Written by: Biteye core contributor Jesse
Editor: Biteye core contributor Viee
With Trump winning the election, investors expect the pro-cryptocurrency new government to introduce more favorable policies for the cryptocurrency industry, leading Bitcoin to achieve its largest historical monthly increase, approaching 100,000 USD. The position of Bitcoin in traditional financial markets is becoming increasingly important, with funds continuously flowing into Bitcoin ETFs, making Bitcoin the seventh largest asset globally with a total market capitalization of 2.6 trillion USD. If Trump fulfills his promise to make Bitcoin a national reserve after taking office, we will see countries scrambling to acquire Bitcoin, and at that time, Bitcoin's total market value is expected to exceed that of the world's largest company, Apple, challenging gold's reserve status.
On the other hand, due to scalability limitations, Bitcoin has long only served as a store of value, and the mainnet Bitcoin cannot generate interest in DeFi protocols like Ethereum. Currently, Bitcoin's TVL is only 6.56% of ETH's. If it reaches the same TVL as Ethereum, Bitcoin's TVL still has 15 times the space, a 60 billion USD incremental market. Not to mention that Bitcoin's total market value is 4.5 times that of Ethereum. Therefore, L2 built around Bitcoin has seen explosive growth this year.
The Bitcoin ecosystem is undergoing a profound paradigm shift, presenting a multidimensional development trend. It is expanding from a single asset economy to a multi-asset economy (introducing diversified assets through tokenization, such as NFTs, stablecoins, and protocol tokens); transforming from a store of value role to a value creation engine (realizing Bitcoin's application in DeFi, leveraging NFTs to promote the marketization of digital and physical assets); and upgrading from a payment intermediary to a decentralized value network (through Bitcoin's on-chain data and its scaling technologies, such as the Lightning Network and cross-chain protocols, Bitcoin is becoming the core infrastructure of the value Internet, supporting more efficient and secure value exchanges and transfers). This transformation redefines Bitcoin not merely as a vessel of value but as an important cornerstone for innovation and economic growth, bringing unprecedented opportunities to the blockchain industry.
However, Bitcoin's inherent limitations, such as lack of smart contract functionality, trustless cross-chain capabilities, high transaction fees, network congestion, and confirmation delays, have long restricted the development of the Bitcoin ecosystem. The construction of numerous Bitcoin L2s has further fragmented liquidity. Additionally, the security of new Bitcoin L2s remains to be tested by the market.
In a context of high market demand and significant pain points, exSat, supported by the EOS Network, has emerged, embarking on an innovative development path. The goal of exSat is to break through the limitations of Bitcoin, becoming a docking layer for Bitcoin's scalability, connecting closed blockchain islands, and creating a more interconnected, efficient, and multifunctional blockchain ecosystem. By providing decentralized data indexing and trustless cross-chain capabilities for Bitcoin, standardizing the integration of most Bitcoin L2s, and supporting technologies such as EVM, Antelope, and ZK, exSat aims to maximize the potential, security, and stability of the BTC ecosystem, fully unleashing Bitcoin's potential.
This article will introduce the innovative features, architecture, participation methods, and token model of exSat, helping readers quickly understand this emerging Bitcoin scaling solution.
I. Innovative Features
First, let us take a look at the innovative changes that exSat brings to the Bitcoin ecosystem:
Better data synchronization method: Combines both "proof of work" and "proof of stake" mechanisms, achieving secure import of Bitcoin data through BTC staking.
Convenient data management: A decentralized data indexing system has been developed to ensure smooth operation of smart contracts. This system can support multiple assets, such as BTC, Ordinals, Runes, etc.
Secure asset management: A decentralized asset management system has been established between BTC and exSat, ensuring that asset transfers are both safe and convenient, allowing exSat to inherit Bitcoin's trust foundation and providing more innovative opportunities for developers.
Smart contract functionality upgrade: Fully supports Ethereum Virtual Machine application development, enabling developers to create richer decentralized applications within the Bitcoin ecosystem.
Flexible expansion solutions: exSat provides developers with a secure and efficient tool to easily create second-layer network solutions for Bitcoin, such as zero-knowledge proof rollups or sidechains using the latest Antelope protocol, simplifying the development process.
The emergence of exSat not only makes Bitcoin easier to scale but also adds smart contract functionality, transforming Bitcoin from merely a store of value into a more versatile tool. Compared to other similar projects, exSat focuses on how to extend Bitcoin's trust mechanism into a wider range of application scenarios, allowing more decentralized applications and second-layer networks to share this trust foundation. exSat adopts a modular design philosophy that maintains security while achieving scalability. It is anticipated that exSat will help Bitcoin play a larger role in this technological revolution and support a more diverse range of applications.
II. Protocol Architecture
How does exSat achieve the aforementioned advantages? Unlike typical L2 solutions aimed at increasing transaction speed or reducing costs, exSat innovatively introduces an interfacing layer to comprehensively expand the Bitcoin ecosystem. This section deeply analyzes the architecture of exSat.
Data Consensus Extension Protocol
exSat adopts a decentralized hybrid consensus mechanism combining proof of work (PoW) and proof of stake (PoS) to ensure the accurate synchronization of Bitcoin blocks within exSat.
By incorporating Bitcoin miners into the exSat ecosystem, the platform leverages Bitcoin's mature PoW security architecture to ensure the integrity and reliability of synchronized block data across the network. In the exSat network, mining pools can act as synchronizer nodes, responsible for synchronizing raw block data from the Bitcoin blockchain and submitting it to the exSat network. The block data submitted by synchronizers will undergo strict verification via smart contracts, and only when the block's hash matches the validators' consensus will the data be considered valid. The first synchronizer to upload the correct block data will receive XSAT rewards.
The PoS validation mechanism introduces an additional layer of validation, allowing validators to participate in network governance and block verification by staking crypto assets, enhancing the network's risk resistance while ensuring alignment with participants' interests. The hybrid consensus mechanism ensures the high security and decentralization of exSat, directly supports smart contracts, and completes transactions within one second. Validators provide trust and security by staking BTC and XSAT, and verify the data submitted by synchronizers based on the PoS model.
Through the collaboration between synchronizers and validators, the exSat network achieves the uploading and verification of Bitcoin block data. This mechanism ensures that the exSat network has a reliable data foundation, providing trust and security for all subsequent operations.
Decentralized State Data Indexing
exSat provides decentralized state data indexing capabilities by synchronizing Bitcoin's UTXO data through the following two steps:
Historical UTXO data: For Bitcoin blocks before the height of 840,000, exSat builds historical UTXO data through snapshots and uploads it in an open-source, verifiable manner.
Real-time UTXO data: For blocks after the height of 840,000, exSat synchronizes, verifies, and parses on-chain through synchronizers and validators, ultimately creating a real-time UTXO on-chain index.
These two steps establish a reliable UTXO data index, making on-chain operations of smart contracts more efficient and trustworthy, laying the foundation for the application and expansion of the exSat network.
In the exSat system, Bitcoin block data is parsed through smart contracts and stored in a decentralized database RAM, ensuring that the data is highly credible under consensus conditions. Asset data is only allowed to be accessed in a read-only manner by DApps, and only the block parsing contract can update the data. Applications can call all data from off-chain services through smart contracts or RPC interfaces without needing external oracles, thus achieving higher security and a smoother user experience. Combined with decentralized asset custody, this model creates new opportunities for decentralized applications based on Bitcoin, further promoting the prosperity of the Bitcoin ecosystem.
Currently, other second-layer networks do not have their own index data. The decentralized data indexing of the exSat network can provide data for these second layers, becoming a hub for them. In positioning, exSat is similar to Taobao, while other layers are merchants using the exsat (Taobao) platform (data) to provide services (selling goods) to other users.
Smart contract platform + EVM compatibility
By being fully compatible with the Ethereum Virtual Machine (EVM), it facilitates the development of diverse smart contracts, expanding the practicality and functionality of the exSat platform.
With EVM compatibility and account abstraction, exSat can use various assets (such as BTC, Ordinals, and other Bitcoin ecosystem assets) to flexibly pay gas fees. At the same time, the platform also supports paying gas fees for others, simplifying operations for developers and users.
Validators manage a multi-signature custodial account using a threshold signature scheme to handle deposit and withdrawal operations on the Bitcoin network. Deposits are completed by transferring funds into the custodial account. When exSat imports the original Bitcoin blocks into the system, deposit transactions can be detected and processed accordingly. Withdrawal requests must be sent to the exSat smart contract. The smart contract will verify the requests and generate Bitcoin transactions accordingly. Validators responsible for operating the multi-signature custodial account will sign and forward the transactions to the Bitcoin network.
Expansion possibilities through Rollup
exSat provides a data availability and settlement layer for Bitcoin, supporting all Rollup solutions, including Optimism (OP) and zero-knowledge proof Rollups. Since data availability and settlement are executed on exSat, there is no need to use data availability samples for data publication. Zero-knowledge proof validation from Bitcoin L2 Rollups will be conducted on exSat.
This modular approach enables developers to customize Bitcoin L2 solutions based on different needs, and is expected to promote the prosperity of the Bitcoin DApps ecosystem.
III. Participation Methods
exSat has received over 20 million USD in grants from the EOS Foundation as startup funding. The founder of exSat, Yves La Rose, is the founder and CEO of the EOS Foundation.
exSat officially launched its mainnet on October 23 and its cross-chain bridge on November 5. The exSat cross-chain bridge was developed in collaboration with Ceffu, ChainUp, Cobo, and Cactus, and has undergone Blocksec audits.
In addition, exSat's main industry partners include Matrixport, Spiderpool, Antpool, viaBTC, Everstake, HashKey Cloud, OKX, BitTrade, Bitget, and others.
The exSat Network has attracted over 690 million USD (7318 BTC) in TVL, and individual users can now stake Bitcoin on the exSat network to earn XSAT token rewards.
TVL query link: https://defillama.com/protocol/exsat-credit-staking
exSat is currently launching the Pioneer 2.0 event, where completing staking tasks (minimum stake of 0.005 BTC) and accumulating 100 points will enable participation in the prize pool division. In addition to XSAT token rewards, exSat will also distribute community incentives worth 100,000 USD during this event.
Event link: https://x.com/exSatNetwork/status/1854217085569937590
According to official news, staking BTC can yield about 3 times the amount of XSAT tokens in returns. With a minimum stake of 0.005 BTC, one can mine 0.015 XSAT per day. Currently, the off-market price of XSAT is about 110 USD, with a low guarantee number daily return of 1.65 USD. Based on the current Bitcoin price of 90,000 USD, the expected annualized rate is about 133%.
Given the significant potential returns, 41 institutions have already participated in the initial mining, while retail participation is still low. By staking Bitcoin on the exSat network, individuals can immediately earn XSAT alongside institutions, rather than accumulating points or waiting for future airdrops. Retail investors may find more gains by participating in emerging projects like exSat while rolling into popular Bitcoin projects.
Staking guide: https://medium.com/exsat-network/exsat-bitcoin-staking-guide-4bca438eea5e
IV. Token Economics
The total supply of XSAT tokens is 21 million, adopting a halving mechanism similar to Bitcoin. Each halving cycle consists of 210,000 blocks, starting from the synchronization of the first 840,000 Bitcoin blocks (N > 840,000).
Initial supply and halving mechanism
At the network launch, the initial reward for each block is 50 XSAT. The reward will be halved at the end of each halving cycle to control inflation and maintain the economic viability of mining incentives.
Phased planning for network launch
1. Initialization Phase
The exSat Foundation is responsible for synchronizing the historical data of the first 840,000 Bitcoin blocks as a snapshot. No rewards are distributed during this phase, as the goal is to lay the foundation for network operation.
2. Network Launch Phase
After completing the historical data synchronization, the exSat network officially launches, synchronizing original data from the Bitcoin blockchain in real time. This process allows the network to continuously receive and process the latest block data, discovering and verifying UTXOs and other types of crypto assets. Meanwhile, the mining reward mechanism of exSat will also officially take effect. Before the XSAT staking phase is launched, validators only need to meet the minimum stake threshold of 100 BTC, without the need to stake additional XSAT. This phase is expected to last about six months, with rewards for validators proportional to the amount of staked BTC.
3. XSAT Staking Phase
Approximately 3-4 months after the first halving event, the XSAT staking phase will be launched. Only users who meet the minimum staking requirement of 100 BTC and are ranked high in XSAT staking volume (at least 21,000 XSAT) can become official validators, participate in signing, and receive rewards.
exSat allows for token incentives to be obtained through both PoW and PoS methods.
Mining pools need to participate in Bitcoin block production within 72 hours. Mining pools that successfully submit Bitcoin block data can receive data submission rewards (10%) and block production rewards (40%).
Validators qualify by staking at least 100 BTC, and when validating Bitcoin block data, the first validator to complete the verification can receive data validation rewards (10%). In addition, validators can also earn staking rewards (40%), which can be increased to a maximum of 80% when no miners produce blocks.
Through this design, exSat not only enhances the efficiency and security of block data processing but also provides users with high-yield opportunities to participate in the construction of the Bitcoin ecosystem.
V. Summary
exSat is a project supported by the EOS Foundation, launched through a fair launch approach, and deeply collaborates with leading custodial institutions and mining pools. exSat is dedicated to expanding the Bitcoin ecosystem as an interfacing layer, enhancing interoperability, scalability, and security within the Bitcoin ecosystem by extending Bitcoin's data consensus. By facilitating direct queries of Bitcoin and ecosystem token balances, exSat enables seamless flow of assets and information between different networks and Bitcoin L2, becoming an important part of the Bitcoin ecosystem.
