merge mining security of Bitcoin you know you

do have to 51% Bitcoin in order to fake um an attack using merge mining although you can repurpose the hash from Bitcoin you do have to sort of do this attack and then also on top the Sentry nodes which are um have they require a super majority of the coins to to create the finality so if you were to try to attack our system you would um have to first take over the Sentry nodes and then you have to go attack Bitcoin um and then there's specifically something in there that makes it um very interesting in that because of the you have to do this first and then this you actually have the capability of detecting that attack

if you know that the cisin chain the tokens are being accumulated or purchased in the market um and then 66% of these know new validators are being started and all of the previous validators are are leaving or gone they sold off and new validators starting you can see this happening in the network you could effectively just move your Bitcoin out you could just withdraw your Bitcoin if you're concerned about that from the bridge and before the CIS coin side is taken over uh you can move it out and the Bitcoin attack doesn't start to happen the merge mining attack doesn't start to happen so this is the only solution we've seen that prevents has a

preventative measure from an attack every other solution once the attacker commits he's going to attack the system and there's no way for you to get ahead of the attack there's no way for you to say okay I've detected something bad happening how can I move my Bitcoin out by the time you realize that the attack is already happening and it's already going to happen and you're going to lose your money if he ends up following through with the attack um yeah in ours you'd be able to say look something's happening I can move my Bitcoin up before the Bitcoin side is is hacked the merge mining concept um so this is quick question on that previous slide um on the last line you have uh

Bitcoin plus CIS coin plus Bitcoin cryptographic security could you quickly just reiterate the the difference between uh like the previous lines where we have Bitcoin security um and then the difference between Bitcoin security and Bitcoin cryptographic security oh it's cryptoeconomics a typo but what that is saying is there's um once you do a side chain you could bring your Bitcoin into the secondary system then you can launch things like igda or other secured solutions that using bitcoin's collateral U like for example if you do have an AVS service that's slashing Bitcoin but creating U creating an a bit VM Bridge operator list that's

decentralized then you've effectively decentralized bit VM using trust minimization and using um bitcoiners that want to stake their Capital to become an operator and they get slashed if they're not live or they're not being if they're not actually operating but they do earn rewards from every bridge transaction that starts to happen so that's just an example of using the system to recursively create solutions back to the security of of the bridge or something related to Bitcoin in that solution you're actually creating a decentralized bit BM solution but you can also use it for da or maybe um using algo stable to create money out of BTC and spending

that and then having uh insurance or you know um you have the ability to do fast transactions so you can spend that money at the supermarket and the merchant can rely on you um because they have insurance backing that so there's different solutions you can create once you have a capital reserve to be able to crypto economically secure those systems okay so the cryptoeconomic solutions you typically involve like if I have $1 million of value flowing through in a day or a week and that's your um that's the slashing conditions are usually have to wait for like a week or there's a

week worth of value then you that's how much Capital needs to be tied up in the system or slash for you to be able to create safety so if there's like a million dollars being used over the bridge every week and um you have the ability to slash and the Slash the fraud proof period is say one week then you need to have at least a million dollars in the bridge backing it for you to say that it's safe or someone has purchased the insurance for a million dollars so that's how you know the cryptoeconomics solution would work where whereas in our Solutions the one we're talking about at least

um it's slightly cryptoeconomic but there it's a dual model and so you do have the ability free to front run no matter how much is in the bridge even if there's a billion dollars there's going to be incentive but the equilibrium points towards um honest Behavior because if someone if any one person could detect that and sound the alarm and everyone can move out there's nothing stopping everyone to move out and basically the attacker loses however much money he's trying to spend move $500 million or $400 million so if he was hoping to make $600 million profit that profit really goes to zero if any one person detects and then people react to it this is kind of what's looking like

today right there's a MPC threshold signature or something like that there's a lock and mint with Bitcoin moving to other chains um you know it's it's red like I showed uh like here the side chain security it's not very secure um you know you start to get into like client and Watchers and people watching for uh invalid transactions or blockchains rolling back and then sounding some sort of alarm or um not allowing big transactions to go through or waiting for a longer period like what Thor chain was trying to do um and it in the end you always end up having some sort of 51% Security in the system you always end up having some light client

Securities what vitalic is saying here uh basically your 51% attack is is the critical thing if you can take over the side system then you've taken over the bridge and if there's a lot of money in the bridge you could get around that and uh tally is sort of coming back after a couple years and saying you know he he has come up with a solution these Solutions are interesting but I think in the in the end there is some assumptions at least in some contrived way there is another 51% in there and if not it's still not this the solution might apply to an evm but it wouldn't apply to bitcoin itself because Bitcoin doesn't have that virtual machine built

into it and this is sort of like what some of the solutions are doing now today right they are they're using Bitcoin to move to an L2 and there really is no finality it may be taking the da and putting it right into Bitcoin and you're trying to borrow the security directly from Bitcoin and saying like your L2 is built right on bitcoin but since you're doing an L2 and you're creating like an evm and you know you're bridging Bitcoin into your system you still have a light client and the light client um you know if there's enough money on the line someone commits to attack there's no way to prevent it you're you're going to lose your money um and then there's guys like nubit or da solutions that are

popping out that are creating um solutions that you force you to depend on the security of of The Da and the thesis is that if you are wherever your roll up is settling is where the da should be you know where the state is settling so if your state is settling on bitcoin then the da should be on bitcoin because otherwise you're creating separate U concerns or separate security variables that depend on one one or the other the lowest the weakest link if your da is the weakest link then your whole system depends on the da if if your side chain is the weakest link and the da is pretty secure then it's still the lowest weakest link

is your side chain but if both are U put together then at least you can say that the security is dependent just on that side and you don't have any other external assumptions so in our view uh wherever you're settling that state if it's a side chain the da should be on that side chain like how ethereum is putting rollups to settle on ethereum but then there's EIP 4844 right inside of ethereum it's important because if the system rolls back it's able to validate the da and it's able to ensure that the da is correct as part of the semantic validation of the actual base layer instead of trusting another validator

set doing some da um and then this is sort of what we're looking like now is you have this green bridge it has finality you can do da on that side system and then you can build rollups on top so your da is shared with the state settlement uh and then you have rollock is sort of the rollup layer the fractal fractal layer the cryptoeconomic security is you're taking the Bitcoin and using it for ancillary Services okay and so you build your layer twos and layer 3es and it's a transfer hub from um one from Bitcoin into other chains as well because you get the really really secure light client tied to the uh the ability for you to front run and detect

and also react but also have the Dual mechanism of merge mining plus side chain security which is the honest majority of all of the validators in in the system here and so what is what is the difference between Bitcoin and ethereum such that etherium rollups are able to inherit the security from the ethereum L1 but Bitcoin l2s are not able to inherit the full security of the the Bitcoin L1 yeah it's a really good question and um the way I'm framing that thought is why not just bridge to ethereum and then like with bit BM for example you bridge

to ethereum and then you're using ethereum's like client security right is that sort of what you're asking there instead of so from Bitcoin to ethereum um my question yeah I mean it in that case like ethereum is kind of like a Bitcoin L2 y yep and honestly I prefer that over just people creating POS side chains for the sake of creating l2s uh but then you lose your Mo right because now eth is your L2 and you're just creating a roll up on eth with that Bitcoin and bridging that Bitcoin over

right uh there are some solutions the roll up on eth would still just inherit the security of eth it wouldn't inherit the security of Bitcoin exactly but it's still better than your new Fly by Night POS chain that you just created and has new validators in our white paper we called it established side Chain versus new side chain and an established side chain there is no there's no game known that if that there was this Bitcoin bridging solution that was going to come out in the future and if you had enough of your side chain validators you'd be able to take all that Bitcoin well a new side chain the game as well know and so if you have VC's behind that they will know that if you secretly privately sort of accumulate this stack and you buy up

from the market um at some point in the future if it gets used and there's a lot of Bitcoin you could easily execute that attack if you want um but ethereum has definitely very good Economic Security and enough human um subjectivity in there that if an attack was to happen they would probably roll it back but it you know whether that's you know as good as what we're trying to do we're trying to tie directly into Bitcoin using Bitcoin security but I would say that using eth as sort of L2 is also a pretty good idea if instead of just using the P side chains if you know what I mean there is I think build on bitcoin they do have a they're following this

strategy actually they're doing an eth L2 roll up and then they're settling the state in eth but then they also are sealing the they're sealing um that state using ether Bitcoin merge mining so not only do you have to settle normally as you would settle on eth using you you use bit VM to bridge into eth and then go into Bob but you would also have to merge mine that whole roll up and prove the state within merg Mining and that merge mining proof is needed on eth L1 to be able to transition the the state of the L2 now I would say that it's an interesting

design but you don't inherit the security properties of Bitcoin by doing that because the Bitcoin miners don't they're not ordering the transactions they're they're not sequencing or detecting the order of things so you can effectively really is just a I'm not sure what you get from merge mining for ceiling because whoever is doing the ordering whoever is doing the sequencing is actually creating the security because they're the ones that can trick the light client the key to inherit the security from Bitcoin L1 is merge mining because then the miners act as the sequencer you're either right into Bitcoin and so all the Bitcoin

miners are ordering your transactions and then your security of your side chain if you're doing like you know some sort of citria type solution the security of your solution is dependent on the the loss block Revenue so if you are attacking that system in private you're going to repurpose your hash you're going to remove your hash from Bitcoin and into the private Fork of Bitcoin to try to attack that system launching all your ZK proofs on that private Fork trying to trick that private fork for over 500 blocks and then that 500 blocks is your lost Revenue so if that's $150 or $200 million that's the cost of your attack as well as potential um potentially Bitcoin selling off in

that meanwhile because you can detect that the hash moves away U but if you're doing yeah so that's you know it's contrived to assume that um Bitcoin might sell off because it is a side chain bitcoiners might not care right um but that there is a cost of Attack Of The Lost block rewards if you use merge mining then you effectively um are moving all of that security back out of uh into a side chain and so the cost of attack there is you accumulating the side chain to take over that side chain and if you emerge mining you effectively especially if you solve for finality you effectively create a dual security layer where you have to

51% um attack Bitcoin but you don't have to lose the block rewards you would keep your block rewards but instead the cost is now taking over the side chain so the difference between doing it right into Bitcoin which a few projects are trying to do and I'm I'm disregarding the posi chains here and doing it you say right into Bitcoin you mean merge merge mind no I'm I'm saying like you put all the da and your ZK proofs and whatever system settlement right into Bitcoin so very high cost and you don't get the da scale you don't you don't get to scale up but it's supposed to be very secure very stable system you're building right into Bitcoin right using the da of

Bitcoin blocks itself versus merge mining where you'd create a side chain so the cost analysis would be you lose your block rewards on bitcoin which is say $200 million versus taking over the side chain and you also lose the front running capability if you're going to attack uh you're going to launch an attack on bitcoin you're going to create a fork and you and and once that fork is done you're going to trick the light client in that that I see a uh 500 block reorg and here here's the proof and so if you can show that then you can effectively negate any challenges on something like bit PM

soone someone says hey you're you're moving 5,000 Bitcoin out how are you able to do that like it's not happening on bitcoin but then the operator says yeah it it has happened look here's the proof he creates a fake chain of Bitcoin on the side and he's able to prove because he's got a longer chain and the Challenger is not able to prove that the real chain is correct it's it's really a bit VM is really just an independent uh black box and it depends on the light client and in a merge mind solution you would have to do the same thing but show that the side chain as a longer chain or or shorter chain not Bitcoin and so the cost of taking that over would be the Lost block rewards of Bitcoin versus the

Takeover cost of the side chain and and then um you also don't have the front running capability so the side chain cost would be accumulating enough tokens and then trying to solve for trying to trick that finality uh however long it takes for that finality to be taken over and then going to vanilla merge Mining and attacking um attacking vanilla merge mining which is not that expensive but is it takes time you have to take 51% attack of the Bitcoin hash rate for the length of time needed it's 500 blocks or whatnot does that make sense yeah one followup does does it

become uh uh easier and cheaper to exploit a side chain as the block rewards go down interesting like o o over time um it depends on the economics of that system like if the side chain has real utility real transferable utility and economic utility then that should be commensurate of the market cap right if the side chain has a lot of Bitcoin in there and probably people trust it it probably has utility you're probably Building Systems with it then the um even if you look at Bitcoin the blocker words go down the fees are going up and the fees are going to cover

for the difference right if the fee model makes it sustainable then even as the block Awards go down you still have to uh it it you still have to buy up the collateral to launch the the validators the the question is more probably would the value of the token go down if there's no subsidy and the validators don't want to run anymore because there there is not enough subsidy so this a really good question and asked an ethereum uh Foundation guys as well like you know how do we how do we ensure long-term viability and so EIP 1559 was sort of born out of that was to create the static sort of um cost model that keeps paying out validators it keeps paying out in our case these Sentry

nodes that don't deflate um but it does deflate once the system is used you know if it's if it's really really busy a lot of gas is burned it could become deflationary but otherwise there's a static block award that the validators and the miners keep earning and that's how we sort of saw that in our case the validators are earning uh they earn uh a set amount and that's deflating over time but it stops deflating uh at a set amount like I think it's like five coins or 10 coins it just stops deflating and it will just stay there and so these validators are always going to be paid this block subsidy long term it's deflating up to

like maybe half a percent inflation per year or something like that based on the current Supply and then it just stops and the validators are always going to be paid this amount after that and those are the uh the CIS coin validators or the Rox validators yeah on on the on the base layer of CIS coin there it's it's always going to be paying and the Min rewards that are paid to the to the CIS coin validators okay yeah and then on the evm is EAP 1559 so the the miners are are getting this static blocker work that's always paying them out and it may become deflationary but they're always collecting that block reward based on e559 so it's like 11 10.55 uh coins per

block that's on those are those are ethereum validators uh no those those are valid um those are miners Bitcoin miners mining the CIS coin side chain and then the Sentry node validators that are running a full node of the CIS coin client they are uh earning they are earning rewards right now and they're going to deflate 5% a year but it stops deflating after some out okay okay yeah and so just yeah yeah please uh you just have incentive for you to be able run long term and create security for that system regardless of

how much it deflates got it because it okay because it stops deflating at a certain point yeah it just stops in just a very minimal amount that keeps going cool okay yeah otherwise like right like um who's going to want to run a full node if uh I if the block rewards are gone to zero and the fees may or may not cover right and Bitcoin it's a different story there's no there is no validators so it's just the miners that um if someone wants to collect the block fees they're they're welcome to and today we're only 25x lower than the block subsidy so when Bitcoin goes 10x

and potentially a few more rollups or systems like this launch and it adds more adds more demand for block data that fee subsidy is actually going to be higher than the block subsidy and so block subsidy you can think of it as a bootstrap to be able to create a fee Market that will over overcome uh the actual block subsidy that's interesting because a lot of people push for Big Blocks right but if you push for Big Blocks then the the block fees go down and so actually you want to promote self- sustainability and we think you know we're almost there with Bitcoin that doesn't apply to side chains especially this because you need validators to create finality and for

validators you can't rely on just fees because if the fee Market is going up and down the validators drop too fast it can affect the security of the system so you definitely need to have some sort of subsidy that will keep going long term where they can depend on it instead of a just a fee Market yeah and that's uh that's an even more pressing like more urgent thing to consider than some may realize like I I was always of the mind or or I was of the mind that like you know this only becomes a problem around the year like 2100 or 2140 when the blocker War totally runs out that's actually much more uh it's actually much more pressing to so like make Bitcoin sustainable

because you know one or two more where it may not sustain the network and so the fees depending on price right so uh the fee it is a more urgent thing to the fees are more urgent to solve in the near term rather than like let it like than wait until the you know 50 years down the line and then solve it yeah it's funny how you know this is all sort of coming to a head around when people are estimating AGI to come so you know it's almost like a a bootstrap to get us to the the the point of no return and it should be self- sustainable after that we're almost there like it's used to be

thousands of X and and the Bitcoin Community say no we need to increase we need to increase subsidy or we need to increase block size and no one really um it's great that we didn't do anything because no one understood all the variables involved and we're seeing the fees almost there so it's it's great to see that uh yeah so the only other thing I would say about C and and stuff like that is um the way I see it the QED is that um side chains will always be needed uh because if we think of scaling up we'll need da and so as we showed with the diagram here if you add custom da layers

you're going to have red Bridges to those your weakest link is going to be that da layer in order for us to maximize the security so that we can show the the Bitcoin community that there is solutions that are very secure that don't have these weakest links these chains in the middle that that would break under stress you you end up having side chain wherever the settlement of that system is if it's a modular stack it better be modular if you're creating a monolithic side chain it's not very interesting so if you're creating a modular stack then the settlement of the rollups should be the same place as where your custom da is sitting to have everything enshrined in one base so that the system is secured in one light

client and that light client matters because the bridge if you're moving that Bitcoin over to your side depends on the like client if you're depending on you know multiple layers within the like client and then one breaks down then your system is insecure you can steal that Bitcoin so having that uh that coupling is really important the da plus State and with opcat you're seeing see people being able to do ZK rollups or ZK proof systems of Bitcoin offchain and that's great and it's also optimizing bit VM Solutions making it cheaper is great as well uh the challenges there are if you go into that and you think

okay well will these Solutions compete with an evm Could you actually do an evm um and anytime you get into an evm you end up doing a side chain because you're going to represent Bitcoin in an account-based model there are solutions that are trying to scale up um using opcat you doing ZK side chains and those are great but they'll be using utxos right so you know for example transitioning uh taking an input and spending an output and then taking the next output spending it another and creating like a chained series of utxos and that's good for like some use cases like very secure vaults and stuff like that but you can't do things like you Unis Swap amm and so

you're going to be competing in a market of utility that has all these very cool things that you could do and all of the Lindy effects of evm developers and solidity and all this cool stuff happening versus okay now what is the utxo side offer there are some shortcomings of that there there's some great things you could do parallel Computing and stuff but shortcomings of utility that you'll be competing with which will push the world back into more of an account-based model if you just can't do an amm based system everything in defi depends on these amm dexes today so if you can't do that developers may not even want to build in that and offer utility so you go back into a account

based model and if you go back into an account based model opcat doesn't matter because you have to create this bit VM style Bridge into yourside system and so opcat is not needed for that right you can do bit PM without opcat so this is why I think that um opcat might be a red herring a little bit you know it's not really needed to scale Bitcoin yes it would be cool to do vaults and these sort of things to add utility to BTC but you can also do those on the on the virtual machine layer once you have your side chain so it ends up resolving all back to a side chain and how do you do a proper side chain we've presented one here there's probably you know plenty of

others that are doing very secure versions as well uh that that was great Jack thanks um and yeah it's a fresh new perspective on opcat and kind of what what the result is you know once you implement it and and sort of the state of things afterwards as far as the practicality of using uh Bitcoin on on a a side chain that has opcat and and then using one on something like an evm account model um I think i' I've exhausted all my questions um so during the presentation so I don't have any more um yeah really appreciate you coming on man if you do

have any closing thoughts feel free to share otherwise I think it was great yeah I know I I I love that um you know I'm not saying that l2s or POS l2s shouldn't stop doing what they're doing the fact that the funding is coming in it's just a function of uh pressure effort funding you know all the just like how AI has gotten so you know recursively fastest because the funding has been there so I fully expect a lot of really cool things and the the beauty is that um the Bitcoin system is pure and we're going to be building uh utility into this pure system and none of that's none of that's priced in and so I I think a lot of things are being going to be priced into Bitcoin and it's looking really good uh in terms of the

where the market is the ETF got approved on eth so it proves that you know all those sailor rants about U the equity aspect of uh ethereum going against it um means that that opens the doors for not only eth but every structure that sort of looks like eth with subjectivity or any sort of human um component to it is going to be accepted in the market uh including Bitcoin l2s as well once they grow big enough so yeah it's a none of this is really that priced in um into the market and we we expect a really bright future this this run should be dominated by utility and bringing responsible utility um you know the meme coin stuff might be around but I think

there's going it's really really coming to a point where we're seeing uh these Solutions emerge that it's going to help the world rather than just create speculative Cycles that's awesome yeah that that is the Hope um and hopefully with this institutional adoption we'll we'll see it uh we'll see that Capital uh flowing towards more legitimate use cases and more meaning full use cases than than meme coins as you describe it's as fun as those are J again thanks so much for coming on absolute pleasure man yeah thanks guys anytime um glad to be here at you guys service