BTC Relay

Transcript

[Music] so C can an ethereum contract own Bitcoins could it own your Bitcoins the direct answer is no but if it is possible that an ethereum contract could have a lot of incentives so that effectively it does own and control your Bitcoins imagine a contract that has a massive amount of ether or assets that

you wanted this contract could be programmed to you know uh give you a large amount of these assets when it receives a proof that that Bitcoins from your address were sent to an address that the contract specified the the first secret to interacting with Bitcoin in ethereum is the use of payment proofs BTC relay is a bridge that empowers daps to accept Bitcoin payments process arbitr Bitcoin

transactions and empowers Innovation across Bitcoin and ethereum such as decentralized exchange and side chains it has four primary advantages the the First Advantage is it is trustless with its inputs it doesn't care who sends them whether they are reputable or malicious and the outputs produced by the relay follow the cryptographic rules behind Bitcoin and ethereum the and it's also fully open source and this leads to the second advantage that it is fully decentralized there are no owners no

administrators no back doors I can't change it once it's deployed there effectively it's owned by everyone the community the third Advantage is the relay is autonomous unlike other contracts autonomy is actually a requirement for the Relay because it must be alive with a Bitcoin blockchain where new blocks are generated every 10 minutes on average the fourth Advantage is that the relay is modular it is a building block that is easy to integrate with and an EXT sensible foundation

for Innovation such as decentralized exchange and side chains so the first secret was using payment proofs but what would these payment proofs be verified against so the second secret is the BTC relay builds a mini version of the blockchain a smaller version of the Bitcoin blockchain in an ethereum act and I'll call this an SPV chain and this SPV chain is what the payment proofs are verified against so again not much time for this

talk so I'm going to give a whirlwind technical introduction to BTC relay it starts with Bitcoin and SPV simplified payment verification so in Bitcoin a a block has both a a header which is 80 bytes and then all the transactions in that block this header has a quite a few remarkable properties that lead to the Bitcoin blockchain for example one of the one of the fields in header has the uh the hash of the previous block another property is that it has a the header has a root of the Merkel

tree formed by all the transactions in that block so there now now here's an example of we've heard a lot of about Merkel and Merkel trees so I'm going to give a quick example of how that works so we have all of the transactions here at the bottom where these are all the transactions in this block so there's only four for this example so with take for all of these transactions we hash them Bitcoin uses um a hash that will produce a 32 bite value so that's how we get the that Lev the the level above now for each pair of transaction hashes we concatenate them so we

temporarily get a 64 byte value and then we hash that again to end up again with another 32 by value so at this level we always take pairs them pairwise concatenate them and then hash them and we keep repeating that process until there's only one hash left and that is basically the root of your Merkel tree now with this root you can verify whether there's a whether a transaction exists in that block or not that that is all that you need and BTC relay uses just headers to build an SPV chain for example suppose you paid LS1

Bitcoin in tx3 now you could you could provide the relay with all the transactions in the block all of these the relay would run the algorithm that I just explained it would compute a Merkel route and then with that route that it computed it would just check the actual header and does that computed route match what's in the header if it does match then then the relay will be will have verified that yes tx3 is in this block now it's possible to have um shorter proof instead of having to send all the transactions because this could be

really really long down here and and for an example for tx3 that that Miracle proof would include hash two and just hash 01 so you would just need these two instead of all the transactions in the block now I'll I'll have to let you ruminate on that and but you can see that it's logarithmically shorter than the naive approach so here are the apis that the BTC relay contract the two main verification apis

it exposes verify TX and relay TX so all the all this data here is the transaction and merel proof and basically this asks the relay there's this transaction in this block it's the nth transaction in this block is is that valid is that true BTC relay will return true based on three conditions the first is is this transaction in that block is that block on the Bitcoin main chain and the third is does this block have enough six confirmations at least six confirmations the real ATX API is has

the same parameters with two additional ones the first additional one is the actual transaction cuz recall that this is only the hash of the transaction so you've lost a lot of data here but this is all the inputs outputs of the Bitcoin transaction it's arbitrary and then the additional parameter is your contract address where you want to be able to process these transactions there there are two main parties in BTC relay the Rel layers who submit the block headers which are used to build the SPV chain and verifiers to uh verify Bitcoin payments and

transactions and so every 10 minutes there's a new Bitcoin block and BTC really needs that header so this leads to the Third Secret which is having incentives for the community to be relays so that their contract itself the BTC relay contract is autonomous now now there are different incentive uh plans and ideas that were considered but given limited time I will discuss the current one in this current one when when a relayer submits a header they get to see a fee for that

header now the the verifier who uses that who has a payment or transaction in that block needs to pay that fee to the fee recipient the initial fee recipient is is the relayer so for example it's called him Romeo now to prevent excessive fees there could be another person or party it's called Tango Tango decides to pay an amount C to relayer Romeo now what what happens is now Tango gets to become the fee recipient so any future verifications there Tango will receive the fees but to also in addition to paying C

Tango would have had to also set a fee lower than what Romeo had set and C is roughly double the double the amount that it initially cost Romeo to submit the header to to be a relayer and uh earn some ether there's this repository here where it's right now it's a currently a Comm line tool that accept that uh fetches block block headers using a Bitcoin block Explorer like blockchain.info Compares it with what the relay has and submits the ones the relay doesn't have and it's on a public test net so

you don't need to spend real ether and you don't have to worry about what's this unlocked account that you have to provide here there's more information and I'm going to give an example of um extensibility so a basic CH side chain flow is you have let's consider that your Bitcoin blockchain is here and your side chain your side chain is here now time is going vertically downwards so at the start in Bitcoin and the Bitcoin blockchain you lock some BTC let's call that a lock BTC transaction now when appr proof of that

is sent to a side chain then the side chain can create some side chain tokens here uh and then you know time goes by and let's say we want to get the Bitcoins back okay now those side chain tokens are destroyed and then when those side chain tokens are destroyed a proof of it is sent back and verified in Bitcoin blockchain over here and that's how this uh the Bitcoin blockchain can then unlock the original BTC that was locked so in this short example you can see that if you're a side chain contract the the first part where there's a lock BTC transaction you can just pass that to BTC relay to get the answer of if

that lock BTC transaction has been confirmed now an example for integrating it into a Dap there's so this example is basically adding a just another contract to to whatever dap you have and two important points the ones in blue the first point is you need to have a process transaction function with this exact signature if the signature doesn't match then it won't your contract won't get the data that BTC relay is sending it

the second important point is you have to check that message sender is BTC relay otherwise your contract anyone can send your contract for fake transactions and as as this sample does it's recommended to to uh set the address of BTC relay in a Constructor there's a minor minor thing about deliberately emitting braces there just so it fits on the slides there there are other things that you also will want to do afterwards right so for example you probably want to keep track of the transaction hashes that you've seen otherwise people could just replay them and you know keep getting

your side chain tokens so I have a couple more demos but I'm going toh do it after the references because requires me going off the slides but for the conclusion the okay the conclusion is okay so there's three Secrets the first one is it BTC relay Builds an SPV chain it verifies transactions using Merkel proofs and it has incentives for the community to relay the block headers so that BTC Relay can build the SPV chain it is trustless decentralized autonomous and

modular and these are uh yeah I want to thank these people uh supporters of BTC relay for their uh yeah Priceless time thought and work and here are references and the site is BTC relay. org which I'll show right now okay me Scot there okay so so this is where um BTC relay is that's the address it's on a public ethereum test

net that anyone can connect to at this you get the information that link there's the ABI there uh there was some issue in the test net right now where someone minded on it so it's a little slower but all you can compare it with what what has usually it's up to date with the uh the the block blockchain explorers the quickly um yeah this is the site that has more so BTC relay. org that has more information there and the other quick example that I wanted to show was so here we do I've already run this because I'm not connected to the Wi-Fi but this is the first transaction in Block

38100 when we do a lookup it gets all the transactions in that block and then it's going to pass pass them to a module that I've put an npm to generate that Merkel proof so the module is pretty easy to use you pass in all your transactions the index of which one you want to proof from and if we go back to if we go back to the example that that's an example of it but of course you know you don't need to show your users any of this stuff because once you have the data then you can just pass it along to the contract BTC relay and when you click uh call it's just going to

return one or zero this is just a sample to to show it and and I guess just more some some Source since we have a bit couple of minutes here um so okay let's see so this is this is where where where where the call is done the the verifi TX call anyway you can look at this as well um online it's uh but but uh there so the mod the module is here the Bitcoin proof module

and it's uh yeah we call it yeah we call it somewhere the the npm code that I showed um so so that's yeah I guess maybe time for one question or two yeah if anyone has any questions yeah I can this be used to uh to connect with meta protocols as well meta coins like Master coin countery so it could but you would have to um you would have to write something similar so you can't leverage it directly unless those use um you know bit Bitcoin directly unfortunately the answer no basic because yeah for for script is

expensive is there is there another question works because the miners are actually putting their hash power behind Lo say stuff transactions but protols like party basically to get any information at all abely okay y okay one one more yeah okay two okay I do know all right yeah the yep the uh the headers yes uh are you storing that on the E blockchain yes it's like 20 something megabytes no no no it uh yeah well if you start from yes satous Genesis yeah then it would be

that that big but yeah that's something that we can configure you'll just you'll just pay the fees to put that in when you start well no that's the thing um that's why we have the the incentives so we're probably just going to start at a future block that's not satoshi's Genesis okay and then let you know let it be yeah the community in mhm yes Alex yep uh yeah there yeah there can be plans here hang are there plans to build a uh a BTC token on ethereum that Maps

one to one with actual Bitcoins so yeah that's yeah that could be definitely a future um thing that's possible to to build the the next main thing that I'm building is just a decentralized swap of ether and Bitcoins and then after that you know with the side chains then these ideas can can be done any others okay thanks thank you Joseph Joseph [Applause] Chow