Written by: Jesse, core contributor of Biteye
Editor: Biteye core contributor Viee
With Trump's victory in the election, investors expect the new pro-cryptocurrency government to enact more policies that are conducive to the development of the cryptocurrency industry, and Bitcoin has also recorded its largest monthly increase in history, approaching $100,000. Bitcoin's position in the traditional financial market is becoming increasingly important, and funds are continuously flowing into Bitcoin ETFs, making Bitcoin the world's seventh largest asset with a total market value of $2.6 trillion. If Trump fulfills his promise to use Bitcoin as a national reserve after taking office, we will see countries scrambling to buy Bitcoin. By then, the total market value of Bitcoin is expected to exceed that of Apple, the world's largest company by market value, and challenge the reserve status of gold.
On the other hand, due to the limitation of scalability, Bitcoin has been used only as a store of value for a long time. Bitcoin on the main network cannot earn interest in DeFi protocols like Ethereum. Currently, Bitcoin TVL is only 6.56% of ETH. If it reaches the same TVL as Ethereum, Bitcoin TVL still has 15 times the space, an incremental market of more than 60 billion US dollars. Not to mention that the total market value of Bitcoin is 4.5 times that of Ethereum. Therefore, L2 built around Bitcoin has achieved explosive growth this year.
The Bitcoin ecosystem is undergoing a profound paradigm shift, showing a multi-dimensional 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 value storage role to a value creation engine (realizing the application of Bitcoin in DeFi, using NFTs to promote the marketization of digital and physical assets); upgrading from a payment intermediary to a decentralized value network (through Bitcoin's on-chain data and its extended 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 exchange and transmission). This transformation has made Bitcoin no longer just a carrier of value, but also an important cornerstone of innovation and economic growth, bringing unprecedented opportunities to the blockchain industry.
However, the inherent limitations of Bitcoin, such as no smart contract function, trustless cross-chain, high transaction fees, network congestion and confirmation delays, have always restricted the development of the Bitcoin ecosystem. The construction of numerous Bitcoin L2s has further fragmented liquidity. In addition, the security of the new Bitcoin L2 has yet to be tested by the market.
In the context of huge market demand and painful pain points, exSat supported by EOS Network came into being and embarked on an innovative development path. The goal of exSat is to break through the limitations of Bitcoin, become the docking layer of Bitcoin scalability, connect closed blockchain islands, and create a more interconnected, efficient, and versatile blockchain ecosystem. By providing decentralized data indexing and Bitcoin trustless cross-chain, standardizing and integrating most of Bitcoin L2, and supporting technologies such as EVM, Antelope, and ZK, exSat aims to maximize the possibilities, security, and stability of the BTC ecosystem and fully unleash the potential of Bitcoin.
This article will introduce exSat’s innovative features, architecture, participation methods, and token model to help readers quickly understand this emerging Bitcoin expansion solution.
1. Innovative features
First, let’s take a look at what innovative changes exSat brings to the Bitcoin ecosystem:
A better way to synchronize data: Combining the two mechanisms of "proof of work" and "proof of stake", the secure import of Bitcoin data is achieved through BTC staking.
Convenient data management: In order to enable the smooth operation of smart contracts, a decentralized data indexing system has been developed. This system can support a variety of assets, such as BTC, Ordinals, Runes, etc.
Secure asset management: A decentralized asset management system is established between BTC and exSat to ensure that asset transfers are both secure and convenient, enabling exSat to inherit Bitcoin’s trust foundation and provide developers with more opportunities for innovation.
Smart contract function upgrade: fully supports Ethereum virtual machine application development, developers can develop richer decentralized applications in the Bitcoin ecosystem.
Flexible expansion solutions: exSat provides developers with a secure and efficient tool to easily create Bitcoin's second-layer network solutions, 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 expand, but also adds smart contract functions, making Bitcoin no longer just a storage tool. Compared with other similar projects, exSat focuses on how to extend Bitcoin's trust mechanism to a wider range of application scenarios, allowing more decentralized applications and second-layer networks to share this trust foundation. exSat adopts a modular design concept, which is scalable while maintaining security. It can be foreseen that exSat will help Bitcoin play a greater role in this technological revolution and support the flourishing of more diverse applications.
2. Protocol Architecture
How does exSat achieve the above advantages? Unlike typical L2 solutions that aim to increase transaction speed or reduce costs, exSat innovatively introduces a docking layer to fully expand the Bitcoin ecosystem. This section deeply analyzes the architecture of exSat.
Data Consensus Extension Protocol
exSat uses a decentralized hybrid consensus mechanism that combines Proof of Work (PoW) and Proof of Stake (PoS) to ensure accurate synchronization of Bitcoin blocks in 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 entire 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 the synchronizer will be strictly verified by smart contracts, and the data will only be considered valid when the hash value of the block is consistent with the validator consensus. The first synchronizer to upload the correct block data will receive an XSAT reward.
The PoS verification mechanism introduces an additional verification layer. Validators participate in network governance and block verification by staking crypto assets, which enhances the network's risk resistance while ensuring consistency with the interests of participants. The hybrid consensus mechanism ensures the high security and decentralization of exSat, directly supports smart contracts and completes transactions within 1 second. Validators provide trust and security by staking BTC and XSAT, and verify the data submitted by the synchronizer based on the PoS model.
Through the collaboration between the synchronizer and the validator, the exSat network realizes the upload 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 a decentralized state data indexing function, which synchronizes Bitcoin’s UTXO data in two steps:
Historical UTXO data: For blocks before Bitcoin block height 840,000, exSat builds historical UTXO data through snapshots and uploads it in an open source and verifiable manner.
Real-time UTXO data: For blocks after height 840,000, exSat performs on-chain synchronization, verification, and parsing through synchronizers and validators, and ultimately creates a real-time UTXO on-chain index.
This two-step process establishes a reliable UTXO data index, making smart contract operations on the chain more efficient and reliable, laying the foundation for the application and expansion of the exSat network.
In the exSat system, Bitcoin block data is parsed by smart contracts and stored in the decentralized database RAM, ensuring that the data is highly credible under consensus. Asset data is only accessible to DApps in read-only mode, and only block parsing contracts can update data. Through smart contracts or RPC interfaces, applications can call all data from off-chain services without external oracles, thereby achieving higher security and a smoother user experience. Combined with decentralized asset custody, this model creates new opportunities for decentralized applications based on Bitcoin and further promotes the prosperity of the Bitcoin ecosystem.
Currently, other second-layer networks do not have their own index data. The decentralized data index of the exSat network can provide data to these second-layer networks and become the hub of the second-layer networks. In terms of positioning, exSat is similar to Taobao. Other second-layer networks are merchants who use the exsat (Taobao) platform (data) to provide services (sell things) 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 and expands the practicality and functionality of the exSat platform.
With EVM compatibility and account abstraction, exSat can flexibly pay gas fees using a variety of assets (such as BTC, Ordinals, and other Bitcoin ecosystem assets). At the same time, the platform also supports paying gas fees for others, simplifying operations for developers and users.
The validator manages a multi-signature escrow account that uses a threshold signature scheme to process deposits and withdrawals on the Bitcoin network. Deposits are made by transferring funds into the escrow account. When exSat imports raw Bitcoin blocks into the system, deposit transactions can be detected and processed accordingly. Withdrawal requests need to be sent to the exSat smart contract. The smart contract will verify the request and generate a Bitcoin transaction based on the request. The validator responsible for operating the multi-signature escrow account will sign and forward the transaction to the Bitcoin network.
Expanding possibilities with 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 performed on exSat, there is no need to use data availability samples for data release. Zero-knowledge proof verification from Bitcoin L2 Rollups will be performed on exSat.
This modular approach enables developers to customize Bitcoin L2 solutions according to different needs, which is expected to promote the prosperity of the Bitcoin DApps ecosystem.
3. Participation Methods
exSat received a grant of over $20 million from the EOS Foundation as start-up capital. Yves La Rose, the founder of exSat, is the founder and CEO of the EOS Foundation.
exSat was launched on the mainnet on October 23, and the cross-chain bridge was launched on November 5. The exSat cross-chain bridge was developed in cooperation with Ceffu, ChainUp, Cobo and Cactus, and has been audited by Blocksec.
In addition, exSat's major industry partners include Matrixport, Spiderpool, Antpool, viaBTC, Everstake, HashKey Cloud, OKX, BitTrade, Bitget, etc.
exSat Network has attracted more than $690 million (7,318 BTC) in TVL, and individual users can already stake Bitcoin on the exSat network to receive XSAT token rewards.
TVL query link: https://defillama.com/protocol/exsat-credit-staking
exSat is currently launching the Pioneer 2.0 event. After completing the staking task (minimum staking 0.005 BTC) and accumulating 100 points, you can participate in the prize pool. In addition to the XSAT token rewards, exSat will also distribute community incentives worth 100,000 U to users in this event.
Event link: https://x.com/exSatNetwork/status/1854217085569937590
According to official news, staking BTC can get about 3 times the amount of XSAT tokens in return. According to the minimum pledge of 0.005BTC, 0.015 XSAT can be mined every day. The current over-the-counter price of XSAT is about 110U, and the daily return of the minimum security number is 1.65U. Based on the current Bitcoin price of US$90,000, the expected annualized rate is about 133%.
Given the considerable potential returns, 41 institutions have participated in the first mining, and there are not many retail investors participating. Staking Bitcoin on the exSat network allows you to earn XSAT immediately with institutions, rather than accumulating points or waiting for future airdrops. While retail investors are rolling in hot Bitcoin projects, participating in emerging projects such as exSat may have more to gain.
Staking Guide: https://medium.com/exsat-network/exsat-bitcoin-staking-guide-4bca438eea5e
Token Economics
The total supply of XSAT tokens is 21 million, with 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 launch of the network, the initial reward per 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 issued at this stage, and the purpose is to lay the foundation for network operations.
2. Network startup phase
After completing the historical data synchronization, the exSat network is officially launched, synchronizing the original data of the Bitcoin blockchain in real time. This process allows the network to continuously receive and process the latest block data, discover and verify UTXO and other types of crypto assets. At the same time, exSat's mining reward mechanism will also officially take effect. Before the launch of the XSAT staking phase, validators only need to meet the minimum staking threshold of 100 BTC, and no additional XSAT is required. This phase is expected to last about six months, and the validator's reward will be proportional to the number of BTC staked.
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 100 BTC staking requirement and have the highest XSAT staking volume (at least 21,000 XSAT) can become official validators, participate in signing and receive rewards.
exSat allows token incentives to be obtained through both PoW and PoS.
The mining pool needs to participate in the Bitcoin block production within 72 hours. The mining pool that successfully submits the Bitcoin block data can obtain data submission rewards (accounting for 10%) and block production rewards (accounting for 40%).
Validators are eligible to participate by staking at least 100 BTC, and when verifying Bitcoin block data, the first validator to complete the verification can receive a data verification reward (10%). In addition, validators can also receive a staking reward (40%) through staking. When no miners generate blocks, this reward ratio can be increased to 80%.
Through this design, exSat not only improves 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. Conclusion
exSat is a project supported by the EOS Foundation. It was launched in a fair launch manner and has in-depth cooperation with leading custodians and mining pools. exSat is dedicated to expanding the docking layer of the Bitcoin ecosystem. By expanding Bitcoin's data consensus, it enhances the interoperability, scalability and security within the Bitcoin ecosystem. By facilitating direct queries on Bitcoin and ecosystem token balances, exSat can achieve seamless flow of assets and information between different networks and Bitcoin L2, and will be an important part of the Bitcoin ecosystem.
