The potential of the BTC ecosystem is essentially because BTC is the largest asset. The ceiling of a public chain's ecosystem is determined by the market value of the public chain. The easiest to understand is lending. BTC holders always have a need for mortgage loans. Even if it is 10% of the funds, it is 120 billion US dollars. If it is a public chain with a market value of 1 billion, 50% of the funds is only 500 million US dollars, which is the gap in the ceiling. For example, if the mortgage generates stablecoins, then the scale of the mortgaged assets is large, and the potential of the stablecoin track is great.
From this perspective, the market value of BTC is 4 times that of Ethereum, and its ecological potential is definitely much higher than that of Ethereum. However, the actual situation is just the opposite. The overall scale of the BTC ecosystem is now far behind that of Ethereum. The fundamental reason is that the performance of BTC as a public chain is too low and the programmability is too poor, and it does not have Turing completeness. Then the solution is to imitate the architecture of Ethereum and use the layer2 method. Layer2 has TPS and programmability.
The adoption of layer2 is the strategy of most BTC ecosystems now, but there is an urgent problem to be solved, that is, security. If you want BTC holders to put their funds into layer2 with peace of mind, you must ensure the security of BTC. First of all, security is very important. After all, no one wants to lose the big picture while picking up sesame seeds. Secondly, the BTC chain itself is different from Ethereum, and it is impossible to learn from Ethereum's security design.
Then, our protagonist comes on stage. Babylon provides the security of native BTC and is the basis for other BTC layer2.
Babylon's architectural logic
Various PoS chains, including BT
●This includes BTC layer2, and can also be other public chains. The data layer is composed of various PoS chains that hope to use Bitcoin to enhance their security and are willing to pay for it.
●In addition to performing normal consensus protocol functions such as generating and validating blocks, validators on a PoS chain are also responsible for signing finality signatures on the finality gadget.Control layer: Babylon chain
●The control layer is the bridge connecting the Bitcoin network and the PoS chain, and is implemented by a Cosmos-SDK chain called the Babylon chain.
●The Babylon chain acts as a control plane and is responsible for the following key functions:
Providing Bitcoin timestamp service: The Babylon chain records the PoS block hash and validator set on the Bitcoin chain, ensuring consistency between the PoS chain and the Bitcoin network, and enabling fast and secure unbinding.
Acting as a trading marketplace: The Babylon chain matches Bitcoin stakers with the PoS chain and facilitates transactions between the two.
Tracking pledge and verification information: The Babylon chain records information such as EOTS key registration and updates to ensure the security and transparency of the pledge process.
Record the final signature of the PoS chain: The Babylon chain stores the final signature of the PoS chain to ensure the security of the protocol.The underlying security layer: the Bitcoin network
●The Bitcoin network is the cornerstone of the entire architecture, providing underlying security for the system.
●The security and decentralization of the Bitcoin network ensures the safety of staked Bitcoin assets and prevents malicious behavior.
Babylon users can achieve safe staking without transferring bitcoins out of their own addresses. In this way, bitcoin holders do not need to bridge to the PoS chain. And there is no need to encapsulate or escrow the pledged bitcoins.
Since Bitcoin itself does not support Turing-complete smart contracts, the Babylon protocol cleverly uses Bitcoin's existing scripting language and UTXO model to implement the functions of the mortgage contract. The protocol designs four types of transactions: mortgage transactions, unmortgage transactions, reduction transactions, and unmortgage transactions. These transactions limit the transfer path of Bitcoin through specific script logic, thereby realizing functions similar to smart contracts.
Staking Transaction:
The pledge transaction is the first step for users to participate in Bitcoin staking. It locks the user's Bitcoin in a special UTXO, which can only be unlocked in two ways: an unstaking transaction initiated by the user after the unstaking conditions are met, or a slashing transaction initiated when a security violation occurs.
In this way, the staking transaction commits the user’s Bitcoin to the PoS chain as a deposit for their participation in validating and maintaining the security of the network.
2. Unbonding Transaction:
When a user wants to withdraw from Bitcoin staking, he can initiate a unstaking transaction.
The unstaking transaction needs to meet certain conditions, such as being locked for a period of time, to prevent users from frequently entering and exiting the stake and affecting the stability of the network.
3. Slashing Transaction:
Slashing transactions are triggered when a user performs malicious actions on the PoS chain, such as double signing or attempting to undermine network consensus.
Slashing transactions send a user’s staked bitcoins to an unspendable address, destroying them as a penalty for malicious behavior.
The Babylon protocol uses accountability assertions and finality gadget technology to ensure that in the event of a security breach, the perpetrator's private key is leaked and automatically triggers a slashing transaction.
4. Unstaking Transaction:
The unbonding transaction is used to release the user's Bitcoin from the locked state after the relative time lock of the unbonding transaction expires.
This process ensures that users can recover their Bitcoins in a timely manner when they exit the stake normally, while preventing malicious users from attacking during the unstaking process.
Penalty Mechanism
For the above four types of transactions, a mechanism to prevent malicious behavior is needed. Babylon's Slash technology mechanism is implemented by using advanced cryptography, consensus protocol innovation and optimized Bitcoin scripting language.
1. Accountability Assertions
Accountable assertion is a cryptographic technique whose core idea is to use extractable one-time signatures (EOTS) to ensure that the private key of the malicious actor will be leaked under certain circumstances. In the Babylon protocol, when the validator performs malicious behavior such as double signing, the protocol automatically extracts its private key and makes it public, so that anyone can use the private key to execute slashing transactions and punish the malicious actor.
Since the pledger used a joint signature when staking UXTO, if he wants to do something evil and signs the transfer before the end of the pledge, it will trigger an accountability assertion and the private key will be made public.
2. Final Gadget
Finality gadgets are an additional layer of mechanism added on top of the existing PoS consensus protocol to enhance security. An EOTS finality gadget is used in the Babylon protocol, requiring validators to use EOTS for additional signatures after the block is finalized.
The purpose of this additional signature is to convert all security violations into contradictions of the accountability assertion at the same block height, allowing the accountability assertion mechanism to work effectively.
A key aspect of Babylon is its BTC timestamp protocol. It timestamps events from other blockchains onto Bitcoin, allowing these events to enjoy Bitcoin's timestamps just like Bitcoin transactions. This effectively borrows the security of Bitcoin as a timestamp server. The BTC timestamp protocol enables fast stake unbinding, composable trust, and reduced security costs to maximize liquidity for Bitcoin holders. The protocol is designed as a modular plugin that can be used on top of a variety of different PoS consensus algorithms and provides a foundation on which reset protocols can be built.
Bitcoin Timestamp Service
The Bitcoin Timestamp Protocol is a time proof technology that allows arbitrary data to be sent to Babylon to generate a Bitcoin timestamp, generating a timestamp for the POS chain, thereby improving its integrity and security, such as resisting long-range attacks.
Long-range attacks are a headache for POS chains. Verification nodes of POS chains need to stake tokens as a punishment for committing evil. However, when node tokens are withdrawn, their behavior cannot be constrained. Since the cost of building a chain with POS is relatively low, multiple validators can build a fake chain. Long-range attacks refer to creating a chain longer than the original main chain starting from the genesis block, and tampering with the entire transaction history to replace the original main chain. For example, the malicious validator still has the token of his choice in the forged chain.
When newly added nodes or nodes that have been offline for a long time synchronize new block data, they cannot clearly know which chain is the real main chain. It is very likely that a fake chain will be added, and the real main chain will be usurped.
To prevent long-range attacks, many PoS chains require newly joined clients and validators to identify the checkpoint blocks on the canonical chain. It may take days or weeks for all trusted peers to agree on the checkpoints. This is because there is no central trust party on the blockchain, and validators are equally trusted. If a forged chain appears and a disagreement occurs, validators need some time to communicate and confirm.
This is why POS adopts a very long pledge unlocking period.
Since BTC is a Pow chain, the longest chain is used as the main chain. To attack BTC, 51% of the total network computing power needs to be concentrated. The cost is extremely high and can be basically confirmed to be impossible. Therefore, BTC can be considered the safest public chain.
1. Bitcoin timestamp service is to enable the PoS chain validator to package the hash value of the PoS block and the validator set that voted for the block as a transaction and submit it to the Bitcoin chain. These transaction information will be recorded in the Bitcoin block, thereby "anchoring" the PoS block information to the Bitcoin chain.
Since the checkpoints on the PoS block will be submitted to the BTC mainnet, the PoS validator only needs to synchronize according to the checkpoints on the BTC mainnet. When the timestamp of the validator's withdrawal application is recorded on BTC, the counterfeit chain needs to generate an earlier BTC timestamp to make other validators believe that they did not withdraw money. However, this behavior is equivalent to an attack on BTC.
Therefore, the POS chain using the BTC timestamp can achieve fast decompression, often only requiring a waiting time of 1 day or even a few hours.
Bitcoin Timestamp Service is a technology that uses the security of the Bitcoin network to enhance the security of the PoS chain and achieve fast unstacking. Due to insufficient space in the Bitcoin block, PoS blocks cannot be checked directly on Bitcoin. Babylon aggregates the checkpoints sent by the PoS chain as a separate PoS chain and publishes them to Bitcoin on their behalf. And Babylon's Bitcoin Timestamp Service is designed as a modular system for easy integration.
In summary, the Babylon protocol provides an innovative way to enhance the scalability and security of the BTC ecosystem by combining the security of Bitcoin with Layer 2 solutions. Although Bitcoin faces challenges in performance and programmability, Babylon's architectural design effectively solves these problems, allowing Bitcoin holders to safely participate in staking without transferring their assets. This not only enhances the ecological potential of Bitcoin, but also provides important security guarantees for future public chains and DeFi projects. As this protocol develops, we can expect to see further growth and diversification of the Bitcoin ecosystem.
Reference articles:
https://www.theblockbeats.info/news/48455
https://www.chaincatcher.com/article/2079486
